India starts to realize that central regulation over online gaming is the only way forward

Failure of state-level gaming bans addressed in Parliament, Centre urged to regulate the sector

FPJ Web DeskUpdated: Wednesday, June 29, 2022, 04:45 PM IST
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India starts to realize that central regulation over online gaming is the only way forward | Photo: Pexels

In December last year, the failure of state-level blanket bans on online gaming to solve the issues of gambling addictions and financial ruin for persons and families they seeked to clear up was addressed in India’s upper house of parliament - the Rajya Sabha. Raising the issue, Susil Kumar Modi, a member of parliament and senior BJP leader, urged the Central Government to step in and implement comprehensive national regulation over the online gaming sector.

“Online gaming is becoming a big addiction. I would like to highlight that this sector, like the crypto industry, certainly has a regulatory lacunae. So, I would urge the government to bring a uniform tax on online gaming. I urge the government to make a comprehensive framework of regulation for online gaming,” Mr. Modi said in his speech.

“Crores and crores of youngsters have become addictive to online gaming. As it is online, it is very difficult to prevent kids from getting addicted,” the BJP leader highlighted the problems arising from unregulated gaming. “And now this online gaming has been converted into gambling or betting. And now there is a controversy whether it is a game of skill or it is a game of chance,” he added.

MP Modi pointed the attention of the house to the failures of Tamil Nadu, Telangana, Andhra Pradesh, and Kerala to address these issues by enacting bans on online gaming in their states. All those bans were found to be unconstitutional by the respective high courts for being unproportionate and violative of fundamental rights granted by the Constitution.

A couple of months after Sushil Modi’s speech in the Rajya Sabha, one more blanket ban on gaming was struck down by the High Court of Karnataka for similar reasons.

Besides being contradictory to the supreme law of the Union of India, state-level legislation has no extra-territorial operation and cannot affect gaming operators based outside of the country. Thus, state gaming bans only block the activities of legitimate homegrown operators and expose citizens to even greater risks.

National Gaming Regulation Proposed at the Lok Sabha

On April 1 this year, just a few months after gaming-related issues were addressed in parliament, Adv. Dean Kuriakose, a member of the Lok Sabha from the Indian National Congress, proposed the Online Gaming (Regulation) Bill, 2022.

The Bill envisages the establishment of a new national regulator for the sector - the Online Gaming Commission, to be created by the central government. The regulator is to be tasked to elaborate rules and supervise the functioning of the gaming industry in the country. The Commission will also be empowered to issue, suspend and cancel licenses for gaming websites and servers.

The introduction of the Bill was met with enthusiasm by industry experts as a modern approach to solving the old problems.

“This is vastly different from blanket bans, as, let’s face it, with today’s possibilities of using VPNs and cryptocurrencies to avoid online detection, players will play no matter if there’s a ban or not. The option for players in a “blanket ban market” is foreign casinos, which means that money will seep out from India into the pockets of offshore gaming companies,” as stated by Felicia Wijkander, Chief Editor at SevenJackpots, India’s largest casino comparison platform.

“Unlike the current Public Gambling Act, 1867, The Online Gaming (Regulation) Bill, 2022, includes all types of real money games. Not just casino games and sports betting, but other games with real money functionalities such as Fortnite, PUBG, Candy Crush, etc.,” she added, pointing out that the proposed law is seeking to solve the problem with the blurred boundaries between skill- and chance-based gaming by simply abolishing this vague and ambiguous distinction.

The Proposed Bill Lacks Focus on Customer Protection

Although a move in the right direction, the proposed Bill displays a number of deficiencies, mainly in the field of customer protection which should be the main focus of such legislation.

One of the key aspects that is missing from the suggested regulatory framework is Know Your Customer (KYC) norms which should best be based on an Aadhaar ID and age verification process.

The Bill also fails to introduce any responsible gaming (RG) mechanisms that can be found in many successful national regulations on gaming, gambling and betting over the world.

Such tools often include a national self-exclusion system, gaming time and betting amount limits, rules and restrictions for advertising and marketing, requirements for providing easy one-click access to RG solutions and mental health support by operators, among others.

With India having undoubtedly started to realize that a comprehensive national regulatory framework is the only way forward towards achieving a truly safe gaming environment, it is just a matter of time until all issues, including proper player protection, are addressed in a meaningful and sustainable manner.

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