With 130 million players, India has become the fantasy sports industry's largest
market. An online game is a game accessible via the Internet and can be played
by a user through a computer/smartphone, where the user deposits money with the
expectation of winning, however, there is a very fine line of segregation
between games of skill and games of chance, the latter when played with money
constitute gambling which is prohibited under the Public Gambling Act, 1867.
In order to oversee online gaming at the federal level in India, the Information
Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021
("Gaming Rules") were amended and notified on April 6, 2023. The two-pronged
intention behind these rules was for the government to firstly disallow betting
and gambling platforms, and secondly to create a framework to legitimately
recognise players providing real money gaming online without the element of
India currently has a fragmented system for regulating gaming, with each state
having its own regulations that are frequently out-of-date and inappropriate for
online gaming. As a result, there are disparities in how different governments
view and regulate skill-based real-money online games. Some states have even
outlawed these games, despite legal precedence that suggests they are not
intrinsically illegal. This lack of clarity creates uncertainty for businesses
engaging in the online gaming industry, as different states have varying
interpretations of what is allowed within their jurisdiction.
The Indian government has introduced Gaming Rules, intended to offer a
centralised structure for regulating online skill-based real-money games, to
alleviate these challenges. These rules bring the online gaming industry under
the authority of MEITY. Implementing these rules is a response to the
longstanding demand from the industry for clear and consistent regulations to
foster a stable business environment for online gaming in India.
Chance-based games played for money or money's worth, with an expectation of
winning, are expressly not allowed under Indian law.
Online Games and Online Real Money Games: Indian Government acknowledges the
Over the past decade, consumers in India have had access to a dramatic increase
in the number of online real-money games. However, legitimate real money games
have frequently suffered from state government intervention and a lack of public
trust in the absence of statutory accreditation. In addition, because the
industry was unregulated, Indian users were the victims of several offshore and
domestic frauds and fraudulent games.
The Amendment Rules have now introduced the following concepts:
Permissible online games:
This includes permissible online real money games and
all other online games which are not real money games.
Permissible online real money games:
This includes only such games which have
been verified by a self-regulatory body. ("SRB")
Online Gaming Intermediaries (discussed further below) will now have to ensure
that they do not host or allow any third party to host through their platforms
any online real money game that has not been verified as a permissible online
real money game. As a result, Indian users can now distinguish between genuine
real money games and fraudulent ones. This is a huge step towards legalising
online games, including those that involve real money, and it may dramatically
boost both the user base of those games and investment interest in the Indian
online gaming market.
SRBs to determine the permissibility of Online Real Money Game?
Online Gaming Self-Regulatory Bodies, have been tasked with the job of verifying
whether an online real money game is permissible under the Gaming Rules or not.
To do so, they need to ensure, inter alia, that:
- The online real money game does not involve wagering on any outcome; and
- Is in compliance with its due diligence obligations, and any framework
that may be developed by the SRB in pursuance of the Gaming Rules.
Once the verification is complete, the SRB is required to publish a list of
approved real money online games together with information about the
application, such as name, date, etc.
While this is a good measure, there are some factors that may become a business
Gaming Rules will place the power in the hands of the SRB alone to verify if a
game can be offered for real money via the online mode in India. Hence
independent assessment by the gaming company would be disallowed causing
business hindrances for the companies. Moreover, online games have multiple
formats which are updated on a regular basis and if such regular updates would
be considered a "new game" it would be cumbersome for the companies to get
approvals every now and then.
The Amendment introduces the concept of an "online gaming intermediary." The
Amendment Rules in India classify online game providers as "Online Gaming
Intermediaries," placing them under the purview of the Information Technology
Act, 2000. This term refers to intermediaries that enable users to access one or
more online games through their computer resources. The definition of
"intermediary" includes various service providers such as telecom service
providers, internet service providers, search engines, online marketplaces, etc.
The broad definition of "online gaming intermediary" raises concerns about the
kinds of entities that might qualify, nevertheless. A literal meaning might
include intermediaries who don't necessarily play a direct part in online
gaming, including cloud service providers or web hosting companies.
This categorization gives the government extensive authority to compel these
intermediaries to forbid users from accessing any online games if it is deemed
necessary to protect national sovereignty, integrity, defence, security,
friendly relations with foreign states, public order, or prevent user harm. The
government may also demand that online gaming intermediaries give any
information that is required to law enforcement. This significant step gives the
government overall control over online gaming platforms and includes
intermediaries for online gaming under the regulatory framework.
Obligations for Online Games other than Online Real Money Games?
With respect to curbing activities that could lead to user harm, the IT Rules
have further bestowed power on the Indian Government under rule 4C (wherein
obligations in relation to online game other than online real money game have
The Amendment grants the central government the power to direct various
intermediaries, including platforms like Google Play Store, App Store, and ISPs,
to fulfil certain obligations related to online games.
