Rules for Online Gaming Regulation in India: The Endgame or We Need to Level Up?

Ministry of Electronics and Information Technology (MeitY) has notified the new online gaming rules by amendment to the existing Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. ¹ The primary intention has been to “address the twin challenges of catalyzing and expanding online gaming innovation while protecting citizens from illegal betting and wagering online” across the country. It aims to minimize the harms associated with online gaming, especially those related to financial losses and other negative consequences, including “psychological harm.” It has also been stated that these new rules are intended to promote the gaming industry sector in the country by providing uniform guidelines and active involvement of industry stakeholders in regulating this sector. ² It may also be hypothesized that this shall reduce uncertainty regarding how these “games” are regulated across different states of India, unlike previously, where some state governments had banned certain digital online games, given their possible role in causing increased rates of problematic gambling and suicide, especially among children and young adults. ³

In this article, we critique the lacunae of these new rules, especially in the context of foreseeable challenges during the operationalization of the provisions. We also offer suggestions for effectively implementing these new rules on the basis of the evidence from other countries and our professional experience. We also discuss other possible complementary policy measures that should be adopted to supplement these new rules to minimize harms associated with maladaptive patterns of gaming and gambling, especially among the most vulnerable.

Salient Regulatory Mechanisms under the New Online Gaming Rules, 2023

An online real-money game has been defined as an “online game where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit.” The term “deposit” in the above definition has been used for “deposit made or committed to, in cash or in kind, by the user for participating in an online game.” Also, “winnings” refers to “any prize, in cash or kind, which 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.” Thus, permissible online games under the new rules will include those that either do not involve real money (i.e., free-to-play) or have been assessed and certified as permissible online real-money games (PORMG). This certification shall be done by the self-regulatory bodies (SRBs) that shall be constituted as per the new rules.

Further, it lays down certain guidelines for the functioning of the SRBs while performing their prescribed functions. Among other things, the SRB has to publish and timely update the relevant information about its functioning (e.g., list of SRB members and theframework used for the verification of online real-money games before giving permission) and the verification of online real-money games (e.g., list of online real-money games assessed by the SRB and those given permission or rejected along with reasons) in the public domain through either its website, mobile-based application or both. Importantly, though the rules allow SRBs to make their own framework for verifying online real-money games before giving them permission, they give certain guidance on things that this verification framework shall include.

Additionally, the SRB also casts certain duties on the online gaming intermediaries (OGIs; platforms that offer one or more than one online game) to further protect the players from online-gaming-related harms, especially financial losses.

Not Yet the Endgame: Lacunae and Implementation-Related Challenges

Functioning of SRBs

The new rules stipulate certain guidelines for the online gaming industry to constitute SRBs and make it mandatory to have at least one member nominated by the government in them. The SRB has been tasked with the assessment and certification of games as permissible or not. This approach falls under the rubric of “co-regulation” and expects the industry stakeholders to abide by certain rules and regulations proposed by the government with minimum interference from any governmental agency. Co-regulation of online gaming has certain perceivable benefits as a shared responsibility framework. This is likely to promote the active involvement of various stakeholders for an efficient regulation of India’s rapidly growing online gaming industry. In this arrangement, there shall be a face-off between the competing commercial interests of the gaming industry and the public health interests. Moreover, the co-regulation framework’s effectiveness is determined largely by how well it is implemented. Hence, it is critical to lay down the procedures and standard operating procedures for the functioning of the SRBs. While the rules stipulate the composition of the SRBs and have provisioned for a multi-stakeholder representation, some of the crucial implementation issues, such as the minimum number of members required to determine the quorum for its meetings, review process, and decision-making process (unanimous or by consensus), are yet to be addressed. These issues, while seemingly mundane, are crucial for the effective functioning of the SRBs and ensuring that the co-responsibility model proposed in the rules is a success. While the possibility of efforts of one or more stakeholders circumventing the provisions of the new rules may be considered speculative at the moment, and the future holds the answer to how it shall roll out, certain developments so far suggest that these concerns are not baseless. For example, the draft rules had introduced the requirement that the gaming companies should obtain “no bot” and “random number generation” certificates for all PORMGs, but it was dropped from the final rules’ notification, thereby diluting the effectiveness of the provisions. Both these measures were aimed at providing greater assurance to the players that outcomes of a particular online game involving real money were statistically random in the case of card games and that they have an unbiased chance of winning against an opponent who is a real human player.

