Gaming Regulations: Navigating Legal Frameworks in Different Regions

Any emerging industry or public activity is eventually placed under some sort of regulation and statute at some point. And that’s how it should be. After all, the public’s interests must be protected, and legalities must be defined.

It is no surprise that the online games industry, too, comes under legal frameworks designed to protect the interests of stakeholders. For gamers, it must be comforting to know that the rummy app or fantasy league that they play in operates under legal regulations.

For the Greater Good

Some regulations may be useful and necessary, while others may seem harsh. However, one cannot deny that any industry is better off with legal regulations than without them.

As a gamer, where would you prefer to play online rummy? In a recognised and registered app? Or some shady online card room on the dark web?

Online gaming regulations have acted as a security blanket for players. They assure them that gaming platforms under their purview are within the ambit of the laws of the land. This makes the platforms answerable to authorities. The authorities come with a clear mandate to protect the interests of the general public. 

The fact that the industry is regulated also boosts the confidence of the gamers. It is undoubtedly a secure feeling to play on a platform that is not a “fly by night” venture based out of an obscure island in the Pacific.

With the legitimacy that comes with statutory regulations, the industry enjoys an elevation in its profile as public perception improves. This results in higher revenue for the product, which in this case is online games. This consequently, results in more job creation, more tax collection for the exchequer and more value addition to the economy.

Regulatory Monitoring of the Gaming Industry Formalised

When it comes to the legal frameworks in India, various laws and regulations around gaming and gambling encompass the gaming industry. However, online gaming is a fairly recent phenomenon, and most of these laws are not in sync with it.

This is why the Ministry of Electronics and Information Technology (MeitY) invited feedback on the draft amendments for online gaming in the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. 

The Government’s Press Information Bureau was quite clear when it discussed the amendments when it came out in April 2023. The government wants to see the expansion of online gaming innovation while restricting illegal betting and wagering.

The amendments also spoke of the self-regulatory body(s) designated by the central government. Such a body would have the power to approve, authorise or otherwise take action on various activities carried out by gaming platforms.

Tangled Up in Interpretations

Within the online games industry, much deliberation has been going around regarding the interpretation of card games like rummy and poker. To begin with, almost anyone associated with the online games industry is aware that the Supreme Court has cleared rummy and poker as games of skill. The amendments to the IT Rules 2021 further confirmed that purely skill-based games are not prohibited. 

Despite these rulings and amendments, various state laws continue to challenge these games. As a result, you still cannot play in a rummy app or a poker platform in many states in India. Some of tThese states include Sikkim, Assam, Telangana, Odisha, etc.

There have also been instances of courts setting aside the state laws, as was done by the honourable Madras High Court. The online gaming platforms will have to continue to navigate through these state laws and factor them into their domestic expansion plans.

Accommodating Regulations 

Moving on to more recent developments, the ministry studied the gaming industry’s representations to the MeitY and received a setback in its move towards a self-regulatory body. The ministry thought that the industry proposals were dominated by gaming companies and industry associations and questioned the neutrality of the proposed self-regulatory body. As a result, the ministry will directly regulate the industry.

The industry will now accommodate a SEBI-style regulation as envisaged by the ministry and expects to see a detailed code of conduct governing the market. In the meantime, the real-money gaming segment is coming to terms with the high GST rate, which could see their domination in the industry reduce from 84% to 75%. However, the industry can take comfort from the fact that it will grow at a healthy CAGR of 15% till FY28.

Regulations are a Win-Win

Amidst the frequent twists and turns of events, the gaming industry is well aware that healthy regulations are a win-win for all parties concerned. The government would be happy with the presence of a clearly defined legal framework.

The gamers would feel more secure participating in an ecosystem that is closely monitored by a ministry or a government-affiliated body. The industry, too, will find answers to the questions it always had, such as a code of conduct on financial frauds, player protection, responsible gaming, gaming certification and so on.

Despite the complexities that legal frameworks often present, the online games industry would surely look at gaming regulations as a force for good that would only strengthen their position in the country. 

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