In this article, we will be catering the critical legal aspects related to online gaming in India. We will be talking the recent legal developments that are shaping the landscape aswell.
WHAT IS ONLINE GAMING?
- Online gaming is the playing of games via online mode with friends, family, or any known member.
- The players have to pay a monthly or annual subscription fee to play the online games on the internet platform. The gaming experience involves users playing in groups offering a multi-user experience.
- The multi-users can chat or talk to each other and play to win gaming battles.
- Currently, there are various Online portals available to provide a smart user interface for such players. They are providing them with a hassle-free gaming experience.
WHAT IS ONLINE GAMING IN INDIA?
- As per the Indian Government, Online games mean “game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary”.
- The gaming experience dealing with wagering and betting falls out of the ambit of online gaming.
- As per the Minister of State for Electronics in India, online gaming is permissible games involving real money. Also, they do not harm the users and make them addicted to the online gaming experience.
- They do not involve wagering or are not involved in betting.
WHAT ARE THE CLASSIFICATIONS OF ONLINE GAMES?
Online games in India typically fall under two primary legal categories:
- Games of skill- Games of skill is involving a substantial element of skill and strategy, are exempted from anti-gambling laws.
- Games of chance- Games of opportunity is primarily relying on luck, are often subjected to gambling regulations.
- The distinction between these categories plays a pivotal role in determining the applicability of gambling laws.
- In recent years, online poker and fantasy sports platforms have gained significant attention and faced legal challenges.
- The legal status of these platforms hinges on the determination of whether they constitute games of skill or games of chance. The courts have generally leaned towards classifying poker as a game of skill due to its strategic nature, while fantasy sports platforms argue that participant knowledge and decision-making make their offerings games of skill as well.
- The legal battle surrounding these classifications reached a milestone in the XYZ v. ABC case, wherein the High Court upheld the type of poker as a game of skill. This ruling established a precedent for other courts to follow, providing a level of legitimacy to the online poker industry.
WHAT IS THE LEGAL ASPECT RELATED TO ONLINE GAMING IN INDIA?
- Online gaming is rapidly growing in India and has led to an efflux in legal considerations surrounding this dynamic industry.
- As players immerse themselves in virtual worlds, legal frameworks are being scrutinized to ensure a balance between entertainment, consumer protection, and regulatory compliance.
- The Indian Ministry of Electronics and IT (MeitY) is trying to regularise this part of the virtual world from the players being tricked or harmed by the addiction or from being scammed.
- The MeitY has introduced certain rules and regulations to scrutinize the virtual online gaming world.
- Such scrutiny will be with the help of the Self Regulatory Organisations (SRO’s).
- The SRO’s will be approving the games to operate in India in accordance with the rules introduced by the Indian Ministry of Electronics and IT (MeitY).
- The Self Regulatory Organisations will be providing betting-free, harm-free games, and wager-free online games for online gaming users. Such rules have been brought into the picture by amending the IT rules of 2021.
CAN INCOME RECEIVED FROM ONLINE GAMING BE TAXED?
- The taxation of online gaming in India is a complex matter.
- Income generated by players through gaming activities may be subject to income tax, while gaming platforms are also subject to various tax implications.
- Furthermore, foreign investment in the Indian gaming industry is subject to the Foreign Direct Investment (FDI) policy of the country. Recent amendments to the FDI policy have allowed for increased foreign investment in the sector, fueling its growth.
CAN ONLINE GAMING BE ADVERTISED?
- The advertising and endorsement of online gaming platforms have also garnered legal attention.
- The Advertising Standards Council of India (ASCI) has issued guidelines that require gaming advertisements to be transparent and not mislead consumers.
- Celebrity endorsements of gaming platforms is facing scrutiny, leading to a closer examination of whether such endorsements violate any ethical or legal standards.
WHAT IS ONLINE GAMING ONLINE GAMBLING OR A SKILL GAME?
- The distinction between online gambling and skill games is a subject of contention in recent years.
- While games of skill has gained acceptance as legal activities, the line between skill and chance can sometimes be blurred. This has led to debates over whether certain card games or betting activities should be treated as skill-based games or gambling.
- The XYZ Bill is currently under consideration in Parliament. It is seeking to establish a regulatory framework to address these ambiguities and provide clarity on the legal status of various online gaming activities.
- The legal landscape of online gaming in India is rapidly driven by technological advancements, changing consumer behaviors, and legal challenges.
- As the industry is struggling with questions of skill versus chance, consumer protection, taxation, and advertising.
- It is imperative for both players and stakeholders to stay informed about the latest legal developments.
- Recent rulings, such as the XYZ v. ABC case, has provided an essential guidance, but the journey toward a comprehensive regulatory framework is ongoing.
- In this dynamic environment, players, gaming platforms, and regulators must collaborate to strike a balance.
- It should be fostering innovation, ensuring consumer safety, and upholding legal standards.
- As online gaming is becoming an increasingly integral part of Indian leisure and entertainment, a clear and comprehensive legal framework will play a pivotal role in shaping the future of this vibrant industry.
By: Advocate Riti Gupta, Associate Lawyer at Aggarwals & Associates, Mohali