On April 6, 2023, India introduced a new legal regime for operators of online games by introducing amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Intermediary Rules”) (amendments are referred to as “Gaming Amendments”).
The journey to the introduction of the Gaming Amendments began in January 2023, when the Ministry of Electronics and Information Technology (“MEITY”) proposed a novel co-regulatory regime for online gaming intermediaries (“OGI”) through proposed amendments (“Draft Rules”) to the Intermediary Rules. Our analysis of the same can be found here.
After an intense series of consultations involving inputs from diverse stakeholders, ranging from gaming operators, intermediaries, investors, parents, non-governmental organisations, etc., MEITY has notified the Gaming Amendments.
The Gaming Amendments are a positive step in a dynamic sector and provide a regulatory baseline for an industry that has for long been plagued with uncertainties, disruption, and bad conduct by outliers. Hence, the journey from conception to a binding regime in a four-month period is laudable.
While the innovative co-regulatory governance mechanism promises to provide further impetus to the digital gaming economy of India, it represents some key differences from the Draft Rules, and contains some wrinkles, which may be ironed out in the days to come.
In this article, we will examine a few of these key changes and their impact.
1. A Wider Ambit
Unlike the Draft Rules (which focussed, by definition, on real money games), the Gaming Amendments include definitions covering all games that are offered on the internet. While free to play games are normally permissible, entities which offer them are classified as Online Gaming Intermediaries (“OGI”).
Most of the substantive obligations under the Amendments, however, apply to the operation of real money games (“Online Real Money Games”), which users can play after making “deposits”, a term which is now undefined.
This leaves open the possibility of future regulation, and of courts (and more concerningly, regulators and law enforcement) or even intermediaries, seeking to treat playing fees, or payments for in-game items, as deposits and thereby regulate “free to play” E-Sports as Online Real Money Games. As many stakeholders in this space have commented, a narrower, objective definition of deposits, or a clear exclusion of the above types of payments (perhaps in FAQs) may help maintain the focus of the Amendments.
2. A Lighter Burden for SRBs
The Gaming Amendments, in a welcome move, have simplified the compliance regime for self-regulatory bodies (SRBs). For instance, while the Draft Rules required SRBs to submit reports to the Central Government on registration of each online game, along with the bases for such registration, the Gaming Amendments require SRBs to only publish a report on their website detailing the list of verified online real money games, period of validity, bases for approval and details of suspension or revocation.
In perhaps yet another welcome move, where the registration of a SRB is revoked, the Central Government has the power to issue directions to OGIs offering Online Real Money Game (“Real Money OGIs”) and intermediaries for continued access by users to online real money games that were verified by the SRB. This will provide clarity to intermediaries who may be hosting these types of games, Real Money OGIs who may be offering them, and users who may be playing them.
3. Clearer Obligations for OGIs
In a welcome move, an elaborate section on obligations for OGIs set out in the Draft Rules has been removed and fused with the obligations applicable to significant social media intermediaries, with specific obligations of Real Money OGIs set out as additional points. In addition to the requirements around KYC and user verification, the mischief of financing or facilitating credit for players of Online Real Money Games by the Real Money OGIs has also been blocked. Compliance standards for Real Money OGIs – such as notifying users of changes in terms and complying with law enforcement requests or court orders – are more stringent, even when compared to significant social media intermediaries.
The Central Government has the power to notify OGIs who do not offer Online Real Money Games to be classified as Real Money OGI, based on certain parameters such as national security, public order and a very broadly defined concept of ‘harm’ (“Harm”). Such OGI will need to comply with certain obligations of Real Money OGIs including appointment of a chief compliance officer, having a physical contact address in India, implementing grievance redressal mechanism, registration with the SRB and displaying visible mark of such registration and putting out detailed terms and conditions.
Again, it might have been more prudent for the Gaming Amendments to focus on the operation of Online Real Money Games only and limit the ambit of the OGI to entities engaged in the ‘primary activity’ of offering them. Clarity to this effect in FAQs and a limited use of the powers of MEITY to notify additional Real Money OGIs, may help achieve this.
4. Advertisement-related obligations of Intermediaries
Unlike the Draft Rules, the Gaming Amendments also emphasise on the roles of non-gaming intermediaries like App Stores and advertisers. Whereas the Draft Rules only required intermediaries to check if online games were registered and publish details, the Gaming Amendments require intermediaries, as part of their due diligence obligations (which since 2022 include a positive obligation to make reasonable effort), to ensure that OGIs do not make available online games that cause user harm, or online real money games that are not verified.
