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Gaming Law

The Ministry of Finance has issued a notification dated March 07, 2023 (“Notification”), classifying entities that engage in specific activities (see below) related to Virtual Digital Assets (“VDA(s)”) in the course of business, as “persons carrying on designated business or profession” Therefore, such entities are now considered “Reporting Entities” under the Prevention of Money Laundering Act, 2002 and the corresponding rules (“PMLA”).

VDAs are defined as any “information or code or number or token” that is not currency and is generated through “cryptographic means or otherwise”. The definition further specifies that VDAs offer a digital representation of value exchanged, inherent value, or serve as a store of value or a unit of account that can be transferred, stored or traded electronically, and includes notified non-fungible tokens (“NFTs”) or other digital assets[1].

The definition of NFTs includes all tokens that qualify as a VDA, excluding those which enable the transfer of ownership in underlying tangible assets in a legally enforceable manner[2]. The fact that subsequent clarifications have had to be issued to exclude items like subscriptions, gift cards and reward points[3] indicates the broad scope of this definition .

Under the notification Notification, carrying out (or enabling) the following activities would result in classification as a Reporting Entity:

(a) exchange between VDAs and fiat currencies;

(b) exchange between one or more forms of VDAs;

(c) transfers of VDAs;

(d) safekeeping or administration of VDAs or instruments enabling control over VDAs; or

(e) participation in and provision of financial services related to an issuer’s offer and sale of VDA.

(collectively “Regulated Activities”).

Reporting Entities under the PMLA are subject to an onerous and granular set of obligations, including verification of client identity[4] & ownership of the client[5] and purposes behind transactions[6]& record maintenance[7].

While financial institutions and casinos have long been subject to this regime, the Notification may result in an expansion to certain activities carried out by online real money gaming intermediaries[8].

In games, in-game tokens often have value attached to them and can be transferred, stored or sometimes traded. This can be a key mechanism for most games.

Similarly, in-game objects, like collectibles, skins and the like, are often generated either with or without blockchain-based validation. These objects (of value) can be capable of being stored or traded electronically. While they are primarily intended to improve the gaming experience and engagement, potential classification of such assets as VDAs on grounds of having inherent value (example, as tradeable artistic works or instruments of value) can have PMLA implications for gaming companies. Given that players may exchange, craft, improve, or consume in-game objects in the course of gameplay, satisfying reporting obligations in such circumstances may require creating additional technology and infrastructure.

It may be noted that the purchase of in-game tokens is typically enabled through one or more financial intermediaries such as payment gateways or wallet providers, which are already Reporting entities under the PMLA. Thus, the characterisation of an online gaming entity as a “Reporting Entity” is not required. Further, the CERT-In Directions, dated April 28, 2022 (“CERT-In Directions”), already require virtual asset service providers, virtual asset exchange providers and custodian wallet providers to retain transaction and KYC records for a period of 5 (five) years. There are also the KYC requirements proposed under the draft amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Gaming Amendments”).

Given that the Notification is now in force, gaming intermediaries should take note of these changes in the law and evaluate their offerings from a PMLA perspective.


[1] Section 2 (c) (47-A) of the Finance Act, 2022.

[2] Ministry of Finance, Central Board of Direct Taxes, Notification, S.O. 2959(E). (June 30, 2022).

[3] Ministry of Finance, Central Board of Direct Taxes, Notification, S.O. 2958(E). (June 30, 2022).

[4] Section 11-A of the PMLA.

[5] Section-12-AA (b) of the PMLA.

[6] Section 12-AA (c) of the PMLA.

[7] Section 12 of the PMLA.

[8] Rule 2(1)(qa) and Rule 2(1)(qb) of the Draft amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 in relation to online gaming, Ministry of Electronics and Information Technology, Government of India respectively define an “online game” to mean a game that is offered on the Internet and is accessible by a ser through a computer resource if he makes a deposit with the expectation of earning winnings; andan “online gaming intermediary” to mean an intermediary that offers one or more than one online game.

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Photo of Arun Prabhu Arun Prabhu

Partner (Head – Technology) at Cyril Amarchand Mangaldas. Arun special expertise in advising clients in the information technology enabled services, outsourcing and information technology sectors. He was also a member of the Government of India’s working group on the legal enablement of information…

Partner (Head – Technology) at Cyril Amarchand Mangaldas. Arun special expertise in advising clients in the information technology enabled services, outsourcing and information technology sectors. He was also a member of the Government of India’s working group on the legal enablement of information and communication technology systems. Arun was described as a “very effective and highly knowledgeable” lawyer by Chambers and Partners in 2011. He can be reached at arun.prabhu@cyrilshroff.com

Photo of Aarushi Jain Aarushi Jain

Partner in the Technology-Media-Telecom (TMT) Practice at the Mumbai Office of Cyril Amarchand Mangaldas. Aarushi heads the Media, Education and Gaming Practice at the firm. Over the years, she has advised several clients including production houses, new media platforms, K-12 schools and Universities…

Partner in the Technology-Media-Telecom (TMT) Practice at the Mumbai Office of Cyril Amarchand Mangaldas. Aarushi heads the Media, Education and Gaming Practice at the firm. Over the years, she has advised several clients including production houses, new media platforms, K-12 schools and Universities, EdTech and Gaming Platforms,  IT, and New Tech businesses,  Indian and domestic, with a variety of legal, commercial and regulatory issues. She has also been involved in advising clients on cross border structuring, joint ventures and M&A deals in media, education as well as gaming space. A tech enthusiast at heart, Aarushi loves to talk about convergence of tech and media, policy reforms, as well as new age issues including those of AI, NFTs and Metaverse. She can be reached at aarushi.j@cyrilshroff.com

Photo of Anirban Mohapatra Anirban Mohapatra

Partner in the General Corporate Practice at the Bengaluru office of Cyril Amarchand Mangaldas, and is part of the Technology, Media and Telecommunications practice of the Firm.

Anirban regularly advises clients across diverse sectors including healthcare, manufacturing, banking, information technology, automobile, financial services…

Partner in the General Corporate Practice at the Bengaluru office of Cyril Amarchand Mangaldas, and is part of the Technology, Media and Telecommunications practice of the Firm.

Anirban regularly advises clients across diverse sectors including healthcare, manufacturing, banking, information technology, automobile, financial services media and broadcasting on transactional as well as advisory matters. Anirban supports transactions by handling the entire documentation process for large scale technology transactions and advice on emerging trends in the data protection and privacy space. Anirban works with the business teams of clients closely to ideate and evolve legal documentation, policies and best practices based on commercial requirements of clients and interactions with regulators such as the Telecom Regulatory Authority of India (“TRAI”).

He graduated from West Bengal National University of Juridical Sciences, and first joined the firm in 2012. He can be reached at anirban.mohapatra@cyrilshroff.com.

Photo of Mahim Sharma Mahim Sharma

Senior Associate Designate in the General Corporate Practice at the Ahmedabad office of Cyril Amarchand Mangaldas. Mahim specialises in blockchain, data protection and information technology matters. He can be reached at mahim.sharma@cyrilshroff.com