India’s government will regulate online gaming, sidelining industry-led SROs. MeitY will develop rules for real-money games, ensuring consumer protection and fair play.

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In a major shift in approach, the Indian government has decided to directly oversee the regulation of the online gaming industry, moving away from the idea of an industry-led self-regulatory organization (SRO).

The Ministry of Electronics and Information Technology (MeitY) is set to develop rules for online games that involve financial transactions.

Industry’s Self-Regulation Proposals Turned Down

The government had initially asked the gaming industry to develop a self-regulation model.

However, this plan was abandoned after it was found that the proposals were mainly influenced by gaming companies and their associations, raising doubts about their ability to serve as a fair regulator.

Clear Distinction in Regulation

According to new IT rules, online games that involve real money will now need approval from a regulatory body.

This move aims to protect consumers and ensure fair play in the industry.

On the other hand, games that do not involve real money transactions will not require such approvals, allowing for more freedom in their operation.

Uncertainty Leads to Calls for Clear Guidelines

Following the announcement of online gaming rules on April 6, 2023, the industry was given three months to propose their self-regulatory bodies.

However, the submissions still need to meet the government’s criteria for a diverse and impartial body, which will result in the rejection of all SRO applications.

This has prompted companies and industry associations to seek clearer guidelines on responsible gaming, player protection, and other regulatory aspects.

There is also a push for a regulatory authority similar to the Securities and Exchange Board of India (Sebi) to oversee the sector.

Online Gaming Industry’s Rapid Growth and Future Challenges

The online gaming market in India has seen rapid growth, with a report by EY highlighting a compound annual growth rate (CAGR) of 28% from FY 2020-2023, reaching Rs 16,428 crore.

However, the industry faces challenges, especially in the real money gaming segment, which is expected to decrease market share due to recent changes in the Goods and Services Tax (GST) regime.

Looking Forward

The government’s decision to regulate the online gaming sector is seen as a step towards creating a safer and more responsible gaming environment in India.

With MeitY working on the regulatory framework, the industry is awaiting detailed guidelines that will shape the future of online gaming in the country.