MeitY Introduces Gaming Rules To Protect Children and Vulnerable Sections from Negative Impact

• ByStartupStory     |    April 21, 2023

According to the Ministry of Electronics and Information Technology (MeitY), the online gaming regulations were implemented to safeguard children and other susceptible sections of society from the adverse consequences of such games. MeitY announced the online gaming regulations earlier this month. The ministry stated in a press release that the changes were intended to manage the unchecked and unjustified adverse impact of online gaming activities on users, particularly vulnerable groups such as children.

Despite the growth of the online gaming sector in recent years, the Ministry highlighted various social and economic issues stemming from such games. These concerns range from addiction problems affecting both children and adults, to financial losses suffered by adult users. Furthermore, there are content-related issues related to the portrayal of violent or inappropriate content in games, with insufficient measures in place to prevent children from accessing such material or playing real money games. MeitY stated that the rules aim to address addiction-related concerns among children and adults through measures such as warning messages, monetary spending limits, and time restrictions.

MeitY has stated that the new online gaming rules will increase public awareness of trusted online games that have undergone mandatory verification processes. Users will be able to identify permissible online games via a visible verification mark. All online games verified by self-regulatory bodies will be required to display the mark under the new rules. Additionally, the regulations contain sufficient controls to protect citizens from illegal gambling and betting websites and apps. MeitY noted that intermediaries, such as social media platforms and app stores, are obligated to make reasonable efforts to avoid hosting, publishing, or sharing any online game that may cause user harm or has not been verified as a permissible online game by an online gaming self-regulatory body designated by the Central Government.

In order to combat the issue of illegal betting and gambling ads, the new online gaming rules prohibit intermediaries from displaying any promotion or surrogate advertisement of an online game that is not permissible. The Ministry of Electronics and Information Technology (MeitY) recently notified the rules for online gaming, which define online games as those accessible via a computer resource or intermediary on the internet. Online real money games must follow KYC procedures and inform users of any changes to their agreement, terms, or privacy policy within 24 hours of the change. Additionally, they cannot offer financing through third parties for users to play on their platform. MeitY is also reportedly developing a separate order for fintech and payment companies to block payment gateways for non-permissible online games.

The regulatory dispute between the Centre and states, however, is ongoing. Tamil Nadu has passed a law completely prohibiting online gambling. Minister of State for Electronics and Information Technology Rajeev Chandrasekhar stated that it is pointless for states to regulate online gambling since the internet is under the Centre’s purview. According to Chandrasekhar, “the basic principle for what online gaming permits has been established (via IT amendments). The Internet can’t be regulated by states so, in some aspects, it is meaningless for a state government to try and legislate things that are happening on (the) Internet even if they have law and order under their control.”

The gaming sector in India has experienced significant growth in terms of user base, despite regulatory uncertainties. According to Lumikai’s report, India’s gaming market size was estimated at $2.6 Bn in FY22 and is projected to reach $8.6 Bn by FY27. The number of gamers in India rose to 507 Mn in FY22, with a CAGR of 12% from 450 Mn in FY21. In 2022, Indian gaming startups raised $349 Mn in funding, which was 80% lower than the previous year’s $1.74 Bn capital inflow. The average deal size was $3.4 Mn, a 38% decrease from 2021.

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