The grounds for invoking these provisions in relation to online games include
factors that affect the sovereignty, integrity, and security of India, friendly
relations with foreign states, public order, and the prevention of user harm.
The term "user harm" is broadly defined under the Gaming Rules, leaving room for
interpretation and granting extensive powers to the government. A clearer
definition, similar to the one proposed in the data protection legislation,
could have been included.
While the intent seems to be to treat online free-to-play games similarly to
permissible online real money games only in exceptional circumstances, such
provisions may raise concerns for operators of free-to-play games. The
government's ability to intervene and direct platforms to restrict or remove
specific games, as seen in the case of the Blue Whale game, may cause worry for
operators in the free-to-play gaming sector.
Centre vs States: Who will regulate?
Under the Constitution of India, each state has the power to regulate betting
and gambling within its jurisdiction. This has resulted in different states
having different definitions of betting and gambling. In line with this, the
Governor of Tamil Nadu approved the Tamil Nadu Prohibition of Online Gambling
and Regulation of Online Games Act, 2022 (TN Act). This Act introduces its own
definitions of "online game," "online gambling," and "online game of chance"
specific to Tamil Nadu.
The TN Act can potentially come in conflict with the Amendment Rules, as an
online real money game verified as permissible under the Amendment Rules may
nevertheless be deemed an "online game of chance" and prohibited under the TN
Act. This is evident in the case of online poker and online rummy, which have
been recognized as predominantly games of skill by Indian courts but have been
specifically designated as games of chance and banned under the TN Act.
Additionally, while the Amendment Rules emphasize self-regulation, the TN Act
establishes a separate regulatory regime for local online game providers,
including the requirement to register with a Tamil Nadu authority. This
regulatory dichotomy is likely to exist in other states as well, indicating the
potential for each state to enact its own laws regarding online gambling.
Where are we on the debate of game of skill and game of chance?
The Supreme Court in the case of RMD Chamarbaugwala v Union of India, observed
that in games where a substantial degree of skills is involved, the game cannot
be categorized as gambling. Moreover, a 3-judge bench of the Supreme Court in
Dr. KR Lakshamanan v. State of Tamil Nadu, while ruling horse racing to be a
game of skill, noted that while there could be betting or wagering in a game of
skill, it would not amount to gambling.
The Amendment Rules firmly confirm that
the Central Government has side-stepped the debate of what is betting or
gambling, i.e., what constitutes a game of skill (which is not seen as betting
or gambling) and what constitutes a game of chance (which is seen as betting or
gambling and is prohibited in various Indian states).
The Amendment Rules puts an obligation on SRBs to satisfy themselves during the
verification process of a real money game that such game "does not involve the
wagering of any outcome." Under the Indian constitutional framework, the Central
Government does not have the power to regulate betting and gambling.
rests with state governments, who can, under Entry 34, List II, Seventh Schedule
of the Constitution of India, legislate on betting and gambling within such
states. Therefore, stakeholders, as well as SRBs, will have to continue to rely
on guidance from Indian case laws and asymmetric state legislations on a
case-to-case basis to determine what constitutes betting, gambling or wagering
and which games will be permissible in which location.
The regulatory step of distinguishing online games from gambling is a
significant forward-looking measure that has been appreciated by the gaming
industry. The implementation of a self-regulatory mechanism for online gaming is
a testament to the government's trust in the industry.
There are also concerns regarding the involvement of state governments,
especially in cases involving real money. Gambling and betting fall under the
jurisdiction of states, and certain jurisdictions have considered other real
money games as gambling. The issuance of a whitelist of certified apps by
self-regulatory bodies (SROs) is expected to assist companies in advocating
their case to state governments.
In conclusion, the latest developments in India's online betting laws and
regulations hold promise for players. The government's active involvement, the
establishment of governing bodies, improved regulation, and increased attention
to protecting minors and individuals with addiction issues all bode well for the
- Public Gaming Act, 1867, Available at https://indiankanoon.org/doc/1824663/
- Gaming Rules, available at https://mib.gov.in/sites/default/files/IT%28Intermediary%20Guidelines%20and%20Digital%20Media%20Ethics%20Code%29%20Rules%2C%202021%20English.pdf
- MEITY Notification, available at https://pib.gov.in/PressReleasePage.aspx?PRID=1914358
- Regulating India's online gaming intermediaries- https://www.foxmandal.in/regulating-online-gaming-intermediaries-the-rules-and-their-implications/
- TN Act- https://prsindia.org/files/bills_acts/acts_states/tamil-nadu/2023/Act9of2023TamilNadu.pdf
- RMD Chamarbaugwala v Union of India- https://indiankanoon.org/doc/725224/
- Dr. KR Lakshamanan v. State of Tamil Nadu- https://indiankanoon.org/doc/1248365/
Award Winning Article Is Written By: Mr.Zaier Ahmad
Authentication No: JL47071500482-17-0723