INDIA ROUNDUP
While the IT Rules prescribe several regulations for PORMGs, there are limited regulations for other online games. Nevertheless, the MeitY has the power to apply certain obligations 14 under the IT Rules to other online games as well, if it believes it is necessary to do so in the interests of the sovereignty and integrity of India or security of the state, friendly relations with foreign states, public order, or preventing user harm. 15 2. Registration of games and membership with SRBs As mentioned earlier, the 2023 Amendments propose a light touch, co-regulatory framework between the MeitY and the designated SRBs. Any entity which fulfils the prescribed criteria can apply to the MeitY for designation as an online gaming SRB. 16 MeitY has the authority to designate as many online gaming SRBs as it may consider necessary for the purposes of verifying online real money games as PORMGs. OGIs are required to become members of the registered SRBs which are responsible for verifying online real money games as “permissible” online real money games based on the specific criteria. 17 They are also empowered to suspend/revoke the verification 18 of any online real money game if they are satisfied that it is not in compliance with the provisions of the 2023 Amendments. The SRBs are also required to publish, inter alia, (a) their framework 19 for verifying an online real money game; (b) an updated list of members; (c) an updated list of all permissible online real money games; (d) a framework for grievance redressal and contact details of their grievance officer on their website, mobile application, or both. Moreover, the MeitY may also require an SRB to furnish information to the MeitY or
disclose information on the SRBs’ website/ mobile application, or both. 20 3. Eligibility of foreign gaming operators to become members of SRBs and seek gaming verification It is currently unclear whether foreign operators can become members of the designated SRBs and register their games under the 2023 Amendments. The issue stems from the compliance requirements under the Foreign Exchange Management Act (“FEMA”) and the Foreign Exchange Management (Current Account Transaction) Rules, 2000 (“Current Account Transaction Rules”). Under the FEMA and the Current Account Transaction Rules, certain outward remittances from India to abroad are prohibited. These include remittances of lottery winnings, income from racing/riding or other hobbies, and remittances for the purchase of lottery tickets or participation in banned/ prescribed gaming activities. The relevant provisions are very broadly worded and it may encompass gambling and skill gaming activities, suggesting that remittances for such activities may be prohibited. This issue may therefore need to be resolved for foreign gaming operators to become members of Indian SRBs and offer online games in India. 4. Framework for grievance redressal The IT Rules prescribe two independent legs of a grievance redressal mechanism, at the level of the OGI, and at the level of the SRB. Grievances by OGIs with respect to game verification are heard by the SRBs in the first instance, and grievances with respect to the OGI’s compliance with the IT Rules are
14 Rule 4C(1) of the 2023 Amendments 15 Explanation to Rule 3(1)(b) – ‘User harm’ has been defined widely to mean any effect which is detrimental to users. This provision is vague in
terms of what threshold of harm may be 16 Rule 4A(2) of the 2023 Amendments
17 Rule 4A(3) of the 2023 Amendments – On application being made by OGIs, the registered SRBs are required to verify online real money games as PORMG after being satisfied that: (1) The online real money game does not involve wagering on any outcome; and (2) The OGI and the online game are in compliance with (a) the obligations under Rule 3 and Rule 4, (b) provisions of law relating to minors’ competency to contract, and (c) framework of the SRB 18 Rule 4A(6) of the 2023 Amendments 19 Rule 4A(8) of the 2023 Amendments – such framework must include the following: (a) the measures to ensure that such online real money game is not against the interests of sovereignty and integrity of India, security of the State, friendly relations with foreign States and public order; (b) the safeguards against user harm, including self-harm and psychological harm; (c) the measures to safeguard children, including measures for parental or access control and classifying online games through age-rating mechanism, based on the nature and type of content; and (d) the measures to safeguard users against the risk of gaming addiction, financial loss and financial fraud, including repeated warning messages at higher frequency beyond a reasonable duration for a gaming session and provision to enable a user to exclude himself upon user-defined limits being reached for time or money spent 20 Rule 4A(9) of the 2023 Amendments
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IMGL MAGAZINE | JULY 2023
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