Gaming and gambling – Regulating online gaming industry | 5th January 2023 | UPSC Daily Editorial Analysis

January, 2023 UPSC
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What's the article about?

  • It talks about a draft amendment to the Information Technology (Intermediary Liability and Digital Media Ethics Code) Rules, 2021, which aim at regulating the online gaming industry in India.

Relevance:

  • GS2: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Context:

  • The Ministry of Electronics and Information Technology on Monday proposed an amendment to bring online gaming within the ambit of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
  • The proposal, released for public consultation, requires all online games to register with any self-regulatory body approved by the Ministry.
  • This model is similar to the rules in place for digital news sites and streaming services under the IT Rules.

What are the key provisions under the draft rules?

  • Online games will have to register with a self-regulatory body, and only games cleared by the body will be allowed to legally operate in India.
  • Online gaming firms will be required to undertake additional due diligence, including KYC of users, transparent withdrawal and refund of money, and a fair distribution of winnings.
  • Online gaming companies will not be allowed to engage in betting on the outcome of games.
  • Similar to social media and e-commerce companies, online gaming platforms will also have to appoint a compliance officer who will ensure that the platform is following norms.
  • Gambling:
    • Gambling (also known as betting or gaming) is the wagering of something of value (“the stakes”) on a random event with the intent of winning something else of value, where instances of strategy are discounted.
      • Wagering = risk (a sum of money or valued item) against someone else's on the basis of the outcome of an unpredictable event; bet. In simple terms, money is involved in the wagering.
    • Gambling thus requires three elements to be present: consideration (an amount wagered), risk (chance), and a prize.
  • Game of chance and game of skill:
    • A game of chance is in contrast with a game of skill. It is a game whose outcome is strongly influenced by some randomizing device.
    • Common devices used include dice, spinning tops, playing cards, roulette wheels, or numbered balls drawn from a container.
    • A game of chance may be played as gambling if players wage money or anything of monetary value.
    • Alternatively, a game of skill is one in which the outcome is determined mainly by mental or physical skill, rather than chance.
    • While a game of chance may have some skill element to it, chance generally plays a greater role in determining its outcome.
    • A game of skill may also may have elements of chance, but skill plays a greater role in determining its outcome.
  • In India, traditional or offline gambling is banned in some states while allowed in others.
  • The online gaming industry considers itself a game of chance and skill, not gambling. As a result, it avoided being prohibited in states where traditional gambling is prohibited.
  • Owing to these differences in the regulation of the online gaming industry and its huge economic potential as well as societal impacts, the Ministry of Electronics and Information Technology (MeitY) stepped in to regulate this sector and bring uniformity.

Analysis:

  • These draft rules leave several questions unanswered.
  • Some of these proposed measures, such as the establishment of a self-regulatory body, collection of know-your-customer (KYC) information from players, and appointment of a grievance officer within the company, are already in place.
  • These are moves that industry bodies representing such companies have encouraged.
  • The Centre’s draft remains ambiguous on the question of whether States can have additional restrictions.
  • So far, the industry has avoided several bans by filing legal challenges, arguing that they provide games of skill rather than those based solely on chance .
  • Still, games that require wagering are outlawed in the physical form under the colonial Public Gambling Act, 1867 or States’ own gambling laws.
  • A clear answer should come from the Union government on whether States are empowered to prohibit these games online as they do offline.
  • While the gaming industry has huge potential as an economic driver of growth in India, there is a strong case for robust regulation.
  • Of skill or of chance, all online games impact individuals and society, in the short and the long term.

Way Forward:

  • The government has said the goal is to facilitate the industry and not hinder its growth.
  • It has also indicated that in future, it will try to curb “violent, addictive or sexual content” in video games.
  • There should be widespread public consultation to ensure that economic rights, individual freedoms, and social imperatives remain in balance.



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