20 May, 2024 | Asia Focus 2024

India's approach to responsible online gaming: Who is leading the charge?

IndusLaw’s Ranjana Adhikari, Srija Ray and Ruhi Kanakia speak on changes surrounding responsible online gaming in India and the organisations leading the change

The real-money online gaming industry in India engages 568 million users (and counting) and is one of the largest online gaming markets in the world, with a current CAGR (compound annual growth rate) of 14%. The industry has attracted investments worth INR 22,931 crore ($2.75bn) in 2023 and holds a market size of INR 16,428 crore, which is predicted to reach INR 33,243 crore by 2028.

With the online gaming industry expanding at its current rate, the number of young users engaging in online games is also expected to rise. Increasingly, new demographics and age-groups are engaging in online games for myriad reasons. With a manifold increase in user base, the ideal of ‘responsible gaming’ has become more relevant for the gaming ecosystem, to balance consumer interests and tackle threats such as money laundering, scams, and addiction to Indian citizens.

Responsible online gaming through India’s regulatory regime

Until last year, in the absence of any central law, online gaming in India was primarily governed by state-level anti-gambling laws that prohibit gambling (i.e., betting on games of chance) but allow games of skill. However, these state-level anti-gambling laws lack provisions for responsible gaming practices. In April 2023, India’s Ministry of Electronics and Information Technology (MeitY) amended the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 introducing regulation of online games at the central level (Online Gaming Rules).

At their core, these new regulations focus on player protection, fair play and globally recognised responsible gaming practices. The Online Gaming Rules propose to regulate online gaming platforms through a light-touch self-regulatory mechanism and by prescribing detailed due diligence obligations, including know-your-customer (KYC) processes, protection of users below the age of 18 and establishing a robust grievance redressal framework, among others. While these practices now find place in regulation, the Online Gaming Rules, though notified, are not in force yet. We are yet to witness the practical impact of these regulations on the industry, as well as the degree of enforcement of these rules by MeitY.

Self-regulation by industry bodies

At present, most responsible gaming practices emanate from an industry-led self-regulatory model. The online gaming sector has been striving to consistently comply with global industry best practices, with operators regularly working alongside government departments and ministries to ensure the industry adopts best practices and functions.

Self-regulatory bodies like the All-India Gaming Federation (AIGF), the Federation of Indian Fantasy Sports (FIFS), the E-gaming Federation (EGF) and the Advertising Standards Council of India (ASCI) have all laid down codes of conduct and best practices to ensure responsible gaming, which are being adhered to by more than 100+ members of each organisation.

In December 2023, the AIGF, FIFS and EGF, in association with the Internet and Mobile Association of India (IAMAI), also issued a ‘Voluntary Code of Conduct’ to be followed by online gaming intermediaries (Code). Through such self-regulatory mechanisms, the online gaming industry in India has collectively undertaken an adherence to globally recognised best practices for online gaming.

Commitment to healthy gaming practices

The Code emphasises the commitment of its signatories to user safety and wellbeing, requiring them to promote responsible gaming practices, exercise caution during online gaming and conduct awareness campaigns on responsible gaming. The FIFS Charter For Fantasy Sports Platforms (FIFS Charter) obligates its members to commit to responsible gaming and adhere to responsible gaming policy.

In addition, the AIGF Online Games of Skill Charter (AIGF Charter) implores members to inform users how to play responsibly and how to access information about responsible gaming practices. This is similar to countries like Denmark, Malta and the UK, where operators are required to monitor user behaviour and take initiative to reach out to users at risk.

Age restrictions

All self-regulatory bodies impress upon their members to implement appropriate age detection tools on their platform to prevent unauthorised access by minors. Members of AIGF and Code signatories are explicitly restricted from offering or targeting any pay-to-play games to or at any person under 18. One responsible gaming feature showcased by the EGF is that it ensures no underage players can access any real-money games.

The Code signatories are also required to prominently display a sign stating “18 or 18+ only” on their platform regarding any online real-money games on their platform. This is similar to practices in countries like Germany, Malta and Denmark, which require operators to deploy age-verification tools.

KYC requirements

Most online gaming operators already conduct identity verification on users before accepting deposits or allowing the withdrawal of winnings. In particular, the EGF stipulates robust KYC processes and account security measures as part of its Code of Conduct.

Members of the AIGF are mandated to conduct identity verification of winners prior to payouts or permitting withdrawals, in line with applicable laws in India, by requesting either the user’s tax identification number, ‘Aadhaar’ number or other identity documents. The Code also requires its signatories to undertake KYC processes for their users as per applicable laws.

Self-exclusion

Self-exclusion involves a user instructing a gaming platform to disable his/her access to their games for a specified period, ranging from hours to months to a permanent exclusion. AIGF mandates its members to establish procedures for users to self-exclude and to inform users of these processes.

Members have to promptly flag or remove the name and details of any self-excluded individual from their marketing databases to prevent sending marketing material within two days of receiving a completed self-exclusion notification. The EGF also ensures that users are given the option to self-exclude as part of its Code of Conduct.

Financial safeguards

The Code, AIGF and FIFS Charters recommend several financial safeguards that must be implemented by gaming operators. The AIGF Charter requires members that hold user funds to set out clearly in their terms and conditions whether user funds are protected in the event of insolvency, the level of such protection and the method by which this is achieved.

In addition, the FIFS Charter stipulates that its members must maintain separate accounts for operational expenses and prize pool funds and pay-outs for winners. This ensures financial integrity. As part of its Code of Conduct for members, the EGF requires members to set strict timelines to process withdrawal requests from users and to ensure that user’s funds are maintained separately.

Grievance Redressal

Players should have a streamlined process for lodging grievances with gaming operators to ensure prompt resolution. The Code, AIGF Charter and FIFS Charter all require members to implement a robust grievance redressal framework to alleviate grievances efficiently and quickly.

Regulated advertisements

The prohibition of gambling product advertisements already has a place under some state-level anti-gambling laws. Additionally, ASCI has issued ‘Guidelines For Advertising of Online Gaming For Real Money Winnings’ which stipulate certain best practices for ASCI members to comply with, including to (i) not target any advertisements of real-money games to any person below the age of 18, (ii) carry the disclaimer “This game may be habit-forming or financially risky. Play responsibly” and (iii) advertisements should not present online gaming for real money winnings as an income opportunity or an alternative employment option.

Initiatives by the government

In addition to self-regulatory practices, various state governments are also undertaking initiatives to promote responsible gaming. For instance, the Government of Karnataka, in collaboration with the All-India Game Developers Forum, is planning to launch a digital detox initiative, offering counselling to help individuals learn effective strategies for managing screen time and cultivating mindful and healthy technology habits.

The EGF has partnered with the Commissionerate of Health Services, Maharashtra, to promote responsible gaming and enhance player safety. Additionally, the Department of Consumer Affairs has announced a collaboration with NIMHANS, Bengaluru, to research disruptive behavioural patterns and develop a pre-emptive model for protecting digital consumers.

Towards responsible and safe gaming

India’s recent regulatory measures reflect a positive step towards promoting responsible online gaming by emphasising player protection, fair play and adherence to global best practices. Coupled with industry-led self-regulatory initiatives and government collaborations, these efforts collectively underscore a growing commitment to the well-being and integrity of online gaming in India.