[Mishika is a student at Symbiosis Law School, Pune.]
The traces of India’s association with the gaming industry can be found as early as 3000 BCE. With the advent of the internet, the nature of games expanded to the online mode via the medium of PC Gaming and Console. The number of online gamers in India is increasing at a compounded annual growth rate of 12%, projected to reach 700 million by 2025. Within just 5 years, the number of Indian gaming companies has increased to 900 million, and the gaming market size is expected to grow by 27% by 2027. This rise of the gaming industry has prompted the government to regulate the gaming industry through some of its recently introduced legislations. In this article, the author analyses the Online Gaming Commission (Commission) proposed to be set up under the Online Gaming (Regulation) Bill 2022 (Bill) vis-à-vis self-regulatory bodies proposed under the draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 (IT Rules). Additionally, the article explores the implications of the Commission on existing state laws.
Online Gaming (Regulation) Bill 2022
The Bill was introduced last year in order to regulate the online gaming sector in India. Broadly, the Bill proposes the setting up of a Commission under Section 3 with the aim of having an oversight over the functioning of online gaming websites. The Commission has been given the power to grant licenses to online gaming websites without which no person will be permitted to operate such a website.
Additionally, on 2 January 2023, the draft amendments to the IT Rules (draft IT Rules) have also been introduced which can be seen as a milestone step by the Government of India in recognizing the online gaming industry. Alongside the Commission that has been set up under the Bill, these draft IT Rules propose for the setting up of self-regulatory bodies. The next section aims to draw a parallel between both these bodies.
Dichotomy between Commission and Self-Regulatory Bodies
While the Bill proposes to set up a Commission, the draft IT Rules proposes to set up self-regulatory bodies which will be responsible for ‘registering’ or ‘granting membership’ to an online gaming intermediary. Following is a comparison between the two bodies proposed.
Composition
The composition of the Commission has been laid down as comprising a Chairperson, Vice-Chairperson and 5 members nominated by the Central Government.
The composition of a self-regulatory body is one person each from the following fields / individuals viz. (a) online gaming, sports, or entertainment, (b) online game players, (c) psychology, medicine, or consumer education, (d) public policy, public administration, law enforcement or public finance (nominated by the Central Government), and (e) information communication technology.
Function
The function of the Commission is to grant licenses to online gaming websites without which no person will be permitted to operate an online gaming website.
The function of a self-regulatory body is to grant registration / membership to online gaming intermediaries without which no person will be permitted to operate their online games.
It can be inferred that the draft IT Rules are not in harmony with the already proposed Bill. A closer look at the composition helps us decipher the spirit and intent of the legislature while proposing the above mentioned legislations. Through the Commission, the Central Government intends to control the gaming industry by nominating members, whereas, through the self-regulatory bodies, it intends to enable self-governance of the industry.
The biggest question is that if both the Bill and the draft IT Rules get passed, how these two bodies are going to co-exist. The function of both these bodies seems to be identical, i.e., while the Commission has the function of granting licenses to online gaming websites, the self-regulatory bodies grant memberships in disguise of licensing. Both these bodies will inevitably engage in redundant duplication of functions, operating under distinct frameworks that will ultimately lead to confusion. For instance, in a scenario where a gaming website obtains a license from the Commission but fails to secure registration from a self-regulatory body or vice versa, the question arises as to whether the website is permitted to offer the game on a public platform. Therefore, in order to prevent confusion and more ambiguity in a fledgling industry, there is an urgent need to harmonize these two legislative developments before any of these come into force.
The Impact on State Laws
Game of skill v/s game of chance
In accordance with the Constitution of India, skill-based games are regulated by the Centre under Entries 31, 42 and 97 of List I, while chance-based games listed as ‘betting and gambling’ under Entry 34 of List II are state subjects. The distinction between what is a game of skill and what is a game chance is still sub judice before the Supreme Court. The lack of a clear differentiation has resulted in certain states like Andhra Pradesh and Telangana enacting laws that enforce a blanket ban on all forms of online gaming, arguing that every game involves an element of chance and hence falls under state jurisdiction. Such legislation unequivocally violates the right to engage in any profession, occupation, trade, or business. Therefore, it is imperative for the Central Government to establish regulations for online gaming as it is fundamentally a business activity and should consequently be protected under Article 19(1)(g) of the Constitution.
Analyzing the powers of the Commission
It is important to note that the Commission established under the Bill does not have the power to make rules or regulations, i.e., it does not have any legislative powers. It merely has regulatory powers. This raises an important question: if a Central law establishes a body with solely 'regulatory' powers, will it supersede state laws? It is abundantly clear from the language of Article 254 of the Constitution that “if any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament, the law made by Parliament, shall prevail.” Given that the Commission cannot come up with any rules or regulations which will be deemed to be ‘law’, the question is whether the decisions, standards or guidelines set by the Commission will be binding on the states. Under the Indian jurisprudence, even delegated legislations prevailing over state law are scrutinised and doubts over their legality are expressed among scholars. The Commission, on the other hand, is merely a regulatory body that the centre has delegated its functions to and therefore, the Commission introducing any rules or regulations which can be considered as ‘provision of law’ is outside the mandate of the parent statute. Hence, any repugnancy in state laws is slightly unlikely to be addressed.
However, it is important to understand the intent and spirit of the legislation. The intention of the legislature is to regulate all skill-based games to ensure that the right to carry on a business activity under Article 19(1)(g) is protected. If a Central law is specifically enacted in respect of online gaming, it is aiming to regulate everything that is skill-based, which comes within the ambit of the Union List so that it can address the major policy concerns. If the decisions of the Commission do not ultimately prevail over the state law, the purpose of enacting a Central Law gets defeated.
A significant concern arises from the fact that the Bill lacks specific standards or definitions. Instead, it grants the Commission unfettered and unrestricted powers to come out with standards of allowing or disallowing games to operate in India. Had the Bill been comprehensive and included criteria for certifying or registering skill-based games, it could have potentially addressed conflicts between the Central and the state governments through the doctrine of repugnancy under Article 254. However, since the Bill lacks such provisions, it is improbable that the conflicts between the Central and the state governments will be effectively resolved.
Conclusion
In conclusion, although the introduction of a Central legislation governing online gaming is a positive step, the current Bill exhibits several shortcomings that hinder its implementation. To address these issues, the following suggestions are proposed:
The Bill should be more comprehensive, incorporating specific parameters for the functioning of the Commission. This approach would help resolve conflicts between the central and the state governments.
Considering that a Central legislation regarding online gaming is unfamiliar to the public, it is advisable to issue guidelines or clarifications in the form of FAQs. This would provide clarity on the scope and intended regulation of the statute.
It is crucial for the legislation to define the terms ‘skill-based gaming’ and ‘chance-based gaming’ expressly. Clear definitions would bring clarity and avoid ambiguity in the interpretation and implementation of the law.
The presence of both the Commission and the self-regulatory bodies seems redundant. Therefore, it is necessary to address this redundancy and streamline the roles and responsibilities of these bodies.
By incorporating these suggestions, the proposed legislation can be strengthened and made more effective in regulating online gaming.