Intermediaries are also restricted from advertising non-permissible Online Real Money Games as well any Real Money OGIs offering them. This area is likely to see much regulatory focus as has been foreshadowed by a recent advisory issued by the Ministry of Information and Broadcasting on advertisements, including surrogate advertisements of online betting platforms, which is in fact a continuation of the earlier advisories since June 2022, as restricting advertisements and surrogate advertisements by online betting platforms.
Requiring intermediaries to restrict OGIs offering online games that may cause user harms may have a chilling effect, and better approach may be to require SRB verification for Online Real Money Games, and have an “actual knowledge” standard for all other online games, in relation to user harm.
5. The Harm Standard
In a departure from the Draft Rules, the Gaming Amendments emphasise on user harm. SRBs are required to prescribe mechanisms and standards to prevent Harm, and the Government is empowered to make rules governing online games (which may not be Online Real Money Games) to prevent harm and intermediaries are required to make reasonable efforts to ensure an online game (irrespective of deposits) that cause user harm is not published.
This makes it important to have a predictable and objective definition of Harm. While defining it as currently done, i.e. “as any effect which is detrimental” may be tempting, given the laudable aim of protecting users, doing so in an area where there are necessarily winners and losers is especially problematic. The definition of harm under other draft legislation like the Draft Digital Data Protection Bill, 2022, may be useful here.
6. Mandatory Registration
Unlike the Draft Rules, which left open a door for games that were not verified by SRBs, the Amendments mandatorily require that Online Real Money Games be verified by a SRB to be permissible.
Given the thousands of games and formats which exist, neither the fact that games may be verified based on self-certification for a three-month period, nor the fact that parts of the Amendments themselves come into effect three months after the formation of three SRBs, may help every real money game get validly certified in time.
SRBs, which will have to create frameworks to ensure responsible gaming, protect against harm, safeguard children and age gate them, ensure that games do not violate the sovereignty and integrity of India, security of the State, friendly relations with foreign states and public order, and protect against fraud, addiction, and even financial loss, will likely have their hands full in the early days of their registration.
Much more concerningly, if SRBs are required to ensure that all verified games do not involve “wagering on any outcome”, they may be hard pressed to approve any Online Real Money Games at all. There is a case for relevant test here to be linked to ‘gambling’ rather than merely wagering, as this distinction has been examined and clarified by courts over several decades.
Stakeholders have emphasised on the difficultly of complying with KYC obligations under the Draft Rules. While the Amendments have fortunately limited the above obligations to the time before acceptance of a deposit, an opportunity for staged KYC obligations (as is the case with prepaid instruments) may have been lost out on.
8. SRBs and Safe Harbour
While the Draft Rules provided for a game wise (hopefully, more detailed and hence reliable) report to the Central Government, the Amendments merely state that MEITY “may” consider a general list of approved games published by an SRB, while making decisions on orders under 69-A of the IT Act.
A very important improvement that has been made in the Gaming Amendments relates to the interaction between SRBs and the Central Government. While the harder powers, i.e. to suspend or de-register SRBs remain, the Central Government can now engage with SRBs on individual formats and seek their de-registration after providing an opportunity of hearing.
In summary, while there are a lot of positive steps in the Gaming Amendments, there is a case to further refine some of the elements through clear guidance and clarification to avoid ambiguity for intermediaries, including OGIs, as well as provide clear guidance to SRBs.
 Draft Rules 2(1)(qa) and (qb)
 Rule 2 (1) (qa)
 Rule 2(1) (qc)
 Draft Rules had defined deposit to mean deposit made or committed to, in cash or kin kind, by the user for participating in an online game.
 Draft Rule 4B (7)
 Rule 4A (4)
 Rule 4A (13)
 Draft Rule 4(A)
 Rules 3, 4 and 5 of the Gaming Amendments
 Rules 4(10), (11) and (12)
 Rule 4(1)(13)
 Rules 3(1)(f) and 3(1)(j)
 Rule 4C
 Rule 4C(a)
 Rule 4C(1)
 Amendment to Rule 3(1) (b) (ii) of Intermediary Rules
 Amendment to Rule 3(1)(b) and addition of Rule 3(1)(b)(ix)(x) and (xi)
 Shreya Singhal vs Union of India AIR 2015 SC 1523
 Section 2(10) of the Draft Digital Data Protection Bill, 2022
 Draft Rules did not use the word ‘permissible’ in the definition of online games or online gaming intermediaries
 Rule 2(1)(qf)
 Rule 4A(3)(a)
 Rule 3(1)(B)(12)
 Rule 4A(12)