Exclusive: Cabinet secretariat appoints nodal ministries for online gaming, esports paving way for potential central regulation

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After several months of deliberations and consultations by the Inter-Ministerial Taskforce formed by the central government to look at regulating online gaming, the cabinet secretariat has finally decided on nodal ministries to regulate online gaming and esports.

According to a Gazette notification issued on 26th December, 2022, amendments to the Government of India (Allocation of Business) (Three Hundred and Seventieth Amendment) Rules, 2022 were published adding “Matters relating to online gaming” under the ambit of Ministry of Electronics and Information Technology and “e-Sports as part of multi-sports events” under the ambit of the Ministry of Youth Affairs and Sports.

Reportedly, the central government has been working on issuing rules to govern the online gaming sector. Although initially, it was planned that there would be certain rules issued to govern skill-based games, after objection from the Prime Minister’s Office the proposed rules will apply to all online gaming websites, regardless of whether they offer skill-based or chance-based games. The rules are likely to include Know Your Customer (KYC) norms to be followed by online gaming portals, barring minors from accessing real money games and putting limits on the amounts that can be played, de-addiction measures and a grievance redressal mechanism.

With the recent amendments to the Allocation of Business Rules, the Ministry of Electronics and Information Technology is expected to issue rules governing the online gaming sector soon. It remains to be seen whether the rules will override the powers of state legislatures to define and ban online gaming, including games of skill or only provide broad guidelines for gaming companies.

Apart from issuing rules to govern the sunrise sector, with the recent amendment to the Allocation of Business Rules, the central government is also looking at including regulation of online gaming and gambling within the ambit of the broader Digital India Act that is being contemplated to govern all digital sectors and replace the two-decades old Information Technology Act. It is however understood that the process of enacting this new legislation is still in its nascent stage and it may take several months or years for the legislation to materialise.

It remains to be seen whether the proposed rules to be issued by the central government would usher regulatory clarity for the online gaming industry and end the uncertainty around legality of online real money games.