Digital India Act-4: Online gaming

A Discussion has ensued on the regulatory structure for online gaming in India. Today’s news paper reports suggest that a confidential report has been submitted by a Government panel on regulation of online games such as Dream11, Rummy circle etc.

The focus appears to be the games which have become casinos with a large part of speculation and chance  built into the winning. As against this, “Skill games” including say the online chess playing arena will continue to represent another end of the spectrum of online games where “Skills” are more prominent than “Chance”.

The driving force for the regulation seems to be the “Taxing” of income of the game operators under GST.

The regulation will try to therefore consider how “Chance” based games donot turn into “Online betting centers and casinos”.

Mixed with these games for money, are the games like the “Blue Whale” which create social issues in the community and also have to be regulated.

To make the issue complicated, we also have the emerging “Meta Verse” where “Gaming” evolves into a more immersive interaction.

The “Crypto Currency” system where a hashing challenge determines the winner of a Bitcoin/Crypto currency is also a “Game of Chance” since there is no skill is involved in the winning.

If the idea is to charge GST, it will be essential to “Value” the winnings in the form of “Loyalty coupons”, “Coins”, “Cryptos” etc and the regulation will be incomplete without such data valuation.

Most games also appear as “Mobile Apps” and may involve malicious apps that may steal data or commit frauds of other kind.

Some games are harmful by being addictive and some are educative (cross word puzzles, hangmen)  or brain stimulating (sudoku, memory games).

In some instances game rewards are issued as loyalty points that can be used as currency within the game. If they cannot be converted into legacy currency or tradeable crypto currency, the rewards live within the gaming system. But if they can be encashed to legacy currency then there are other issues such as taxation, gambling etc. Many games have a monetization plan where external legacy currency can be used for buying game currency. This mixes up legacy currency with game currency and problems arising thereof need to be recognized.

In view of the above, “Gaming Regulation” does not end with  just an appointment  of a “regulator” but has serious implications on every aspect of Cyber Crime law and Data Protection Law.

In order to ensure that the regulation addresses only such concerns of the society that needs to be regulated, there is a need to clearly define and segregate different types of gaming so that appropriate regulation may be imposed.

The definition of “Online Gaming” used in the  Online gaming (regulation) bill 2022 which  was introduced in April 2022 on which the panel must have deliberated and issued a confidential report on 31st August 2022 states as under

“Online Gaming” means games played on any electronics device including Personal Computers, Mobile Phones, Tablets and other devices;

This is a generic definition and does not address the issues that arise regarding how an online Chess game is distinguished from a Blue Whale game or a Dream11 or Rummy circle or a Crypto Currency mining game.

The bill tries to create a regulator (Online gaming commission) and issue licenses to gaming servers so that others who donot have license can be declared illegal. (Section 5 of the Bill).

It exempts hosting and other backend services provided from India for those who operate gaming outside India  and protects the interests of such service providers.

The offences may be recognized as cognizable and also invoked by the intervention of the regulator.

The challenging part of the legislation is section 19 which overrides other legislations by stating

“The provisions of this Act, shall be in addition to and not in derogation of the
provisions of any other law for the time being in force and, in case of any inconsistency, the provisions of this Act shall have effect to the extent of such inconsistency. “

This requires an interplay of this  legislation with ITA 2000 and also the IPC.

Details of regulation are left to the rules.

The most important part of this legislation would be

  1. Segregating different types of gaming such as Educative, Fun, monetary, harmfully addictive, etc
  2. Ensuring that “Crypto Currency mining” come within the definition of “Chance based gaming” requiring a license.
  3. Ensuring that game only rewards donot get converted into legacy currencies.

A detailed debate is therefore required before this regulation comes into existence.

(Let us discuss this further. I invite comments)



The Online Gaming (regulation) Bill 2022

Singapore introduces online gaming regulation

Shortcomings of online gaming bill

Government panel calls for regulatory body, new law for online gaming

About Vijayashankar Na

Naavi is a veteran Cyber Law specialist in India and is presently working from Bangalore as an Information Assurance Consultant. Pioneered concepts such as ITA 2008 compliance, Naavi is also the founder of Cyber Law College, a virtual Cyber Law Education institution. He now has been focusing on the projects such as Secure Digital India and Cyber Insurance
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