India’s New Regulations For Online Games Involving Real Money; What Does It Mean?

The Government of India has planned to regulate all online games that involve real money. According to official sources, the Prime Minister’s Office (PMO) recently overruled a proposal to regulate only games of skill and exclude games of chance.

According to one study, the Indian gaming industry will be worth $7 Billion by 2026. The proposed regulation will certainly affect the growth of the online gaming industry in India, which is currently dominated by real money games. Venture capitalists like Tiger Global and Sequoia Capital fund dream11 and Mobile Premier League.

In April 2022, the Online Gaming (Regulation) Bill 2022 was tabled in the Lok Sabha, and it sought to create an online gaming commission. The Centre has formed two task forces: one would devise the legal contours for regulating the sector, and the other would promote the animation, visual effects, gaming, and comics (AVGC) sector.

What Does It Actually Implies?

In August 2022, a panel was tasked with framing and implementing the regulations for the gaming sector. A new organization was set up to differentiate games of skill and games of chance. It was mandated that games of skill would be governed by central regulations that insisted on registration, know-your-customer (KYC) requirements, and a system for dealing with grievances.

Regulation of online games, meanwhile, would fall to state governments. But in October 2022, an official from the office of Prime Minister Narendra Modi objected to the differentiation and called for more oversight of all online games.

The official said that differentiating games as skill or chance is tough because of a lack of legal clarity and conflicting court decisions, adding, “online gaming may be considered as one activity/service with no distinction.”

Although the power and appeal of instant payouts in a setting like online gambling, such as sports betting, are obvious, the realities are a bit more complicated.

There have been about 2,400 complaints of delays or glitches in withdrawing winnings by consumers against the top three U.S. sports betting operators alone over the last three years. Sports betting is a heavily regulated industry, and withdrawal speed for winnings often becomes tangled in compliance checkpoints.

Dark Side of Online Gaming

Tamil Nadu has had 17 reported cases of death by suicide in three years because of financial losses incurred due to online gambling addiction, especially to online rummy. Most of the victims are young and middle-aged men with modest incomes.

The Tamil Nadu government is facing immense public and political pressure due to the rise of online gambling platforms. While gambling is a state subject and is prohibited in all its forms by governments across the country, it is the lack of clarity between games of skills and games of chance that has left Central and state governments stumped.

In 2020, the Tamil Nadu government attempted to ban online gambling in the state by bringing in amendments to the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021. But the Madras High Court in 2021 struck down the ban as unconstitutional.

Tamil Nadu and Karnataka governments have also pointed out that online games like poker and rummy are susceptible to fraud and manipulation. The former formed a committee to consider recommending a fresh law after examining various aspects of the functioning of online games, their advertisements, and their addictiveness.

Summarily, the Indian online gaming sector is all set to undergo a thorough revamp with legal restrictions imposed on both games of chance and skill. It is yet to be seen whether the impact of these new regulations will be weathered well or not.