For finalizing the draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules (“the rules”) the Ministry of Electronics and Information Technology (“MeitY”) is holding public consultation. The keys points of the meeting are as follows:
1. Gaming Industry Associations cannot become self regulatory bodies (“SRBs”) until approval from MeitY is received.
All India Gaming Federation (AIGF), e-Gaming Federation (EGF), and Internet and Mobile Association of India (IAMAI) pressed to become self regulatory bodies however the MeitY clarified that they cannot become SRB until they are vetted and approved by MeitY.
2. Definition of Online game
Draft rules define “online game” as 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.
However, the representatives of various Online gaming companies recommended that the definition of online game must be narrowed down to include only real money games. Stakeholders wanted more clarity on the real money games which do not include betting and gambling.
Queries were raised about the status of “free to play games” and distinction between game of skill and game of chance. However, Mr. Rajeev Chandrasekar clarified that online wagering on the outcome of any game is illegal.
3. Power of states to regulate online gaming
Mr .Chandrasekhar pointed out that these online gaming rules will not override law made by state legislatures. He further added that MeitY could not guarantee protection against state-level authorities but citing compliance with these rules should count as sufficient defense and regulating offline gambling and betting will remain within the preview of states.
In response to the question whether a SRB can register the similar game in one state if the game is banned in another state, Mr. Chandrasekhar stated that the rules need to operate without ambiguity and must not give any additional leeway to states to legislate on online gaming and gambling. The ministry is already re-examining Rule 3(1)(b)(ix) under which the online gaming company must abide by all laws that are in force in India, including state laws.
3. Reducing KYC compliance burden
Various stake holders wanted KYC burden to be reduced. It was suggested that gaming intermediaries could be treated as small Pre Paid payment instruments (PPIs) and hence their KYC compliance burden should be reduced as RBI has lowered the KYC compliance burden for small PPIs.
However, MeitY stated that KYC compliance requirements are non negotiable.
4. Similar standards for SRBs.
Concerns were raised that multiple SRBs may be registered under the said rules may have different standards therefore member gaming companies could do forum shopping in search of more lenient SRBs. Hence there is a need to prescribe similar standards for all the SRBs.
The stakeholders were demanding the dos and don’ts to be prescribed by MeitY. A few of them wanted industry experts, educationalists and other social stakeholders to prescribe do’s and don’ts instead of government.
However, Mr. Chadrasekhar said government will not allow SRB’s to mushroom even though multiple SRBs may be registered under the rules. Furthermore, the government did not want to be too prescriptive in the rules instead wish to lay down the principles to followed by SRBs in their functioning. He suggested two ways for function of SRBs (i) Follow do and don’ts prescribed by government or (ii) evolve a code of conduct as an industry.
Mr. Chandrasekhar was not also in favour of suggestion of including a judicial member in Board of directors.
5. Test for determining game of skill and game of chance
Stakeholders demanded that in addition to qualitative test based on courts judgments SRBs should also have data driven, objective and quantifiable way of differentiating between game of skill and game of chance. Chandrasekhar said that this could be figured out within the SRB.
6. Pre launch registration
Stakeholders suggested registration of games with SRBs after their launch . If the request for registration is not approved then game could be withdrawn from the market. Stakeholder’s divergent views on pre launch registration is owing to the fact that pre-launch registration with the SRB posed risks to their intellectual property and could lead to trade secrets being leaked.
They proposed self certification instead of pre launch registration with SRB as the game could run for six to 12 months while the SRB did the registration in the background.
Mr. Chandrasekhar inquired about the consequences for a gaming company if its self-certification goes wrong.
7. Additional due diligence requirement for significant online gaming intermediaries
Stakeholders demanded that size and number of users must be considered before imposing additional due diligence requirements on online gaming intermediaries . In comparison to other intermediaries who have 72 hours to comply with government’s directive Online gaming intermediaries have only 24 hour to comply with such orders.
Mr. Chandresekhar responded that the government is thinking to fix the time of 24 hours for all the intermediaries.
8. Standards for RNG and NB certification
As the proposed rules are silent about requirements for issuing random number generation (“RNG”) and no bot certificates, stakeholders suggested that International Standards such as ISO 17025 could be adopted to create a standardized framework for SRBs.
9. Whether cloud service providers would also have to verify with SRB
In response to the question whether a cloud service provider (CSP) would also have to verify with the SRB if the intermediary is a registered entity given that CSPs usually do not have visibility into the content that their clients may host or store on their platforms.
In response Mr. Chandrasekhar said that even a CSP have a responsibility and would not be given a free pass. CSPs would have to ensure that gambling would not be offered via their services.
Source : Newslaundry