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TN On Collision Course With Centre In Regulating Online Gaming

The Central government needs to take the next step and help cement the industry’s foothold in the country. It has already taken the first steps in this regard by setting up the inter-ministerial task force (IMTF) to look into multiple aspects of establishing a regulatory framework. 

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Online gaming has at times been confused with online betting and gambling from time immemorial. Nothing could be further from the truth. Activities which are as different as apples and oranges have been clearly recognized by the judiciary to be distinct from each other.

The Supreme Court of India has iterated that offering a game of skill is a protected activity, under Article 19 (1) (g) of the Indian Constitution. States such as Tamil Nadu, Karnataka and Kerala have erroneously legislated on online gaming.

Their interpretation has been on the basis that every game, when played for money, would amount to gambling betting or wagering. Courts, however, have summarily struck down such provisions, stating that the involvement of money does not change the nature of the game.

There have been numerous instances of the Supreme Court of India and High Courts of states such as Punjab and Haryana, Bombay, Kerala, Madras, Rajasthan and Karnataka providing the much-needed distinction between the two. As per the recent report, the Tamil Nadu government is relooking at regulating or prohibiting online gaming afresh.

The online skill gaming industry is still at a nascent stage. If every state has different regulations for online skill gaming, it can become a daunting prospect for operators as well as investors, which can lead to a drying up of FDI as well as raise a question mark regarding policy stability in the country.

The constant uncertainty also acts as a serious hindrance to the growth of this high-potential industry.  

The Minister of State for Electronics and IT, Rajeev Chandrasekhar, in his reply to a Parliamentary question, has already specified that online gaming platforms are intermediaries and they have to follow the due diligence as prescribed in the IT Act, 2000 and the Rules thereunder.’

This can be interpreted to mean that the Central Government is inclined to regulate the online skill gaming industry while states continue to exercise their jurisdiction on matters related to betting and gambling.

It follows that the Centre shall come up with a framework at the national level, to regulate the industry, as online games of skill are to be interpreted as online-related businesses and not betting and gambling. The Centre has made its vision amply clear over the last few years with regard to the online gaming industry.

In August 2020, Prime Minister Modi was vocal in his praise of gaming innovators and developers, recognizing the true potential of the industry.

Roadmaps have been laid out since then, aimed at establishing guidelines for the industry. Multiple parameters have been addressed, such as the need for a self-regulatory body that could help to establish a set of uniform rules and standards for the industry.

The Central government now needs to take the next step and help cement the industry’s foothold in the country. It has already taken the first steps in this regard by setting up the inter-ministerial task force (IMTF) to look into multiple aspects of establishing a regulatory framework. 

A uniform national regulatory framework can enable the industry to grow by leaps and bounds, adding substantially to the economy. Checks and balances would be needed, especially those that help in creating a safer playing environment for all gamers.

The protection of the consumer also needs to be safeguarded. Data privacy and protection, KYC of every customer, and a grievance redressal system will go a long way in establishing the industry as a compliant and growing part of the economy. Apart from a regulatory body, a nodal ministry could ensure the enforcement of the established law. 

A light-touch regulatory framework is the ideal outcome of this exercise. To achieve this, a collaborative effort is needed between the Centre, states, self-regulatory organisations and the industry to legislate, regulate, administer and govern the functioning of the industry.

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