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Online Gaming Under The Proposed ‘The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023’

Ministry of Electronics and Information Technology (MEITY) has released the draft rules pertaining to online gaming by amending the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. These rules are released by MEITY for the comments by the public and shall remain open for such comments till 17th Jan. 2023. Following additions/amendments has been proposed the new rules:

Definition:

The draft rules have proposed to include the definition of online games and the online gaming intermediaries in the erstwhile rules under 2 (qa) & 2 (qb) respectively. The proposed definition of online games only includes the games which includes stakes whether in cash or in kind and not the casual games that are available on the internet. The following are the proposed definition:

2(qa): “online game” means a game that is offered on the Internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings; Explanation—For the purposes of these rules—

(i) ‘Internet’ means the combination of computer facilities and electromagnetic transmission media, and related equipment and software, comprising the interconnected worldwide network of computer networks that transmits information based on a protocol for controlling such transmission;

(ii) ‘deposit’ means the deposit made or committed to, in cash or in kind, by the user for participating in an online game;

(iii) ‘winnings’ means any prize, in cash or in kind, that is distributed or intended to be distributed to a user of an online game based on the performance of the user and in accordance with the rules of such online game;

2(qb): “online gaming intermediary” means an intermediary that offers one or more than one online game.

Restrictions:

i. The proposed rules have proposed to add sub-clause (ix) to Rule 3(1)(b) to put restrictions on online games coming under the purview of betting, gambling or the games which involves participation of minors.

Self- Regulatory Body:

i. The said rules under Rule 3(1)(ma) has proposed to make it mandatory for the online gaming intermediary to be registered under a self-regulatory body to host, publish or advertise any online game. It also mandates the display of details of such registration on its website, mobile based application or both.

ii. The self-regulatory body shall be registered with the Ministry of Electronics and Information Technology.

iii. Such regulatory bodies may be more than one in number.

iv. Company incorporated under section 8 of the Companies Act, 2013 or a society registered under Societies Registration Act, 1860 can be registered themselves as a self-regulatory body.

Composition of Self- Regulatory Body:

i. an independent eminent person from the field of online gaming, sports or entertainment, or such other relevant field;

ii. an individual who represents online game players;

iii. an individual from the field of psychology, medicine or consumer education, or such other relevant field; and

iv. an individual with practical experience in the field of public policy, public administration, law enforcement or public finance, to be nominated by the Central Government;

v. an individual from the field of information communication technology.

Due Diligence:

i. The online gaming intermediary shall display a demonstrable and visible mark of registration on all online games registered by the self-regulatory body.

ii. The following information needs to be included in rules and regulations, privacy policy, terms of service and user agreements of the online gaming intermediary:

a) All the games offered by the online gaming intermediary.

b) The policy related to withdrawal or refund of the deposit.

c) The expectation of earning winnings.

d) The manner of determination and distribution of such winnings.

e) The fees and other charges payable by the user of online game.

f) The risk of financial loss and addiction associated with the online game.

g) The KYC procedure followed by the intermediary.

h) The measures taken for protection of deposit made by the user.

i) The framework of self- regulatory body under which the intermediary has been registered.

Random Number Generation Certificate:

i. Gaming companies will also have to secure a Random Number Generation Certificate, which is typically used by platforms that offer card games to ensure that game outputs are statistically random and unpredictable.

ii. They will also have to get a no bot certificate from a reputed certifying body.

Both the above certificate with relevant details needs to be published by the intermediary on its website, mobile application or both.

Compliances:

i. Online intermediary also requires to identify and verify the identity of the user (KYC) while commencement of user account-based relationship and it also mandates the procedure for such identification and verification to be similar to the procedure required to be followed by the entities regulated by RBI for the same.

ii. Rules provides for the appointment of Chief Compliance Officer by the online gaming intermediary, who needs to be key managerial personnel or the other senior employee of the intermediary, and must be an Indian resident. He is responsible for:

a. ensuring compliance with the Act and the rules made thereunder.

b. Coordinating with law enforcement agencies and their officers to ensure compliances with their orders and requisitions.

iii. In addition to that, proposed rules also provides for the appointment of a nodal contact person by the online intermediary for coordination with the law enforcement agencies and the officers to ensure compliance to their orders or requisitions. Such contact person must be an employee of the intermediary, other than CCO and a resident of India.

iv. There shall be a publication of physical contact address in India on its website or mobile application or both by the online intermediary for the purpose of receiving communications.

v. An online intermediary shall provide the government with the information under their control or possession, for the purpose of prevention, detection, investigation, or prosecution, of offences under any law within 24 hours of the receipt of an order asking for such information, provided that such agency is lawfully authorised to obtain such information and the order seeking that information is in writing.

vi. Every self-regulatory body registered under these rules shall communicate the fact of recognition of every online game registered with it to the Central Government, along with a report regarding the bases on which it has recognised it as such.

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