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Proposed amendment to IT Rules on online gaming

Updated: Jan 5

Ministry of Electronics and Information Technology (“MeitY”) was appointed as the nodal ministry for matters pertaining to online gaming vide notification dated 23 December 2022. MeitY vide notification dated 2 January 2023 proposed an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which shall pertain to matters governing online gaming (“Proposed Rules”) and has sought feedback from the public till 17 January 2023.

Below stated are the notable provisions of the Proposed Rules:

1. Online Game” has been defined as a game that is offered on the Internet[1] and is accessible by a user through a computer resource if he makes a deposit[2] with the expectation of earning winnings[3]. “Online Gaming Intermediary” means an intermediary that offers one or more than one Online Game.

2. The due diligence as stated in Rule 3 of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Rules”), including but not limited to publishing of privacy policy and terms of use on the website and mobile application, shall be observed by the Online Gaming Intermediary. Furthermore, Online Game has to be in conformity with gambling and betting laws prevailing in India and shall be available for usage to individuals above the age of 18 years only. Additionally, within 3 months of the enactment of the Proposed Rules, the Online Gaming Intermediary shall verify the registration of the game from the concerned self-regulatory body[4] and display the same on its website and mobile application, before hosting or publishing or advertising an Online Game for a consideration.

3. Within 3 months of the enactment of the Proposed Rules, the following additional due diligence is to be observed by an Online Gaming Intermediary, while offering Online Games:

3.1. display a demonstrable and visible mark of registration on all Online Games registered by the self-regulatory body;

3.2. the rules and regulations, privacy policy, terms of service, and user agreements of the Online Gaming Intermediary shall inform the user of its computer resource of (a) all the Online Games offered by the Online Gaming Intermediary, along with the policy related to withdrawal or refund of the deposit made with the expectation of earning winnings, the manner of determination and distribution of such winnings, and the fees and other charges payable by the user for each such Online Game; (b) the risk of financial loss and addiction associated with the Online Game; (c) the know-your-customer procedure followed by the Online Gaming Intermediary for registration of the account of a user; (d) the measures taken for the protection of deposit made by a user; and (e) the framework of the self-regulatory body, of which the Online Gaming Intermediary may be a member of;

3.3. prominently publish on its website and mobile-based application, a random number generation certificate and a no bot certificate from a reputed certifying body for each Online Game offered by it, along with relevant details of the same;

3.4. at the time of commencement of a user account-based relationship for an Online Game, identify the user and verify his identity. The procedure for such identification and verification shall be the procedure required to be followed by an entity regulated by the Reserve Bank of India;

3.5. enable users who register for their services from India, or use their services in India, to voluntarily verify their accounts by using any appropriate mechanism, including the active Indian mobile number of such users, and where any user voluntarily verifies their account, such user shall be provided with a demonstrable and visible mark of verification, which shall be visible to all users of the service. Further, the information received for the purpose of verification shall not be used for any other purpose, unless the user has expressly consented to such use;

3.6. appoint an employee of the Online Gaming Intermediary who is resident in India as the grievance officer;

3.7. appoint key managerial personnel or such other senior employee of the Online Gaming Intermediary who is resident in India as the Chief Compliance Officer and shall be responsible for (a) ensuring compliance with the Proposed Rules and shall be liable in any proceedings relating to any relevant third-party information or data or communication link made available or hosted by the Online Gaming Intermediary where he fails to ensure that such Online Gaming Intermediary observes due diligence; and (b) coordination at all times with law enforcement agencies and their officers to ensure compliance with their orders or requisitions made in accordance with any law for the time being in force;

3.8. appoint a nodal contact person[5] for 24*7 coordination with law enforcement agencies and officers to ensure compliance to their orders or requisitions;

3.9. have a physical contact address in India published on its website and mobile-based application for the purposes of receiving any communication addressed to it;

3.10. implement an appropriate mechanism for the receipt of complaints and grievances in relation to the violation of provisions, which shall enable the complainant to track the status of such complaint or grievance by providing a unique ticket number for every complaint or grievance received;

3.11. to the extent reasonable, provide complainant with reasons for any action taken or not taken by it in pursuance of the complaint or grievance received by it;

3.12. immediately inform its users of the change in privacy policy and user agreement, after such change is affected, in English or any language specified in the 8th Schedule to the Constitution; and

3.13. provide the information under its control or possession, or assistance to the Government agency which is lawfully authorised for investigative or protective or cyber security activities, within 24 hours of receipt of the order.

4. A self-regulatory body shall be registered with MeitY, for the purpose of evolving a framework to secure conformity with the interests referred to in section 69A of the Information Technology Act, 2000 (“Act”) and the number of such registered bodies may be one or more than one.

