The central government’s proposals for self-regulation in the gaming sector and mandatory player verification for online gaming companies to exercise due diligence have been welcomed by stakeholders, though some say there is scope for more.

The move follows a long struggle by gaming entities to seek clarity in the different rules governing esports (games of skill) and gaming (fantasy, card games and other games of chance, etc), especially as the latter has come under much scrutiny by various state governments.

Roland Landers, CEO, All India Gaming Federation, said: “As the oldest, largest, and most diverse industry body for online gaming, which had set up the first Self-Regulatory Organisation (SRO) for the sector in India, we welcome the release of the amendments to Intermediary Guidelines Rules, which will now specifically also cover gaming intermediaries. We believe this is a great first step for comprehensive regulation of online gaming and will hopefully reduce the state-wise regulatory fragmentation that was a big challenge for the industry. These rules will also be a start in curbing the menace of anti-national and illegal offshore gambling platforms.”

Rohit Agarwal, Founder and Director, Alpha Zegus, says the rules are majorly to do with the RMG category of online gaming. “The rules now require stringent KYC and transparency on monetary transactions, especially winnings. This has been a grey area for a while in the online gaming ecosystem, and the IT department is now trying to regulate it,” he says.

Sameer Barde, CEO, E-Gaming Federation, elaborates that the SRO would ensure a robust time-bound grievance redressal mechanism, registration of online gaming intermediaries, promoting responsible gaming through age verification, implementation of a rigorous KYC process, and undertaking of safeguard measures against addiction and financial distress. “Overall, we feel, these moves will eventually help the government establish a regulated and sustainable industry while promoting responsible gaming. We’re truly excited about the future of the online gaming industry and as a self-regulatory body, E-Gaming Federation looks forward to playing an active role in shaping the future of the sector.”

Bharat Patel, Chairman and Director, Yudiz Solutions, notes that it is a carefully calculated decision to encourage the development of in-house online gaming products and solutions. “We consider it will benefit our country’s economy in a peculiar way. Majorly it will impact the skill-based game industry, which has been trying to explore the Indian markets on a reasonable level. One of the concerns is whether the businesses will need verifying themselves that could enable the central committee to consider the motive of the entertainment, game, and activity,” he says.

That being said, Jay Sayta, a technology and gaming lawyer, notes, “While the need to regulate online gaming websites and apps is almost universally acknowledged and the purpose for which the process of framing an online gaming policy is initiated is well-intentioned, the draft rules are a farrago of confusing and contradictory provisions coupled with lack of backing of a plenary legislation.”

“The provisions defining online games without clearly distinguishing between games of skill and chance fail to provide the much-needed regulatory clarity that the industry was seeking. Further, outsourcing the responsibility of regulating a serious issue like online gaming that has enormous socio-economic consequences to private organisations may not be appropriate,” he adds. 

It should be noted that esports played in competitive tournaments continues to be under the sports ministry and is not covered by the draft rules. Agarwal further said, “It does not really have an impact on esports, since there are no monetary 'winnings' in esports games. The only transactions that happen are in-game purchases, which are already well-regulated. Esports has always been skill-based, and not luck based, so there is no change.”

“Esports fundamentally utilizes the means of online games to essentially explore entertaining activities through digital means, but those games consist of their separate categories,” says Patel. “Games that fall under MMORPG and FPS categories will be unaffected indeed by the decision, and maybe companies will start to introduce fantasy apps for esports games too. These decisions have highlighted many prospects in the gaming industry.