Online gaming industry in India

A task force set up the Ministry of Electronics and Information Technology has prepared a final report of its recommendations to regulate the online gaming industry in India.

Details –

The task force has proposed the creation of a central regulatory body for the sector, clearly defining what games of skill and chance are, and bringing online gaming under the purview of the Prevention of Money Laundering Act, 2002.

Recommendations of the task force –

• A central-level law for online gaming should apply to real money and free games of skill, including e-sports, online fantasy sports contests, and card games etc.
• Casual games with no real money element in the form of stakes may be kept outside the scope of such rules, unless they have a high number of users in India.
• Creating a regulatory body, which will determine what qualifies as a game of skill or chance, and accordingly certify different gaming formats, seek compliance etc.
• A three-tier dispute resolution mechanism, similar to that prescribed under the Information Technology Rules, 2021 for online streaming services.
• Any online gaming platform – domestic or foreign– offering real money online games to Indian users will need to be a legal entity incorporated under Indian law.

Why a central-level law?

• Online gaming so far has been a state subject, but state governments find it extremely difficult to enforce certain rules like geo-blocking certain apps or websites within the territory of their state.
• Also, rules passed in one state are not applicable in another, which has caused inconsistency.
• State governments also do not have enough blocking powers like the Centre to issue blocking orders for offshore betting sites.

Online gaming market in India –

• The revenue of the Indian mobile gaming industry is expected to exceed $1.5 billion in 2022, and is estimated to reach $5 billion in 2025.
• The industry in the country grew at a CAGR of 38% between 2017-2020, as opposed to 8% in China and 10% in the US.
• India’s percentage of new paying users (NPUs) in gaming has been the fastest growing in the world for two consecutive years, at 40% in 2020 and 50% in 2021.