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Here's how new rules can give a big push to India's online gaming industry

Here's how new rules can give a big push to India's online gaming industry

The proposed rules for the online gaming industry will likely spur more entrants, boost investor confidence and create new jobs in the sunrise sector

The proposed rules for the online gaming industry will likely spur more entrants, boost investor confidence and create new jobs in the sunrise sector The proposed rules for the online gaming industry will likely spur more entrants, boost investor confidence and create new jobs in the sunrise sector

The government’s move to regulate e-sports and place higher due diligence requirements on online gaming companies is a shot in the arm for the sunrise sector as clear rules are expected to spur more entrants, boost investor confidence and create new jobs.

Recently, the Indian government recognised e-sports as part of mainstream sports and made the Ministry of Electronics and Information Technology (MeitY) the nodal agency for all online gaming-related matters. In the first week of January, MeitY released draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to regulate the industry that has revenues of $1.2 billion, per Invest India—the national investment promotion and facilitation agency.

The proposals legalise the status of the online gaming industry, spell out regulatory compliance requirements and streamline governance processes. MeitY has invited comments till the middle of the month. “While there has already been a steady growth of investor interest within the online gaming industry, the regulatory certainty that the rules for online games will provide will surely provide a fillip in terms of investor sentiment,” says Roland Landers, CEO of industry body All India Gaming Federation.

Some of the key proposals include setting up one or more self-regulatory bodies for the industry, mandatory KYC of players as per Reserve Bank of India norms as well as setting up a grievance redressal mechanism. As the compliance obligations proposed in the rules are largely in line with industry best practices, many gaming companies are already following them. Industry body E-Gaming Federation (EGF), for instance, has established a self-regulatory standard in the form of a Code of Conduct involving KYC, SSL-level encryption, RNG certification, and other risk-flagging mechanisms to protect players. Its CEO Sameer Barde says they also mandate audits by the Big Four audit firms periodically. “Moreover, our flagship ‘Responsible Play’ model involves meeting requirements that ensure assisting vulnerable players, protecting player data, ensuring secure payments, and maintaining responsible marketing.”

The norms will only introduce a well-defined uniform regime across the ecosystem and bring in more safety and transparency for players, the experts say. Though the compliance burden may not be high, there are challenges for gaming companies in the form of age-gating and verification of players by self-regulatory bodies, implementing KYC mechanisms at RBI-mandated levels for small-value customer accounts and satisfying customer grievances and law enforcement requests within an aggressive time frame, says Arun Prabhu, Partner & Head-Technology Media Telecom, Cyril Amarchand Mangaldas. “Creating, obtaining and maintaining registrations for games with the self-regulatory bodies, especially if there are numerous applicants for such registrations, will also be a challenge,” he adds.

While the challenges persist, the industry and the other stakeholders feel that the government’s move is a step in the right direction. 

@SaysVidya

Published on: Jan 21, 2023, 2:47 PM IST
Posted by: Arnav Das Sharma, Jan 21, 2023, 2:43 PM IST