India's Ministry of Electronics and IT Announces Amendments to Information Technology Rules for Online Gaming

On April 6th, 2023, the Government of India's Ministry of Electronics and IT announced updates to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Rules”). These amendments specifically target online gaming and the dissemination of false and misleading information about government affairs. Here are the main modifications that have been implemented in the rules.

Key Changes –

• The amendment has introduced the following definitions -

“Online game” means a game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary. Explanation.—In this clause, ?Internet? means the combination of computer facilities and electromagnetic transmission media, and related equipment and software, comprising the interconnected worldwide network of computer networks that transmits information based on a protocol for controlling such transmission; (qa)

“Online gaming intermediary” means any intermediary that enables the users of its computer resource to access one or more online games. (qb).

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• Following the amendment an online gaming intermediary now has to abide by the due diligence procedure as given under Rule 3, which includes publishing rules and regulations, privacy policy, and user agreements on their website or mobile application, informing users of these policies in their preferred language, periodically informing users of non-compliance consequences, refraining from hosting or publishing unlawful information upon receiving actual knowledge, and periodically informing users of any changes to policies.

• A proviso to Rule 3(1)(f) has been added that states that if an online gaming intermediary has enabled the users to access any permissible online real money game will have to inform its users of such change as soon as possible, but not later than 24 hours after the change is affected.

• An amendment to Clause 3 (1) (j) of the Rules has been introduced as per which, an online gaming intermediary who enables the users to access any permissible online real money game not later than twenty-four hours of the receipt of an order, provides information under its control or possession, or assistance to the Government agency which is lawfully authorized for investigative or protective or cyber security activities, for the purposes of verification of identity, or for the prevention, detection, investigation, or prosecution, of offenses under any law for the time being in force, or for a cyber security incident.

• Rule 4 relates to Additional due diligence to be observed by significant social media intermediaries which is now made applicable to online gaming intermediaries. The due diligence includes the appointment of a Chief Compliance Officer who will be responsible for ensuring compliance with the Act and rules. A nodal contact person must also be appointed for 24x7 coordination with law enforcement agencies to ensure compliance with their orders or requisitions. Additionally, a Resident Grievance Officer must be appointed to handle grievances, who is responsible for the functions referred to in sub-rule (2) of rule 3.

• Further sub-rules have been inserted in rule 4 that focuses on any permissible online real money game, which includes the following compliances - they must display a visible verification mark from an online gaming self-regulatory body for each permissible real money game (10), they must provide information on withdrawal/refund policies, determination and distribution of winnings, fees and charges, know-your-customer procedures, deposit protection measures, and the framework in rule 4A for each real money game. (11), they must identify and verify the identity of users before accepting any deposit in cash or kind for a real money game. (12), they cannot finance or enable third-party financing for playing real money games. (13)

• Rule 4-A (Verification of online real money game) has been inserted, which states that:

1. The Ministry can appoint multiple online gaming self-regulatory bodies through a notification in the Official Gazette.
2. Any company registered under section 8 of the Companies Act, 2013, can apply for designation as an online gaming self-regulatory body if they meet certain criteria, including having a board of directors with relevant experience.
3. An online gaming self-regulatory body can declare an online real money game permissible if it meets certain criteria, including not involving wagering on any outcome.
4. The online gaming self-regulatory body must publish an updated list of all permissible online real money games and their details, along with a list of their members and any suspensions or revocations.
5. The online gaming self-regulatory body can suspend or revoke the verification of a game if it does not comply with the rules.
6. A verified online real money game must display a visible mark stating its verification status.
7. The online gaming self-regulatory body must publish a framework for verifying online real-money games.

• A Rule 4-C, pertaining to online games other than those involving real money has been added as per which, the Central Government reserves the right to direct intermediaries to make necessary alterations that do not undermine the core objective, should it deem such actions necessary in the interest of India's sovereignty, integrity, security, or foreign relations.