Pahle India report recommends tenets of regulating online skill gaming industry

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Sunrise Indian Online Skill Gaming (OSG) needs a robust regulatory framework to realize its immense potential for growth and innovation, according to a report by Pahle India Foundation. This not-for-profit policy think tank makes and facilitates policy change to make India a global leader in all aspects by 2047. Pahle India’s vision is “Putting India First to make India First.”

The report titled -A Regulatory Framework for the Online Gaming Sector was released today in New Delhi by the Foundation. Pahle India Foundation created the report from numerous in-depth interviews and conversations with experts and stakeholders. This includes experts from organizations like Gambling Integrity, United Kingdom; Federation of Indian Fantasy Sports (FIFS) and the E-Gaming Federation (EGF).

The report mentions that the sunrise online gaming industry has multiple challenges, including perception, lack of proper definition, presence of fly-by-night operators, the constant problem of clubbing games of skill with games of chance and gambling, and money laundering apprehensions. These uncertainties often impede growth and any potential innovation in the sector. Hence the report recommends a regulatory framework that can balance responsibilities between the policymaker, industry, and end consumers.

The structure or approach to regulation should include:

A statutory regulator or Gaming Commission would be responsible for granting licenses, setting standards, rules and guidelines, and conducting compliance audits that regulate the everyday functioning of the sector

Self-Regulatory Organizations would set standards for their members and ensure that each member adheres to guidelines and best practices laid down by them, usually in line with industry and global best practices. SROs will ensure that the principles of regulation are met. The SRO can also help enhance rules over time as it understands the industry best.

Regarding the report, Rajiv Kumar, Chairman Pahle India Foundation & Former Vice Chairman of NITI Aayog, said, “Setting up a regulatory regime is the most prudent choice for enabling the growth of this sunrise sector. Good regulation for any industry is determined by the balancing of responsibilities between policymaker, industry and end consumers. The regulatory framework for new age sectors like OSG should be a light-touch regulatory one that combines principles, rules and self-regulation.”

The report says that the essence of the regulatory framework must be to encourage responsible play, and, in this regard, the SROs will play an important role. Presently the sector has three industry associations – the Federation of Indian Fantasy Sports (FIFS), the E-Gaming Federation (EGF) and the All India Gaming Federation (AIGF). The fundamental role of the SROs is to self-regulate and lay down guidelines such as data protection and prevention of underage play, which its members should follow.

As per the report, the five broad areas of regulation are marketing and advertising, safeguarding minors, providing tools for responsible play, anti-money laundering and financial fraud safeguards and grievance redressal mechanisms.

Marketing and advertising material should not be misleading and contain necessary disclaimers, information and warnings. Advertisements must not be targeted toward minors or those exhibiting addictive behaviour and should not be shown on platforms predominantly meant for minors. Suitable changes to algorithms must be made so that minors are not part of any target group in online marketing. This responsibility can easily be taken up by the Advertising Standards Council of India (ASCI), an SRO that sets advertisement standards and guidelines for India.

The operators must play a significant role in encouraging and guiding their consumers and must use behavioral monitoring techniques using technology and big data techniques to detect and prevent addiction. New players should go through a responsible playing tutorial before participating in games of skill. All players must set self-determined limits on deposit and time to begin participating on platforms so that financial loss is mitigated and does not lead to other issues like addiction. Operators can collect data on player behavior to identify potentially risky consumers and accordingly take remedial steps.

India already has a Prevention of Money Laundering Act (PMLA), and all online gaming operators must be brought under its ambit. All operators should also have robust grievance redressal mechanisms, including a 24/7 helpline to help consumers with responsible gaming tools queries.

A robust regulatory system shall help legitimate operators help sustain the online skill gamers, discourage fly-by-night operators and promote consumer protection and responsible play.