Three collectives, representing over 200 Indian online gaming companies, are set to reach out to the ministry of electronics and information technology for recognition as self-regulating organisations (SROs), two people familiar with the development said.
SROs will be the mainstay of the self-regulatory mechanism for online gaming, and any gaming firm looking to offer products in India must be registered with at least one of them.
“Before hosting or publishing or advertising an online game for a consideration, (companies must) ascertain from an online gaming intermediary and verify from the concerned self-regulatory body…” according to the rules, uploaded for public feedback on 2 January.
SROs will have to be approved by the government to start functioning.
According to one of the two people cited above, SROs will have to deal with two major challenges: ensuring that verified real money games are based on skill and not chance and creating a level-playing field to ensure gaming companies trying to establish a hold in the industry can be incorporated. “There have to be two tests to meet the first challenge, a subjective qualitative test, which ensures games meet the approved definition of permissible games. And a quantitative test to ensure that the games are dependent on the skill and not on chance,” he said, seeking anonymity. “Two, SROs will have the burden to ensure the space is not restrictive. It must allow new players to be incorporated.”
“The government will be taking a call on approving SROs once they apply,” the second person, an official familiar with the matter, said, also seeking anonymity. The ministry is likely to come out with a set of FAQs, or frequently asked questions, to address issues, he added.
According to experts, it will be imperative for the ministry to do so since there is still a lack of clarity around certain provisions of the amended rules, which require clarification.
“The IT Rules explicitly state the obligations of SROs without being too prescriptive,” said Vivan Sharan, a partner at tech-policy think tank Koan Advisory. “For instance, SRO must be registered in India under the Companies Act, their members must represent a segment of the Indian gaming industry, and they must follow local laws. Additionally, SRO Boards should include relevant experts from diverse fields, such as mental health and education, as well as a government nominee. The SROs must also prove financial capability to discharge the obligations. Most importantly, once recognised, SROs must operate independently and demonstrate transparency in standard-setting and certification.”
According to the new rules, any online real money game has to be verified by a self-regulatory body. It should not involve wagering on any outcome, and the online gaming intermediary and its products have to comply with the provisions of any law relating to the age at which an individual is competent to enter into a contract and the framework made by the online gaming self-regulatory body.
The stakeholders raised the issue of e-KYC requirements that were proposed under the new rules, mandating all gaming platforms participating in financial transactions (cash or kind) to verify the identity of a person. The rules suggest that a gaming firm must do this via mechanisms laid down by the Reserve Bank of India.
“There are many conditions that SROs will need to enforce, including general lawful conduct and distinction from betting and gambling, which are all state subjects, besides establishing demonstrable safeguards against different forms of behavioural and financial harms,” Sharan said.
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