Draft online gaming rules have contradictory provisions, ambiguity continues

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On 2nd January, 2023, the Ministry of Electronics and Information Technology released draft amendments to the Information Technology (Intermediary and Digital Media Ethics Code) Rules (“Draft Rules”) in relation to regulation of ‘online gaming intermediary’ for public consultation.

While everyone will accept the need to regulate online gaming websites and apps and the purpose for which the process of framing an online gaming policy is initiated is well intentioned, experts argue that the Draft Rules are not constitutionally valid as going beyond the scope of the parent legislation.

Beyond the issue of constitutionality, the Draft Rules are also contradictory.  The Draft Rules at Clause 2(1)(qa) define online game as ‘a game that is offered on the Internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings’. The said definition of online game does not distinguish between skill-based and chance-based games played for stakes.

Now read this with the fact that Clause 3(2)(ix) which prohibits intermediaries, including online gaming intermediaries from hosting, displaying or sharing information ‘that is not in conformity with any law for the time being in force in India including any law relating to gambling or betting…

In the absence of a definition of gambling and betting within the rules and clarity on which category of games are sought to be regulated if online game for consideration is sought to be regulated on one hand and gambling or betting content is prohibited on the other hand. In light of clear definition in tax laws, the GST department has sought to collect INR 21,000 crores from Gameskraft classifying entire operations as gambling and betting. Now, the possibility of similar scenario repeating under these rules cannot be ruled out keeping the self regulatory bodies and the law enforcement at logger heads.

Therefore, clarity on the definition of online game and whether it specifically covers only skill-based games as well as providing a definition of gambling and betting in the draft rules is imperative.

Further, the Draft Rules abdicate the government’s responsibility to monitor and control online gaming platforms and out source these functions to self-regulatory organisations which are funded and backed my online gaming platforms, thereby creating a conflict of interest and also raising serious questions on their credibility, independence and autonomy.