The Intermediary Guidelines and Digital Media Ethics Code Rules of 2021, published by the Indian government, have significant implications for the online gaming and gambling industry. These new rules, which aim to regulate online content in India, include provisions that impact the online gaming and gambling sector, particularly with regards to user-generated content and advertisements.

One of the key provisions in the new guidelines is that intermediaries (which include social media platforms, messaging apps, and online gaming and gambling platforms) must establish a grievance redressal mechanism for receiving and resolving complaints from users. This provision is particularly relevant for the online gaming and gambling sector, where users may have concerns about the fairness and legitimacy of games or the handling of their personal data.

Another important provision in the guidelines pertains to user-generated content. The rules require intermediaries to remove or disable access to any content that is considered “grossly harmful” or “harassing” within 24 hours of receiving a complaint. This could have significant implications for online gaming and gambling platforms that allow users to create and share their own content, such as game replays or strategy guides.

These guidelines also requires online gaming platforms to implement KYC procedures for their users. Under the new guidelines, online gaming platforms are required to collect personal information from their users, including their name, address, date of birth, and government-issued identification number, such as Aadhaar or PAN card. This information must be verified using a government database or other reliable sources.

The purpose of this verification process is to ensure that the player is who they claim to be, and to prevent minors from accessing online gaming platforms. By verifying the age and identity of players, online gaming platforms can ensure that they are not allowing minors to play games that may be inappropriate for their age group. In addition to age verification, KYC procedures can also help prevent fraud and other illegal activities on online gaming platforms. By verifying the identity of players, online gaming platforms can prevent players from using fake or stolen identities to engage in fraudulent activities, such as money laundering or online scams.

The guidelines also include provisions related to advertising. Intermediaries are required to ensure that advertisements are not “false, misleading, or deceptive” and do not promote any unlawful activities, including gambling. This provision could impact the marketing strategies of online gaming and gambling platforms, particularly those that target Indian audiences.

Overall, the new guidelines represent a significant shift in the way that online content is regulated in India, and online gaming and gambling platforms will need to adapt to comply with the new rules. The establishment of a grievance redressal mechanism and the removal of harmful content within 24 hours of a complaint could increase transparency and trust in the industry, but could also add additional compliance costs. The restrictions on user-generated content and advertising may also impact the growth and development of the industry in India.

The Ministry of Electronics and Information Technology (MeitY) on Thursday 6th Day of April, 2023 formally notified the amended rules for online gaming. The definition of ‘online game” has been inserted which means that a game that is offered on the internet and is accessible by a user through a computer resource or an Intermediary. A clause has been inserted that emphasizes if the online game can cause any harm to the user, then it is the duty of the intermediaries and grievance redressal mechanism to inform the user of its computer resource not to display/upload/modify/publish/transmany information of that harmful online game.

According to the rules established by the government, the online gaming self-regulatory body can declare an online real money game as permissible if it is satisfied that the game does not involve wagering on any outcome and that the online gaming intermediary and the game are in compliance with the provisions of rules 3 and 4. The body can rely on the information provided by the applicant for verification of the game initially and declare it permissible for a period of up to three months. Additional due diligence to be observed by the significant social media intermediary whereinsub-rules have been inserted that focus on any permissible online real money game.

The online gaming self-regulatory body must complete its inquiry within the three-month period and either declare the online real money game as permissible or inform the applicant in writing with reasons why the game does not meet the requirements under the rules. An updated list of all permissible online real money games verified under sub-rule (3) must be published and maintained on the body’s website, along with the details of such games, including the details of the suspension or revocation of verification of any online real money game.

Every online gaming self-regulatory body must also publish and maintain an updated list of all its members, including the dates of their acceptance as members and their corporate or business-related identity number and other details. The body may suspend or revoke the verification of an online real money game if it is not in compliance with the rules, after giving the applicant member an opportunity of being heard and communicating the reasons in writing.

The verified online real money game and the online gaming intermediary that enables access to the game must display a demonstrable and visible mark of verification stating that the game is verified by the online gaming self-regulatory body as a permissible online real money game under these rules. The body must prominently publish a framework for verifying an online real money game, which includes measures to safeguard children, measures to prevent user harm, including self-harm and psychological harm, and measures to safeguard users against the risk of gaming addiction, financial loss, and financial fraud.

The Ministry may require an online gaming self-regulatory body to furnish or disclose such information as it may specify in writing. Before issuing a direction under Section 69A of the Act in respect of a permissible online real money game, the Central Government may take into consideration the details published by an online gaming self-regulatory body. The body must also prominently publish a framework for redressal of grievances and the contact details of the Grievance Officer to which an applicant aggrieved by a decision of the body can make a complaint. It is also important for online gaming and gambling platforms to closely monitor developments related to the new guidelines and to take steps to ensure compliance. Failure to comply with the new rules could result in fines or even the suspension or revocation of an intermediary’s registration.

In conclusion, the establishment of a self-regulatory body for online gaming in India is a positive step towards ensuring the safety and well-being of users. The rules established by the government provide a framework for verifying permissible online real money games, and the body’s responsibilities are clearly defined. By promoting responsible gaming practices and ensuring compliance with the rules, the online gaming self-regulatory body can help to mitigate the potential harm caused by online gaming while allowing users to continue to enjoy their favorite games.

Author – Ketan Joshi  (Senior Associate)