The Ministry of Electronics and IT has decided that an approval from self-regulatory organisations (SROs) will be necessary to operate if the games are money-related. There was previously a debate on classifying the games as games of chance or games of skill. The Ministry now steers clear of this nomenclature. SRO will give the permission, and not the government. It is thus light touch regulation. An online money game is where a user makes a deposit in cash or kind with the expectation of earning on that deposit. There is betting and wagering involved, irrespective of the core content of the game.
SROs will be constituted by giving representation to all the stakeholders. There could be multiple SROs. You have to approach an SRO only when there is money involved in the game, not otherwise. Initially, three SROs will be notified. Later more SROs will be notified.
In the structure of the SROs, we will find people with experience in online gaming, educationist, psychologist, child rights activist and so on. Those should be approved by the government. After application, the gaming company can operate for 3 months. SRO then carries further enquiry, and takes a decision regarding certification.
Even otherwise, online gaming companies are treated as intermediaries protected by section 79 of the IT Act, making them a safe harbour. They are so classified by self-regulatory bodies (SRBs).
This is the decisive first step for comprehensive regulation for online gaming in future to make them viable internationally.
SROs will ensure safety of users, especially children. The gaming companies must specify the risk of addiction and financial loss through repeated warning messages. There should be measures to safeguard against financial fraud.
SROs will ensure a safe framework for the gaming companies. The gaming companies must assign a mark of verification by the SRO on such games. There should be a policy for withdrawal or refund of the deposit. The winnings must be properly regulated. There should be KYC details of the users. There should not be any credit extension or financing by third parties to the users.
The intermediaries will also appoint a compliance person, a nodal contact person and a physical contact address in India. The details must be on the website.