Online Gaming in India

Dec. 28, 2022

Why in news?

According to an official gazette, the Ministry of Electronics and IT (MeitY) is now the nodal ministry regulating online gaming.
MeitY will soon publish rules for online gaming platforms and start public consultation on the regulations.

What’s in today’s article:

The online gaming market in India:

What are the different types of online gaming?

e-Sports: These are video games that were played privately or on consoles in video game stores in the 1990s, but are currently played online in a structured manner between professional players, either individually or in teams.
Fantasy sports: These are games in which the player selects a team of real sports players from several teams and earns points based on how well the players perform in real life. For example,
Online casual games:
- These could be skill-based, where the outcome is heavily impacted by mental or physical skill or chance-based(outcome is heavily influenced by some randomised activity, such as rolling a die).
- A game of chance may be considered as gambling if players bet money or anything of monetary value.

How big is the online gaming market in India?

The online gaming industry grew exponentially during the Covid-19 pandemic.
The revenue of the Indian mobile gaming industry is expected to exceed $1.5 billion in 2022, and is estimated to reach $5 billion in 2025.
The industry in the country grew at a Compound annual growth rate (CAGR) of 38% between 2017-2020, as opposed to 8% in China and 10% in the US.
India’s percentage of new paying users (NPUs) in gaming has been the fastest growing in the world for two consecutive years, at 40% in 2020 and reaching 50% in 2021.

What are the challenges faced by online gaming sector?

Lack of regulatory oversight:
- Online gaming exists in a regulatory grey area and there is no comprehensive legislation with respect to its legality or its boundaries.
- Also, there is currently no regulatory framework to govern various aspects of online gaming companies such as -
  - Having a grievance redressal mechanism, Protection of data and intellectual property rights, and Prohibiting misleading advertisements.
Online gaming is a state subject (Under Entry 34, List II 'Gambling' and 'Betting'):

However, state governments have stated that it is extremely difficult for them to implement some restrictions, such as geo-blocking specific apps or websites within their state's borders.
Also, state governments (unlike the Centre), lack the necessary blocking authority to issue blocking orders for offshore betting sites.
There is also concern that legislation passed in one state may not be relevant in another, resulting in inconsistencies across the country.

Societal concerns:
- A number of reported incidences of persons losing big amounts of money on online games, resulting to suicides in various parts of the country.

What are the steps taken by the government to regulate this sector?

An inter-ministerial task force was set up by the MeitY to propose contours of a national-level legislation to regulate online gaming. It submitted its report in October 2022.
- It suggested that MeitY may act as the nodal ministry to regulate online gaming, except for the e-sports category on which the Department of Sports can take the lead.
- Among other things, it also recommended:
  - the creation of a central regulatory body for the sector,
  - clearly defining what games of skill and chance are, and
  - bringing online gaming under the purview of the Prevention of Money Laundering Act, 2002.
In December 2022, the Union Minitry of Finance announced that the online gaming would attract 28 percent Goods and Services Tax (GST).
Recently, the Ministry of Electronics and IT (MeitY) has been made the nodal ministry regulating online gaming.
These decisions are in line with the government’s initiative to push for the growth of the animation, visual effects, gaming and comics (AVGC) sector and making India a global hub for online gaming.

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