On January 2, 2023, Ministry of Electronics and Information Technology (“Meity”) released draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Guidelines”) for regulating the online gaming industry (“Proposed Amendments”).
The Proposed Amendments have been drafted in consultation with the stakeholders and are open for feedback from the public by January 17, 2023. The said amendments envisage the following:-
- Online Game: has been defined as a game that is offered on the internet and is accessible by a user through a computer resource if he makes a deposit (cash or in kind) with the expectation of earning winnings (which includes any prize, cash or in kind based on the performance of a user and in accordance of the rules of such online game).
- Online Gaming Intermediary: means an intermediary which offers one or more than one online game.
- Due diligence by intermediaries: All intermediaries including social-media intermediaries and online gaming intermediaries shall observe due diligence under Rule 3 of the IT Guidelines as well as the following Proposed Amendments:-
- to make reasonable efforts to cause the user of its computer resource not to host, display, upload, modify, publish, transmit, store, update or share any information that is (i) in the nature of an online game that is not in conformity with any Indian laws including law relating to gambling or betting or the age at which an individual is competent to enter into a contract (ii) violates any law for the time being in force;
- before hosting, displaying, advertising an online game for a consideration; the intermediaries will have to verify the registration status of the said online game from the self-regulatory body (“SRB”) established under the Proposed Amendments and display the fact of registration on its website or mobile based application. The Proposed Amendments give three months time to comply with the aforesaid clause from the commencement of the final legislation.
- Additional due diligence by Online Gaming Intermediaries: Rule 4A requires an online gaming intermediary to inter-alia, observe additional due diligence, while discharging its duties:-
- Display visible mark of registration on all online games registered under SRB;
- all the online games offered by them along with the policies related to withdrawal or refund of the deposit made, manner of determination and distribution of winnings, and the fees/charges payable by the user for each such online game;
- risk of financial loss and addiction associated with the online game;
- know-your-customer procedure followed by the online gaming intermediary for registration of the user’s account;
- measures taken for protection of deposit made by a user; and
- framework of SRB, of which the online gaming intermediary may be a member of;
- Prominently display a random number generation certificate and no bot certificate from a reputed certifying body for each online game offered by it, both on its website and mobile application;
- Identify and verify details of its users as per the KYC procedure laid down by Reserve Bank of India;
- appointment of Grievance Redressal Officer, Chief Compliance Officer and Nodal Officer;
- Have a physical address in India and the same shall displayed on its website or mobile application;
- Implement a mechanism for voluntary verification of accounts by users in India, including an active Indian mobile number and distinguish such users with a visible mark of verification which shall be accessible to all other users of the service;
- implement an appropriate mechanism for the receipt of complaints under Rule 3(2) of IT Guidelines and grievances in relation to the violation of provisions of Rule 4A. It also requires the online gaming intermediary to provide reasons for any action taken or not taken, pursuant to complaints/grievance received by it;
- provide 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 such order (instead of 72 hours for other intermediaries);
Online gaming intermediaries are required to comply with the aforesaid due-diligence within three months from the commencement of the final legislation.
- Self-Regulatory Body (“SRB”): Rule 4B of the Proposed Amendments states that self-regulatory body/bodies shall be established to secure conformity with the interests under Section 69A of the Information Technology Act, 2000. SRB shall be registered by Meity and it may consult with an appropriate government before such registration. Every SRB may grant (i) membership to an online gaming intermediary (ii) register an online game as per the criteria laid in Rule 4B; which shall allow the online gaming intermediary offering such online game to display a visible mark of registration (depicting that online game is registered with the SRB).
The Proposed Amendments require SRB to evolve a framework which safeguard users against self-harm, safeguard children, risk of gaming addiction and financial loss, risk of financial frauds etc. SRB shall undertake to test and verify online games registered with them to establish conformity with the aforesaid criteria. In addition, SRB shall also function as an appellate body for grievances/complaints not resolved by the grievance redressal mechanism of its member online gaming intermediary.
- Any other game: which is available over the internet and accessible to its user without making any deposit may be declared as an online game under the IT Guidelines by way of a notification if Meity is satisfies that such game may create a risk of harm to the sovereignty and integrity of India or security of the State or friendly relations with foreign States or public order on account of causing addiction or other harm among children.