Limited Scope of Online Real-Money Games

The move to ban online real-money games that involve wagering on any outcome(s) or are not deemed suitable by the online gaming SRB’s verification framework is a welcome step, as there has been sufficient scientific evidence to suggest that engaging in such games (especially in adolescents and young adults) is associated with a significantly higher risk of developing gaming disorder and experiencing gambling-related problems than other games.^{4, 5} Apart from engaging in real-money online gaming, a variety of other related practices, such as opening (or buying) loot boxes, e-sports betting, and token wagering (i.e., betting of tokens or cryptocurrency coins instead of real money on the outcome of one’s game) have also been linked with problem gambling.^6–8 Further, making in-game purchases or microtransactions in the form of loot boxes has also been linked with an increased risk of developing gaming disorder. ⁹ However, the current rules are either permissive or unclear about the status of these potentially addictive and/or harmful online gaming practices or features. Thus, greater clarity is required about their status under the new rules.

Adherence to the Regulations and Implications of Contravention

Loot boxes were banned by the government of Belgium, but it was found that most gaming companies either did not adhere to the ban or found ways of circumventing it. ¹⁰ This also underlines an important challenge in successfully implementing the newly proposed online gaming rules in India. Importantly, the new rules have not specified punishment for violating the new online gaming rules by either the SRBs or OGIs. Thus, several of the proposed industry-driven self-regulatory measures in the current rules should also be made legally binding on gaming companies and OGIs to ensure adequate compliance, with the inclusion of specified punishments for its contravention.

Framework for Assessing the Games

The lack of specific guidelines for assessing online games leaves scope for a high degree of subjectivity and the possibility of ineffective frameworks being adopted by SRBs. Thus, more specific operational guidelines should be framed for the assessment and certification of online games by the SRBs. For example, the recent Swiss Youth and Media Act has proposed into the legal framework of the country, among other things, the inclusion of available systems to rate video game content, such as the Entertainment Software Rating Board (ESRB) and Pan-European Game Information (PEGI), as an attempt to prevent minors from gaming-related harms. ¹¹ Likewise, a rating system for classifying the addictive and/or harm potential of digital games should also be created, akin to ESRB or PEGI available for rating appropriateness of games’ content, based on the inclusion of violent (e.g., killing of people in-game) or mature (e.g., sexual depictions or themes) topics in the same.^{12, 13} An assessment tool or framework that evaluates different game-related characteristics (e.g., degree of intermittent reinforcement strategies employed in gameplay, massively multiplayer online role-playing games, and degree of immersive avatar-based experience) could be useful in refining potential risks information or labeling for digital games.

Moving to the Next Level: What More Should be Done?

Strengthening the Focus on the Most Vulnerable

The strategies or measures needed to comprehensively address the public health harms due to online gaming behaviors should involve a combination of different approaches: (a) measures to reduce the harms associated with gaming to all, (b) measures to limit the exposure among those at risk or with signs suggestive of hazardous use, and (c) measures to provide adequate support and treatment services to people experiencing gaming-related harms or distress. In addition, these measures should not impede the development, availability, and accessibility of online games. Our understanding of the etiopathogenesis of gaming disorder and the harms associated with gaming is still evolving. Hence, balancing these two sets of driving principles concerning the country’s gaming industry is imperative. Although it is difficult to quantify how much to tilt in favor of either of these two, the interests of the most vulnerable must be at the core of these decisions. The new rules mainly focus on measures limiting online games’ availability that put users at a higher risk of experiencing financial and/or psychological harm. The main thrust is on banning online real-money games that involve wagering on the outcome(s) in the game. Measures such as displaying labels and warning messages about possible harms with online games, providing full disclosure about the amount of money spent by players both directly or indirectly in the game, and age rating of online games depending upon their content should also be equally emphasized. This will empower the users to self-regulate gaming and reduce related harms. Given that the new rules acknowledge that some of those who engage in gaming are likely to experience adverse consequences, the resources to support and help those at risk and those experiencing the adverse consequences and their caregivers must be created in the country.

