The latest amendments to the Online Gaming Intermediary Guidelines, 2021

The author analyses the recent Information Technology Amendment Rules, 2023, highlighting their salient features, especially concerning the realm of online gaming in India. 

—

RECENTLY, the Ministry of Electronics and Information Technology (MeitY) introduced an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2021.

The new Rules, namely Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023, are mainly focused on the regulation of online gaming in India.

Earlier, in January 2023, draft amendments to the IT Rules 2021 were introduced. However, in the recent amendments a lot has been changed from the earlier draft.

This article analyses the amended Rules with respect to online gaming, highlighting their salient features.

What are some of the salient features of the amended Rules ? 

Categorisation of online games

The new amendments categorise online games into "online games" and "online real money games" unlike the previous Rules where online games without earning or reward were not placed in a separate category.

Rule 2 of the IT Amendment Rules, 2023 differentiates between the two categories of games by defining online games as "a game that is offered on the internet and is accessible by a user through a computer resource or an intermediary".

"Online real money games" are defined as games "where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit".

Therefore, the scope of overseeing online games in India has been expanded by encompassing not just online games but also including "online real money games" within the realm of regulation.

Also read: Karnataka High Court reaffirms the legality of online gaming: an analysis

Establishment of online gaming self-regulatory bodies

To regulate online games in India, the MeitY has been given the power to establish 'online self-regulatory bodies'.

As per Rule 4A, these self-regulatory bodies need to be registered under Section 8 of the Companies Act, 2013, which puts them in the category of companies with charitable or social objectives.

The noteworthy point is that the inclusion of "an individual who is or has been a member or officer of an organisation dealing with the protection of child rights" is mandated in the board of directors.

Therefore, the Rules have been drafted in tandem with and as an extension of Section 67B of the Information Technology Act, 2000, which prohibits publication or transmission of "material depicting children in sexually explicit acts, etc., in the electronic form".

Verification of permissible online games

The Rules have substantially widened the scope of online games allowed under the regulatory framework and at the same time have retained the reasonable restrictions. It only allows certain online real money games to be allowed in India.

Therefore, Rule 2 defines these games as "permissible online real money games". Further, to regulate these games, Rule 4A provides the power to the online self-regulatory bodies to certify any online real money game to be a permissible one.

These self-regulatory bodies are required to verify the games within a period of three months and have to update the list of permissible games in the concerned websites.

Along with this, these bodies are also required to publish the framework for verifying online real money games considering the factors such as ensuring public order, safeguarding age-rating mechanism and taking measures against gaming addiction, financial loss and financial fraud.

Further, the power to revoke the verification of any permissible online game is also provided to these bodies, if found violating any Rules.

Measures against "user harm"

One of the biggest issues which concerns the critics of online gaming is the harm purported by these games. 

Online gaming companies are rapidly growing in India, which poses a great risk of psychological, financial and physical harm to players. 

Recently, the Enforcement Directorate of India revealed some online gaming companies to be involved in laundering to the tune of ₹4,000 crore. Similarly, reports of financial loss and psychological harm to users due to online gaming is commonplace. 

The new Rules have addressed this issue significantly. The Rules have put "user harm" on an equal footing with already insisting acts including money laundering, gambling and acts of violation of privacy of other users.

Further, the addition of the words "by itself" in Rule 3 has completely shifted the onus on the online gaming intermediary. So, in case of any discrepancy, these online gaming intermediaries would not be covered under Section 79 of the IT Act, 2000.

Therefore, reading the above amendments related to "user harm" together, online gaming intermediaries are mandated to exhibit due diligence to restrict online games that cause user harm.

Additionally, 'user harm' has been made one of the fundamental yardsticks for the verification of a permissible online real money game.

The Rules define "user harm" as "any effect which is detrimental to a user, which includes self-harm and psychological harm as well".

Prima facie, the definition appears to be quite vague, however, when read as a whole, it seems to be covering every aspect of user harm.

Further, an expert in the field of psychology or mental health or such other relevant field is required to be included in the board of directors, which is expected to safeguard gamers from the harm to an extent.

Also read: Bans on skill-based online games show the pitfalls of paternalistic laws

Grievance redress mechanism

An option to redress a grievance is provided at every stage to the users. Under the amended Rule 3, the online gaming intermediary must provide for a grievance redressal mechanism along with the details of the grievance officer.

The grievance of the user or a victim shall be acknowledged within twenty-four hours and resolved within a period of fifteen days.

Further, Rule 4A directs the self-regulatory board to include a transparent and unbiased grievance redress mechanism with respect to the verification of online real money games. The manner of such grievance shall be disclosed in the memorandum of association and article of association of such self-regulatory boards.

This framework has to be published on the website along with the details of the grievance officer. The self-regulatory boards too are required to acknowledge the grievance within twenty-four hours and resolve it within fifteen days.

Along with this, Rule 3A directs the Union government to establish grievance appellate committee(s), wherein an appeal can be made if provisions of grievance redress are not appropriately complied with by the online gaming intermediary or self-regulatory boards.

The aggrieved person has to appeal within thirty days of receiving previous communication and the appellate authority is also required to redress the grievance within a period of thirty days.

The way forward: addressing the anomaly

The IT Amendment Rules, 2023 were advanced by the MeitY after the draft presented in January 2023 for public consultation.

Thereafter, some concrete changes were made in the final Rules which have been discussed above. 

Further, the Rules were brought as per Section 87 of the Information Technology Act, 2000 under which the Union government is empowered to draft such Rules. 

Similarly, Entry 32 of the State List (Seventh Schedule) of the Indian Constitution empowers states to draft laws related to betting and gambling.

Several states such as Telangana and Karnataka have already drafted laws regulating online real money games.

Since online gaming is a new industry seen from the lens of the law, the consonance of Union and state laws would depend on how the jurisprudence develops over the years.