Right on intention, poor on scoping: Industry body IAMAI on online gaming draft rules

The draft IT rules on online gaming are “right on intention but poor on scoping”, said the Internet and Mobile Association of India (IAMAI) on Thursday (February 2).

The proposed rules are a “very positive development” for the online gaming industry ecosystem for three reasons, including creating a legal framework for orderly and accelerated development of the industry, the industry body said. However, the “scoping of the rules has been done poorly” and some aspects need a “major re-look”, added the body.

These include the definition of gaming and what is sought to be regulated.

“Here, the members of the association feel that the definition of online gaming is too broad and vague. It would unnecessarily bring under regulation and expensive compliance a set of firms that do not need to be regulated or need to be very lightly regulated,” said IAMAI  in a statement.

Further, it said certain provisions of the draft also seem to imply service providers or partners that advertise, publish or host online games will have to comply with the rules by verifying each game with the self-regulatory body (SRB) on an ongoing basis “making it impractical”. Intermediaries must not be obligated to ascertain and verify the registration of online games, IAMAI felt.

“Most importantly, the scoping of the SRB is not strong enough – the industry has asked for a retired judge since ultimately the role of the SRB would be adjudication and the industry has asked for common principles by which gaming SRBs are governed,” IAMAI said.

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The Positives

On the positive side, the draft rules provide for very strong consumer safety measures and, most importantly, allow the industry to be self-regulated. “These measures by bringing in recognition and regulatory certainty will allow for innovations and investments in the industry,” IAMAI said.

The draft rules on online gaming

The draft rules on online gaming were released by the IT ministry last month for wide public consultation and the norms entail safeguards in the form of a self-regulatory body, mandatory know-your-customer norms for verification, and a grievance redressal mechanism, with prime focus on real money games.

As per the draft, the self-regulatory body will be registered with the IT ministry and be tasked with registering online games of intermediaries, who are its members and which meet certain criteria. Such bodies will also resolve complaints through a grievance redressal mechanism.

Online gaming intermediaries will be required to observe additional due diligence by displaying a registration mark on all online games registered by a self-regulatory body and informing its users regarding policy related to withdrawal or refund of deposit, manner of determination and distribution of winnings, fees and other charges payable, and KYC procedure for user account registration.

According to the proposed rules, online game means a game that is offered on the Internet and is accessible by a user through a computer resource if they make a deposit with the expectation of earning winnings. The rules are expected to be finalised shortly.