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States frame laws to regulate online gaming in absence of central policy

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In the absence of a self-regulatory mechanism for online gaming proposed by the Ministry of Electronics and Information Technology (MeitY) in April last year, multiple regulatory offshoots are emerging for the sector.

These include laws being framed by states including Tamil Nadu and Karnataka to curb online real money gaming. At the central level, the Telecom Regulatory Authority of India (Trai) last month launched consultations on the proposed National Broadcasting Policy 2024, which included issues pertaining to a regulatory framework for online gaming.

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MeitY had notified the amended IT rules in April 2023 to regulate the online gaming sector and establish three self-regulatory organisations (SROs). In the succeeding months, it received three proposals from the industry, which were not approved. “The SROs were supposed to decide which games are permissible and which are not,” said a senior industry executive, who didn’t want to be identified. “The IT ministry’s goal also was for these SROs to become a guiding beacon for various state governments so they didn’t ban permissible games. But now there’s a vacuum and states are moving on their own.”

After the SRO plan was discarded, the Centre, in November last year, set up a group of ministers, including home minister Amit Shah and finance minister Nirmala Sitharaman, to look into regulatory issues around online gaming.

Regulating online gaming a_Timeline_MAY 2024_Graphic_ETTECH_1ETtech

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The Tamil Nadu government had introduced a law in 2022 to regulate online gaming and gambling, under which the state also set up a regulatory authority.

The law sought to ban online real money games but, in November 2023, the Madras High Court ruled that the prohibitions under it could not apply to games such as rummy and poker. The state government is working on a revised law to curb these online games, according to people in the know.

Earlier this month, the Tamil Nadu Online Gaming Authority issued stringent warnings against those advertising online gaming platforms in the state. Similarly, the Karnataka government is working on legislation to curb betting and online real money games. State home minister G Parameshwara had said in February that while Karnataka would work on such a regulation, a comprehensive policy was needed from the Centre as well for a prohibition on online games to work.

The home departments of Karnataka and Tamil Nadu didn’t respond to queries.

“Initially, the signal from MeitY was that once SROs start approving games as permissible, companies could use that to create awareness among state governments taking an opposing stance… that the game has been cleared by a self-regulatory mechanism notified by the Centre. But the system was never operationalised,” said another gaming company executive, who also spoke on condition of anonymity.

A senior IT ministry official said the SROs were not cleared because they had a high degree of representation from the industry, which was “more than what the ministry intended to have and was comfortable having.”

Central developments

Trai’s consultation paper floated last month said, “Several concerns have also been raised about the increased usage of online gaming. Like, lack of clear definitions between skill-based gaming and gambling introduces regulatory ambiguity, sparking ethical debates and diverse interpretations about the nature of these gaming activities.”

In its response, the Internet and Mobile Association of India, which represents platforms such as Dream11 and Games 24×7, said that it’s essential to “operationalise the amended IT Rules to effectively govern, administer, and regulate the online gaming industry in India… In case there are overarching concerns regarding the regulatory structure, it would be advisable to promptly devise necessary amendments to resolve them and obviate any regulatory ambiguity.”

IndiaTech, another tech industry lobby group, said in its letter to Trai that for the sake of regulatory clarity, online gaming regulation should be handled by MeitY, the nodal ministry for the sector, “to ensure consistency and avoid potential confusion.”

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