5. The Ministry may, upon submission of an application for registration by a company or a society registered by online gaming intermediaries, which is desirous of being registered as a self-regulatory body, register the same, and in its sole discretion, may consult any appropriate Government or any of its agencies before registering such a self-regulatory body, having regard to the following criteria:

5.1. the number of online gaming intermediaries who are its members;

5.2. its track record in promoting responsible online gaming;

5.3. the general repute, the absence of conflict of interest and the relevance and suitability of the individuals comprising its Board of Directors or governing body; and

5.4. the presence of the following in the Board of Directors or governing body of such self-regulatory body, (a) an independent eminent person from the field of online gaming, sports or entertainment, or such other relevant field; (b) an individual who represents Online Game players; (c) an individual from the field of psychology, medicine or consumer education, or such other relevant field; (d) an individual with practical experience in the field of public policy, public administration, law enforcement or public finance, to be nominated by the Central Government; and (e) an individual from the field of information communication technology;

5.5. the provisions in its Articles of Association or byelaws to ensure its functioning independently and at arm’s length from its member online gaming intermediaries; and

5.6. its capacity, in terms of deployment of technology, expertise and other relevant resources, for evolving the desired framework, testing, and verifying conformity of Online Games with the same, and continuously updating and further evolving such framework, testing and verification protocols.

6. Every registered self-regulatory body, may grant membership to an Online Gaming Intermediary, having regard to the following criteria:

6.1. the adherence by such Online Gaming Intermediary and all Online Games offered by it with the following criteria; (a) is offered by an Online Gaming Intermediary which is a member of the self-regulatory body, who has been granted membership; (b) does not contain anything which is not in the interest of sovereignty and integrity of India, defence of India, security of the State, friendly relations with foreign States or public order, or incites the commission of any cognizable offence relating to the aforesaid; and (c) is in conformity with laws for the time being in force in India, including any such law that relates to gambling or betting or the age at which an individual is competent to enter into a contract, and shall thereby allow the Online Gaming Intermediary offering such Online Game to display a demonstrable and visible mark of registration stating that the Online Game is registered with the self-regulatory body.

6.2. the adherence by such Online Gaming Intermediary to the due diligence and additional due diligence required under the Proposed Rules; and

6.3. track record of such Online Gaming Intermediary in offering Online Games responsibly while securing the interests referred to in section 69A.

7. Every registered self-regulatory body shall evolve a framework to secure the said interests, undertake testing and verification to establish conformity of Online Games with such framework, continuously update and further evolve such framework, testing and verification protocols, and shall prominently publish the same on its website and mobile based application. Such framework shall include suitable criteria regarding: (a) the content of an Online Game registered or to be registered with such body, with a view to safeguard users against harm, including self-harm; (b) appropriate measures to be undertaken to safeguard children; (c) measures to safeguard users against the risk of gaming addiction and financial loss, including repeated warning messages at higher frequency beyond a reasonable duration for a gaming session, provision to enable a user to exclude himself upon user-defined limits for time and money spent; and (d) measures to safeguard against the risk of financial frauds.

8. Every registered self-regulatory body shall communicate the fact of recognition of every Online Game registered with it to the Central Government, along with a report regarding the bases on which it has recognised it as such.

9. Every registered self-regulatory body shall establish a mechanism for timebound resolution of such complaints of users that have not been resolved by the grievance redressal mechanism of its member Online Gaming Intermediary and shall apply in respect of a complaint relating to an Online Gaming Intermediary that is a member of such a self-regulatory body only after such a user has exhausted the opportunity to resolve it under such mechanism.

10. If MeitY is satisfied that a registered self-regulatory body has not complied with the provisions of the Proposed Rules, it may, in writing, communicate the fact of such non-compliance to such self-regulatory body and direct it to undertake measures to rectify the non-compliance.

11. The Ministry may, if it is satisfied that it is necessary so to do, after issuing notice to self-regulatory body and giving it an opportunity of being heard, by order, for reasons to be recorded in writing, suspend, or revoke the registration of a self-regulatory body. Alternatively, in the interest of the users of any Online Game that was registered with such body, at the same time as the issuance of such a notice/order, or at any subsequent time, give such interim directions as it may deem necessary.

12. MeitY, in its discretion, may notify in the official gazette, any game made available on the Internet and accessible by a user through a computer resource without making any deposit, to be treated as an Online Game, if it possesses a risk to the sovereignty and integrity of India or security of the State or friendly relations with foreign States or public order or on account of causing addiction or other harm among children and thereafter, the provisions of the Proposed Rules shall apply to the extent so notified.

The Proposed Rules are a step towards bringing stability, credibility, and legitimacy to online gaming and regularizing a large sector of the Indian economy.

[1] combination of computer facilities and electromagnetic transmission media, and related equipment and software, comprising the interconnected worldwide network of computer networks that transmits information based on a protocol for controlling such transmission [2] deposit made or committed to, in cash or in kind, by the user for participating in an online game [3] any prize, in cash or in kind, that is distributed or intended to be distributed to a user of an online game based on the performance of the user and in accordance with the rules of such online game [4] As formulated under Rule 4B of the Proposed Rules [5] employee of the online gaming intermediary, other than the Chief Compliance Officer, who is resident in India

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