Inter-Ministerial panel suggests central law to control online gaming

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The Public Gambling Act of 1867 has been deemed unfit “to cover/defend/deal” with digital-based activities, and the accompanying evolving technologies by an Inter-Ministerial Task Force (IMTF) established to investigate new regulations for online gaming.

A report submitted to Prime Minister’s office in September by IMTF said, “Moreover since we are in the process of replacing all obsolete laws, it becomes all the more important to replace the existing law(s) with new legislation that will not only cover the entire gamut of technology and internet-based gaming but would also provide coverage for extraterritorial jurisdiction which is completely missing at present.”

The report backed central legislation while also pointing out discrepancies in the laws regarding online gambling. It also said that any unauthorized payment systems for online gaming should not be allowed in any way. This kind of payment method encourages money laundering activities, financing of terrorism activities or transactions in violation of the Foreign Exchange Management Act, etc.

The Public Gambling Act (PGA) is quite old and currently acts as a model law state governments may or may not adopt. According to the research, numerous state governments have embraced the Public Gambling Act in its current form, but others have also introduced their own legislation.

According to the report, this lack of uniformity is a huge concern: “This creates an uncertain regulatory environment for online gaming companies, which are forced to use technologies such as geo-fencing as their games may be legal in some states, and illegal in others.”

Some prime examples are Karnataka, Kerala, and Tamil Nadu, which passed laws to ban online games of skills and chance alike. Other states are also planning to make their own laws, adding more inconsistency in the online gaming sector.

The report also focused on how the same games are sitting at different legal positions in different states; for example, Gujarat high court have deemed poker to be a game of chance and hence illegal, but at the same time Calcutta high court have declared it as a game of skill and legal there.

According to the report, state governments expressed concern about their inability to regulate online gambling properly and noted the panel’s talks with them. They also drew attention to other drawbacks, namely the ambiguity around how to categorize games of skill and games of chance, saying, “There is no central regulatory body to assess whether a particular game is a game of skill or chance.”

The Union Home Ministry recommended looking into the possibility of regulating betting and gaming through a national law in its submissions. According to the department of legal affairs, betting and gambling are state affairs. It listed a number of provisions in the Union List of the Constitution that provide the Center authority to control online betting and gaming.

NITI Aayog, a government think tank, also supported a national law to support business innovation and economic growth. Additionally, it asked for the creation of a legal framework to promptly resolve financial concerns for online gamers.
The report also said that currently, there is no way to keep offshore illegal gambling sites in check, saying, “State laws do not have extraterritorial applicability to block these sites.”

A consistent law is suggested in the paper to specify the types of online gaming that are permitted. A single organization to handle matters relating to internet gaming has been sought, as well as the elimination of contradictions between the states. According to the report, all states should adopt uniform player safety standards for online gaming platforms.

The IMTF also drew attention to “gaming disorder,” declared as a behavioral addiction in 2019 by World Health Organization (WHO). The National Commission for Protection of Child Rights also highlighted the harm done by gaming disorder in 2021.

The IMTF was established by the ministry of electronics and information technology and the report submitted by them has recommendations from the Union ministries of home, sports and youth affairs, information and broadcasting, finance, law, and consumer affairs.

IMTF was required to cover online gaming and skill games, including those with real money. Since betting and gambling are considered state matters, online gambling was left out of its control.