India's Online Gaming Bill: Regressive Regulation – JURIST

The COVID-19 pandemic has changed the course of life in many ways. It has forced everyone to adjust to the new normal, which has led to an inevitable surge in the use of digital technologies from work to socialization. We also have found various ways online to entertain ourselves, such as the OTT platforms and online gaming. While online gaming is entertaining, it has several legal, social, mental, and monetary implications. Given the growth in the online gaming industry in India, it is necessary to form proper guidelines for its safe use.
According to a survey by Statista, the market value of the gaming industry in India is nearly 1 billion US dollars and could go up to 3.4 billion US dollars in 2024. Even according to the statistics provided in the Online Gaming (Regulation) Bill, the online gaming industry in India could grow to 5 billion US dollars by 2025. This is because of the large youth population in India.
The recently proposed Online Gaming (Regulation) Bill, 2022, a private member bill, is a step towards introducing a regulatory system for online gaming to maintain integrity in the ambit of online gaming. However, this bill might fail to curb illegal online gaming because of its regressive nature.
Decoding the Online Gaming (Regulation) Bill, 2022
Under section 2(e), the bill has defined ‘online gaming’ as any game played on an electronic device such as computers, mobile, tablets, and other such devices. So, the first loophole lies in the definition itself since it does not draw a distinction between ‘games of skill’ and ‘games of chance.’ This means that the bill aims to regulate all kinds of online gaming under its ambit. However, the bill also fails to address the regulations and distinctions between online casual gaming and real money gaming. It is necessary to regulate real money online gaming in India because a large part of India’s gaming industry is real money gaming. According to a 2021 survey by Statista, the value of real money gaming in the Indian gaming industry is 49 billion INR and will increase by 11 billion INR by 2025.  The increase in real money games has also led to many problems such as addiction, overspending by users, mental, and social issues, etc. And these issues associated with real money online gaming make it more important to have proper legislation in this segment of the gaming industry.
However, the regulations for online real money gaming should be formed in a balanced way, meaning it should not hamper the growth of this industry but at the same time should curb illegal activities. For instance, by making rigid laws and putting a complete ban on real money online gaming like the states of Telangana, Andhra Pradesh, Arunachal Pradesh, and Odisha this would cease the growth of the real money online gaming sector. However, making liberal laws such as in the states of Goa, Sikkim, and UT of Daman, where there is no ban on real money online gaming, this would lead to more illegal gaming and various other physical and mental issues. To grow and develop this segment, a balanced approach should be followed as in the states of West Bengal, Meghalaya, and Nagaland. A prescribed set of regulations need to be followed in these states to play these online games.
Clause 3 of the bill has proposed  that the central government establish an Online Gaming Commission. This commission would be authorized to oversee the functions of the online gaming industry, draft reports on matters related to online gaming, suggest measures to control illegal online gaming, grant, suspend, and revoke licenses for online gaming websites, and determine the fee for license applications and renewals of licenses. This clause is similar to The Sports (Online Gaming and Prevention of Fraud) Bill, 2018, and this bill was not passed in the parliament because of the ambiguities in the bill. The reason why clause 3 is problematic in the 2022 bill, is that establishing a central agency for regulating online gaming without much clarity on the nature and type of the game it aims to regulate will cause conflict between the centre and state. Under Entry 34, List II ‘Gambling’ and ‘Betting’ are state subjects, which gives states the right to form laws on these subjects. However, under Article 249 of the constitution, the central government has the right to legislate matters on the state’s list in the nation’s interest. But, given the confusion and ambiguities in the bill, even if the central government uses this power and regulates gambling and betting, it would lead to more uncertainties.
Some states have already formed laws pertaining to online gaming, and new regulations by the commission could lead to more confusion. Even though establishing a commission run by the central government is a good step in bringing uniformity in the online gaming industry, the existing legislation by different states needs to be moderated, and the bill should have more clarity. For instance, the Gaming Control Board (GCB) established in the USA, is a federal government agency, and it is responsible for forming regulations that dictate gaming activities within the country. It has laid down various robust rules considering the geographical area of the different states and other requirements that a gaming establishment must fulfill in order to obtain a license. India could also establish a central gaming commission by referring to the countries with a central authority in this sector and forming proper rules and regulations.
The bill also lacks a lucid guideline for a licensing regime, and this is because nowhere in the bill’s norms and rules is there anything regarding a licensing policy for real money online gaming. In India, the gaming industry is one of the most progressive industries, and to increase its growth, there should be uniformity in the system to curb unlawful activities. For this, a detailed and comprehensive licensing policy is necessary. The bill could refer to the licensing regime of some states in India or foreign countries such as the United Kingdom, which has established the License Conditions and Codes of Practice. It has laid down several requirements that the licensees must comply with in order to obtain a license.
The 2022 bill is silent on privacy, data protection, Know your Customer (KYC), grievance redressal systems, and various societal and mental health issues. Addressing these issues is necessary as the gaming industry is growing in the country. A robust regulatory system would help curb illegal activities and help businesses scale swiftly, which would also help boost the economy.
Conclusion
The bill is a significant step forward for the gaming industry; however, it should be amended to make it more transparent and to expand its scope of control to include real money online gaming. Even though establishing a central commission to supervise the gaming sector is a positive start, the scope of regulation under the commission’s jurisdiction must be clarified. The gaming sector is one of India’s fastest-growing industries, and a comprehensive legal system is required to safeguard everyone’s safety and privacy.
 
Nishka Kapoor is a law student at NALSAR University of Law, Hyderabad, India.
 
Suggested citation: Nishka Kapoor, India’s Online Gaming Bill: Regressive Regulation, JURIST – Student Commentary, May 23, 2022, https://www.jurist.org/commentary/2022/05/nishka-kapoor-online-gaming-bill-india/.
This article was prepared for publication by Rebekah Malkin, a JURIST staff editor. Please direct any questions or comments to she/her/hers at commentary@jurist.org
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