Digital India Act: A central gaming regulation will end regulatory uncertainty, boost investments

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The government in the last Parliament session has withdrawn the controversial Data Protection Bill, 2021 after a long list of recommendations by the Joint Committee. It was announced during the withdrawal of Data Protection Bill, 2021 that the government would come out with a new draft which would have a data governance policy framework, cybersecurity policies and guidelines, and a new data protection law.

Now it is widely reported in the media that government will soon bring a Digital India Act (‘DIA’) that is expected to replace the Information Technology Act, 2000 (‘IT Act’). As first reported by Economic Times, the DIA will cover the entire digital ecosystem and will add compliance burden on technology companies while regulating content across OTT platforms.

The DIA is reported to offer a comprehensive framework that would govern aspects such as regulation of intermediaries, provide for digital crimes such as deliberate propagation of misinformation, provide guidelines around women and children safety on the internet, and have a greater regulatory visibility and control over monitoring undesirable content on over-the-top service platforms.

Online gaming currently remains a grey area in the country as it is not specifically covered by any regulation. Under the Indian Constitution, states have the power to legislate on ‘betting and gambling’. Thus, the laws on gaming varies across states. The laws further differentiate between “skill gaming” and “games of chance”, the latter which is prohibited in many states. The states have in recent times, tried to regulate or ban skill gaming under the guise of betting and gambling creating uncertainty in the industry.

The restrictions sought to be imposed by the Karnataka, Tamil Nadu, and Kerala in last one year were termed as excessive and unconstitutional by the respective High Courts. The outcome of the decisions in these cases is that skill gaming cannot be banned but may be regulated. But the lack of a uniform regulatory framework to regulate the online gaming industry has hurt the industry that is expected to be $5 billion industry soon. The Karnataka Gaming Ban Law enacted last year even hit chess competitions.

As argued in this post, the Central Government can enact a regulatory framework for online skill gaming under the entries related to posts and telegraphs; telephones, wireless, broadcasting and other like forms of communication,” and “inter-state trade and commerce.” 

A uniform central law will give a much needed boost to the online skill gaming industry in India and also aid foreign direct investment.  “There are now over 300 million gamers in India, and revenue across all gaming devices reached $1.8 billion in 2020, up 500 percent from 2016. The big driver is mobile gaming which accounted for $1.5 billion last year. Sequoia India and the Boston Consulting Group expect mobile gaming revenue to reach $5 billion by 2025,” said a report released in November last year.

Currently with no specific regulation, few operators lack transparency and accountability in their operations. A comprehensive regulation will also aid players to play in a responsible and safe manner.