Provisions Targeted at Minors

There is a need to introduce additional protective measures for safeguarding vulnerable population groups, especially children and adolescents. Family can play a key role in protecting the interests of this group. The role of parental knowledge, involvement, and control in reducing problem gaming and gambling behaviors should be a key focus area for policymakers and researchers. The available literature, mainly from Western countries, suggests that parents could modulate their child’s internet and digital media use (including gaming) and play a favorable role in multiple ways, including co-viewing or co-playing, practicing good digital media use habits themselves and being a good role model for their children; imposing limitations on the extent of digital media consumption for their children with the active involvement of the children in deciding the mutually agreeable daily limits for internet use or gaming; enforcing restrictions on the types of digital media content that can be accessed; and engaging in conversations with their children about the themes, significance, perspectives, and impacts of the digital media they consume. ¹⁴ The parents and other family members should be supported in playing a constructive role. This should include information about the risk of developing gaming and gambling disorders with playing certain online games, educating them about important risk factors and early warning signs and symptoms (e.g., spending increased time or money on online gaming), and informing them of the available resources for seeking help or more information about the same. Public education about the risks of excessive gaming and covert gambling through online games should also be emphasized. School-based prevention strategies such as teaching students about healthy digital media habits as part of their curriculum and sensitizing them about the potential risks associated with its inappropriate use could be an effective approach to reduce the risk of developing problematic online gaming, gambling, and internet use in them. ¹⁵

Investment into Research on Public Health Implications

There is also a need to invest in research to understand the gaming disorders and harms associated with gaming. The observations from other countries further support the need for the same. The experience from other countries suggests that several measures aimed at limiting the availability or accessibility of online games and harm reduction might not always effectively reduce the time spent on gaming and associated harms in the real world. The South Korean government introduced the “shutdown” policy in which children aged 15 years or below could play digital games only for a certain fixed duration on a given day and week. It also specified the time of the day during which they could play games, banning gaming during late night or school time. However, a subsequent study assessing the effect of this policy reported it to be ineffective in reducing the daily time spent on the internet or improving children’s sleeping habits on a long-term basis over four years following its implementation. ¹⁶ Further, it was also noticed that children found ways of circumventing these restrictions by creating fake adult accounts or using virtual proxy networks to access online games. This limits the effectiveness of restricting access as an isolated policy measure for reducing disordered or problematic gaming. ¹⁷ Similarly, the Chinese government had introduced the “fatigue system” in which minor players (aged less than 18 years) were discouraged from playing online games after crossing a certain period of time by progressively cutting down their in-game rewards (e.g., digital objects required for gaining in-game powers/achievements) or experience points (e.g., required to progress one’s level or stage in the gameplay) with increasing duration of gameplay. Also, frequent warning messages would appear on the gamer’s device, alerting them about their excessive gaming time and the harms of excessive gaming. This policy measure is effective in significantly reducing the desire to return to playing online games among players and was reported to be more effective than the shutdown policy in reducing the time spent on gaming in the long term. ¹⁸ Thus, monitoring gameplay duration and introducing relevant regulatory measures like the “fatigue system” should be considered, especially among minors.

In conclusion, the new online gaming rules could pave the way for the much-needed regulatory framework that prioritizes the well-being of those engaging in gaming behavior. However, to ensure that these rules help achieve the desired outcomes, it is important that they are implemented in letter and spirit. Potential challenges to implement these rules should be addressed urgently and effectively. In addition, these rules need to be supplemented with the additional measures suggested above to ensure that the growth in the gaming industry goes hand in hand with the well-being of the country’s citizens and that going ahead their interests are at the core of this journey.