Gaming Sector
- October 10, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Gaming Sector
Subject: Science and Technology
Context:
A task force set up by the Ministry of Electronics and Information Technology has prepared a final report of its recommendations to regulate the online gaming industry in India.
Key recommendations:
- It proposed a central-level law for online gaming -for real money and free games of skill.
- Casual games with no real money elements may be kept outside the scope of such rules, unless a high number of users in India, or permit the publication or transmission of inappropriate content like violence, nudity, addictive content or misleading content.
- A regulatory body for the online gaming industry
- A three-tier dispute resolution mechanism, similar to that prescribed under the Information Technology Rules, 2021.
- 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.
- These platforms will also be treated as ‘reporting entities’ under the Prevention of Money Laundering Act, 2002, and will be required to report suspicious transactions to the Financial Intelligence Unit-India.
- Regulation:
- MeitY may act as the nodal ministry to regulate online gaming, except for the e-sports category on which the Department of Sports can take the lead.
- Certain other aspects of online gaming could be regulated by the Information and Broadcasting Ministry, while the Consumer Affairs Ministry can regulate the sector for unfair trade practices.
- It may propose a list of prohibited user harms –offshore betting apps– that will not be permitted.
Concept:
- There is currently no regulatory framework to govern various aspects of online gaming companies such as having a grievance redressal mechanism, implementing player protection measures, protection of data and intellectual property rights, and prohibiting misleading advertisements.
- Legal Jurisdiction: The state legislators are, vide Entry No. 34 of List II (State List) of the Seventh Schedule of the Constitution of India, given exclusive power to make laws relating to betting and gambling.
- Online gaming so far has been a state subject
- Types of Games in India: Most Indian states regulate gaming on the basis of a distinction in law between ‘games of skill’ and ‘games of chance’.
- Game of chance (Gambling): Games of chance are all those games that are played randomly. These games are based on luck. A person can play these games without prior knowledge or understanding. For instance, dice games, picking a number, etc. Such games are considered illegal in India.
- Game of skill (Gaming): Games of skill are all those games that are played based on a person’s prior knowledge or experience of the game. A person will require skills such as analytical decision-making, logical thinking, capability, etc. Some games might also require some initial training to win. Such games are considered legal by most of the Indian states.
- Status of Type of Games Allowed:
- Staking money or property on the outcome of a ‘game of chance’ is prohibited and subjects the guilty parties to criminal sanctions.
- Gambling is a non-cognisable and bailable offence in India.
- However, placing any stakes on the outcome of a ‘game of skill’ is not illegal per se and may be permissible.
- Law laid down by the Supreme Court in 1957 (Chamarbaugwala cases) — competitive games of skill are business activities protected under Article 19 (1) (g) of the Constitution.
- Rummy and horse racing have been classified by the courts as games of skill that do not come under the purview of gaming laws
- Staking money or property on the outcome of a ‘game of chance’ is prohibited and subjects the guilty parties to criminal sanctions.
Some legal provisions:
- The Lotteries Regulation Act, 1998:
- The lottery is considered legal in India.
- The lottery should be organised by the state government and the place of Draw should be in that particular state.
- Foreign Exchange Management Act, 1999:
- Remittance of the income generated from lottery winning, and racing/riding is prohibited under this Act.
- Information Technology Rules, 2011:
- Under these rules, any internet service provider, network service provider, or any search engine will not host any such content which directly or indirectly supports Gambling