New Delhi; 06.02.2023: The recently released draft rules by MeitY, as recognized in the Pahle India report, bring the much-needed clarity and legitimacy to the online skill gaming industry. The report suggests a light-touch regulatory framework to foster responsible growth, encourage innovation, and safeguard consumers in the industry. It highlights five key areas of regulation: protection of minors, responsible gameplay, marketing and advertising, financial fraud and anti-money laundering, and grievance redressal mechanisms.
A new report from Pahle India Foundation, a not-for-profit policy think tank dedicated to making India a global leader by 2047, highlights the need for a robust regulatory framework for the rapidly growing Indian Online Skill Gaming (OSG) sector. The report, titled “A Regulatory Framework for the Online Gaming Sector,” was released in New Delhi and was created through extensive interviews and conversations with industry experts and stakeholders, including organizations such as Gambling Integrity, the Federation of Indian Fantasy Sports (FIFS), and the E-Gaming Federation (EGF).
According to the report, the lack of proper definition and the presence of fly-by-night operators, as well as concerns about perception, money laundering, and the classification of games of skill and chance, are impeding growth and innovation in the online gaming industry. The report suggests a regulatory framework that balances the responsibilities of policymakers, the industry, and end-consumers.
The report recommends the creation of a statutory regulator or Gaming Commission responsible for granting licenses, setting standards and guidelines, and conducting compliance audits. It also suggests the establishment of Self-Regulatory Organizations (SROs) that would ensure industry members follow best practices and guidelines in line with global standards. The SROs would help to continually enhance the regulations over time and understand the industry best.
Speaking about the report, Dr. Rajiv Kumar, Chairman, Pahle India Foundation & Former Vice Chairman of NITI Aayog said, “Setting up a regulatory regime is the most prudent choice for enabling the growth of this sunrise sector. Good regulation for any industry is determined by the balancing of responsibilities between policymaker, industry and end consumers. The regulatory framework for new age sectors like OSG should be a light-touch regulatory one that is a combination of principles, rules and self- regulation.”
The report highlights the need for responsible play within the online skill gaming industry and the significant role self-regulatory organizations (SROs) will play in achieving this. There are currently three industry associations in the sector – the Federation of Indian Fantasy Sports (FIFS), the E-Gaming Federation (EGF), and the All India Gaming Federation (AIGF) – and the SROs’ purpose is to self-regulate and establish guidelines such as data protection and preventing underage play for their members to follow.
The report identifies five key areas for regulation: marketing and advertising, safeguarding minors, promoting responsible play, anti-money laundering and financial fraud safeguards, and providing grievance redressal mechanisms. Advertisements should not be misleading and contain appropriate disclaimers, information, and warnings. They should not target minors or those exhibiting addictive behavior and should not be shown on platforms meant for minors. The Advertising Standards Council of India (ASCI), an SRO that sets advertisement standards and guidelines for India, can take up this responsibility.
Online operators should also encourage responsible play through tutorials and self-determined limits on deposits and time spent on the platform. They can use behavioral monitoring and big data techniques to detect and prevent addiction, and collect player behavior data to identify potentially risky consumers.
The Prevention of Money Laundering Act (PMLA) already exists in India and all online gaming operators should be brought under its jurisdiction. Operators should have effective grievance redressal mechanisms, including a 24/7 helpline for consumer queries.
A robust regulatory system will support legitimate operators, discourage unestablished operators, and promote consumer protection and responsible play in the online skill gaming industry.