The online gaming and betting industry in India has witnessed some significant developments in recent months. Changes to state gaming laws, numerous orders and judgments issued by the courts of India, and increased scrutiny by various enforcement bodies has changed the landscape of the industry. This is an update to the 3-part article on our blog titled "GAMING OR GAMBLING - Indian legal position".
Federal Regulations / Updates
- An IM Panel was constituted comprising of NITI Aayog's CEO, the secretaries of the Ministry of Home Affairs, Revenue Department of the Promotion of Industry and Internal Trade (DPIIT), Ministry of Electronics and Information Technology ("MeiTY"), Ministry of Information and Broadcasting ("MIB") and the Sports Ministry to contemplate central regulations for the online gaming industry. Currently the report of IM Panel is in the final stages and shall be sent to the Cabinet for approval.
- A Group of Ministers ("GOM") has been constituted to make recommendations to the Government on GST laws. The GOM is evaluating the current tax structure and is in the process of assessing whether (1) GST should be charged at the rate of 28 percent on both games of skill as well as games of chance, and (2) whether it should be on the entire amount which a player deposits for a game, or on the commission amount. the GoM has not reached a consensus and is seeking legal opinions on the issue.
Advertisements on betting platforms
- ASCI's Gaming Guidelines: India's apex self-regulatory advertising body, the Advertising Standards Council of India (ASCI) releasedGuidelines for Online Gaming for Real Money Winnings, which prescribed guidelines which requires the advertisers to not target minors, carry disclaimers and also, highlight financial risks involved in gaming.
- Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022: The Central Consumer Protection Authority issued theguidelines forPrevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022. These guidelines apply to all advertisements regardless of form, format or medium and require that advertisements must contain "truthful and honest representations". They are made applicable to all producers, service providers, traders, advertising agencies, and endorsers of goods, products, or services being advertised.
- Advisories by MIB: In their advisory dated June 13, 2022, the MIB stated that several advertisements for online betting websites and platforms are running in "print, electronic, social, and online media," despite the fact that most of India prohibits such advertisements. The advisory warns against showing or directing betting and gambling-related advertisements to Indian consumers on online and social media platforms.
Since, such advertisements persisted, the MIB, in consultation with the Department of Consumer Affairs issued a second advisory on October 3, 2022, to (1) TV channels and (2) digital news publishers and OTT platforms, strongly advising them against showing (i) advertisements for online sports betting platforms and (ii) surrogate advertisements for offshore sports betting platforms in the guise of sports news websites.
- Access to foreign betting platforms blocked: MeiTY has issued directions to Indian telecom service providers to block access to foreign / gambling platforms. However, the grounds on which MeiTY has ordered blocking of the websites is unclear.
State-level developments
- Tamil Nadu: The Madras High Court vide its order dated 3 August 2021 1, overturned parts of the Tamil Nadu Gaming & Police Laws (Amendment) Act, 2021 to ban all forms of online games, including games of skill. However, the order was challenged by the Tamil Nadu government on appeal to the Hon'ble Supreme Court. Thereafter, the Governor of Tamil Nadu provided his assent to the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games, Ordinance, 2022. On October 19, 2022, it was reported that the Tamil Nadu State Legislature passed a bill banning online gambling and regulating online games to replace this ordinance. The ordinance seeks to prohibit online gambling and regulate online gambling.
- Meghalaya: In March 2021, the State of Meghalaya introduced a licensing regime for games of skill. However, in October 2022, the Chief Minister of the State announced that the same shall be repealed.
- Rajasthan: The Rajasthan High Court has recognized fantasy sport as a game of skill and in lieu of the same, in May 2022, the State of Rajasthan published a draft of Rajasthan Virtual Online Sports (Regulation) Bill proposing a licensing regime to regulate pay-to-participate formats of fantasy sports. Only Indian nationals or legal entities incorporated in India are eligible for a license under Bill.
- Kerala: Due to the increase in suicide cases in the State, Kerala plans to reintroduce a ban on online rummy. A co-regulatory framework between the State and industry-led self-regulatory bodies is suggested in the draft bill.
In Sum
It is anticipated that the gaming industry's regulatory framework shall undergo considerable modifications in the near future as a result of the dynamic nature of the sector. While the regulatory bodies and the various High Courts and the Supreme Court of India are focusing on reduction of gaming addiction among youth, the law makers should find the sweet spot between an individual's right to livelihood or an individual's right to trade and providing an environment to prevent gaming addiction.
-Shrutika Barabde, Associate Trainee (under the guidance of Ms. Archana Balasubramanian, Partner)
Footnote
1 Junglee Games India Pvt. Ltd. & Anr. v The State of Tamil Nadu & Ors (2021)
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