The Ministry of Electronics and Information Technology (MeitY) on Thursday, notified the amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 in relation to online gaming.
Earlier this year, the Finance Minister Nirmala Sitharaman announced that gamers will have to pay a 30 per cent tax on their annual winnings. This comes after challenges for online gaming in different states, based on how the government there chooses to apply anti-gambling norms.
Welcoming this move, Roland Landers, CEO, All India Gaming Federation, said: “As the oldest, largest, and most diverse industry association for online gaming in the country, we are grateful to MeitY for notifying the amendments to regulate online gaming under the Indian Information Technology Act, and acknowledging the long-standing demand of the gamers and the online gaming industry”.
He went on to add, “We believe this is a decisive first step for comprehensive regulation for online gaming and, will propel the industry to compete globally, as envisioned by the Hon’ble Prime Minister. We are especially grateful that the Government recognised the industry demands and provided light touch, but comprehensive regulations, which will support innovation, boost Create in India and Brand India, and propel India’s Techade”.
Pivotal moment for the online gaming
“These rules will go a long way in promoting consumer interest while helping the industry grow responsibly and transparently and will also help in curbing the menace of anti-national and illegal offshore gambling sites, which have been proliferating in the last few years,” he concluded.
Reacting to the Meit rules, Joy Bhattacharjya, Director-General, Federation of Indian Fantasy Sports (FIFS) said, “The notification of MeitY rules marks a pivotal moment for the online gaming industry in India. It is expected to put an end to the ambiguities that the industry was grappling with and lay the foundation for sustainable and responsible growth of the industry. India’s online gaming industry has already attracted $2.5B in FDI and we are hopeful that this will propel the industry to great heights and encourage innovation. We look forward to engaging with MeitY to seek requisite clarifications as our members initiate the compliance process".
How do new rules change the game?
The Minister of State for IT, Rajeev Chandrasekhar has stated that games involving real money, won't be allowed to facilitate wagering.
This applies to games, in which users deposit a particular amount of money with the expectation of walking away with a reward.
Multiple self-regulatory organisations will have the right to scrutinise online gaming apps and decide if their operations are permitted or not.
What does this mean for fantasy sports and online games?
Online gaming is divided between games of chance and games of skill, in which the first one is categorised as gambling, while the other one is considered legitimate.
Fantasy sports, which allow people to make virtual teams and make money from points earned by virtual avatars based on a players real world performance, is considered a game of skill.
Since gamers aren't putting their money directly on a match or an event, their actions aren't seen as betting.
The clarity issued about what's permissible and what isn't, will enable startups to offer options for gamers accordingly.
"We welcome the regulations announced by the Hon. MoS Shri Rajeev Chandrasekhar. They will unlock the potential for our $20 Billion Indian Online Gaming industry to significantly contribute to our Hon. Prime Minister’s vision of a trillion dollar digital economy," said Harsh Jain, co-founder and CEO of Dream11 and Dream Sports.
