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President Droupadi Murmu has signed a notification to amend Allocation of Business (AOB) Rules to place online gaming under the Ministry of Electronic and Information Technology (MeitY).

So far, there was no specific entry in the rules for online gaming, while the Finance Ministry was involved mainly in taxation related matters. In May this year, the Centre constituted a task force involving various ministries to look into rules and regulations related to this segment.

Allocation of Business Rules

AOB Rules prescribes which Ministry or Department will be responsible for drafting law, implementation of law post enactment, framing rules and formulating the policy for the subject listed against its name. These rules are amended time to time.

Accordingly, 377^th amendment has been notified which said that matters relating to online gaming would be placed below the heading ‘Ministry of Electronics and Information Technology’. It also placed another entry under Ministry of Youth Affairs and Sports defining e-Sports as part of multi-sports events.

Commenting on the development, Joy Bhattacharjya, Director-General, Federation of Indian Fantasy Sports (FIFS) said, “The appointment of MeitY as the central regulatory authority will provide clarity and certainty to investors, industry and consumers.”

“The decision is in line with the government’s initiative to push for growth of the AVGC sector and making India a global hub for online gaming,” he added

Shivani Jha a gaming and tech lawyer says the identification of a nodal ministry for online gaming and esports is a fair move by the government to centralise the rights of gaming companies as well gamers. In the past a user playing a game in Delhi may have been classified as a criminal in a state like Karnataka during a state ban. “One can only look forward to the rules and see how the state and centre will work together to come up with a regulatory mechanism that protects online gamers from arbitrary criminalisation and bans,” she said.

Four key issues

Though no explanation has been given for allocating online gaming to MeitY, it appears the move is aimed at addressing four key regulatory issues.

First, there is no central body/nodal ministry that can be approached by stakeholders to address issues till now.

Second, there are not clear guidelines to determine what qualifies as a game of skill or chance.

Third, there are no specific legal provisions to block foreign betting websites promoting money laundering activities.

Fourth, various consumer protection issues remain unaddressed such as child safety, financial losses, grievances redressal and KYC.

Specific entry in AOB rules is also aimed at fulfilling the need for a uniform regulatory framework at central level. This is pertinent as Internet is borderless and it is difficult to block apps or websites at the State level.  

The Centre is also of the view that ban on online gaming activities by States are not effective.

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Similarly, there is also need for a uniform approach to address issues such as advertisements, responsible gaming practices and KYC as they impact users across India.

Legal issues

Government officials said that online gaming has posed multiple legal issues.  

Current legal provisions related to online gaming are mainly based on Entry 34 of in the State list of the Constitution which deals with ‘Betting & Gambling’.

However, most States have pre-internet era laws which did not envisage online gaming.

Also, different States have different regulatory approaches to online gaming.  For example Meghalaya, Sikkim and Nagaland have implemented a licensing mechanism for online gaming and gambling/betting activities. However, States such as Telangana, Andhra Pradesh and Odisha have prohibited both online gaming and online gambling/betting.

Inter Ministerial Task Force

In May this year, MeitY initiated inter-ministerial consultations with a view to consider issues related to online gaming in their totality.

Accordingly, an Inter Ministerial Task Force (IMTF) was constituted comprising Chief Executive Officer of NITI Aayog and the Secretaries of the Ministries/Departments of Home Affairs, Sports, Information and Broadcasting, Revenue, Promotion of Industry and Internal Trade, Legal Affairs, Electronics and Information Technology and Consumer Affairs.

The IMTF held a number of consultations/meetings, including with industry stakeholders and State governments and has submitted its report. However, it has not been made public yet.

Published on December 27, 2022