On 2^nd January 2023, the Ministry of Electronics and Information Technology (“MEITY”) published draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”), in relation to the online gaming. The said amendments seemingly aim to address the need to ensure the online games are offered in conformity with Indian laws and that the users of such games be safeguarded against potential harm.[i]

MEITY has invited comments from stakeholders and the general public on the proposed amendments to the IT Rules, which include, inter alia, the following:

• Insertion of definition of ‘online game’, as Rule 2(1)(qa), which refers to “a game that is offered on the Internet and is accessible by a user through a computer resource if he makes a deposit with the expectation of earning winnings”
• Insertion of definition of ‘online gaming intermediary’, as Rule 2(1)(qb), which refers to “an intermediary that offers one or more than one online game”
• Amendment to Rule 3, to extend the application of the due diligence obligations thereunder to online gaming intermediaries.
• Further, in addition to the existing due diligence obligations under Rule 3, online gaming intermediaries will also be required to take reasonable efforts to cause the user of the computer resource to not “host, display, upload, modify, publish, transmit, store, update or share any information” which “is in the nature of an online game that is not in conformity with any law for the time being in force in India, including any such law relating to gambling or betting or the age at which an individual is competent to enter into a contract”
• Insertion of Rule 4A, putting forth additional due diligence requirements to be observed by online gaming intermediaries. The said requirements include, inter alia,
  • Informing users of its computer resource of all games offering by the online gaming intermediary, withdrawal / refund policies, manner of determination and distribution of winnings, risk of financial loss and addiction associated with the online game, etc.
  • Appointing a Chief Compliance Officer to ensure compliance with the Information Technology Act, 2000 (“IT Act”) and rules made thereunder, and to coordinate with law enforcement agencies to ensure compliance with their orders or requisitions.
  • Implementing an appropriate grievance redressal mechanism for receipt of complaints under Rule 3(2).
• Notably, the proposed insertion of Rule 6A enables MEITY, if satisfied that a game can create risk of harm to “the sovereignty and integrity of India or security of the State or friendly relations with foreign States or public order, on account of causing addiction or other harm among children”, notify and treat such game as an “online game”.

(For readers interested in perusing MEITY’s draft amendments to the IT Rules, the same are accessible here )

At the outset, it must be said that the draft amendments to the IT Rules appear to be a rushed attempt to regulate the online gaming industry by the MEITY, with several practical roadblocks apparent in the same. The most glaring discrepancy in the draft amendments arises out of the proposed definition of an ‘online gaming intermediary’, as an intermediary which offers an online game(s). ‘Intermediary’ is defined under Section 2(1)(w) of the IT Act as follows:

(w) “intermediary” with respect to any particular electronic message means any person who on behalf of another person receives, stores or transmits that message or provides any service with respect to that message

Keeping in mind the aforesaid definition of an ‘intermediary’, the attempted classification of entities which offer (seemingly referring to the act of publishing / making available) an online game(s), as online gaming intermediaries is inherently flawed. Publishers of online games, who curate, develop, publish, store and transmit their own content, are thus not capable of being deemed online gaming intermediaries.

Further practical conundrums stem out of the aforesaid contradiction in the definition of an online gaming intermediary. To wit, if the term ‘online gaming intermediary’ was to be construed harmoniously with the definition of an intermediary, it would encompass online gaming stores / marketplaces, such as the PlayStation store, the Google Play store, the Apple store, etc. However, given the nature of due diligence requirements sought to be imposed on online gaming intermediaries, it may be extremely impractical to expect such online gaming stores / marketplaces to comply with the said requirements. For instance, the PlayStation store makes available for purchase and download thousands of third-party games. To expect such an online store / marketplace to inform users of the manner of determination and distribution of winnings in all third-party games offered by it, risk of financial loss and addiction associated in relation to each such third-party online game, etc. (as proposed vide Rule 4A(b)) would thus certainly be unreasonable.

Needless to say, numerous other complications arise out of the proposed imposition of due diligence requirements on online gaming intermediaries, which, prima facie, appear to have been drafted with an eye towards governing and regulating publishers of online games (as opposed to intermediaries, in the true sense). Thus, the proposed amendments to the IT Rules 2021, at the threshold, are fraught with practical dilemmas one would expect from delegated legislation which seeks to regulate subject-matter that the parent Act does not, in form or substance, contemplate.

It should also be noted that the MEITY has reserved for itself the discretion to notify and treat any game as an ‘online game’ if it is satisfied that such a game can create risk of harm to “the sovereignty and integrity of India or security of the State or friendly relations with foreign States or public order, on account of causing addiction or other harm among children”. Given this seemingly broad and vague criterion (for instance, what exactly would be considered “harm among children”?), the insertion of such discretionary powers is cause for concern and forebodes overregulation.

The lack of central and uniform legislation for online gaming in India is certainly a lacuna which needs redressal, and the draft amendments to the IT Rules evidently attempt to do the same. However, given the glaring flaws and inherent contradictions in the said amendments, it is imperative for the MEITY to revisit the draft amendments to the IT Rules, and clearly ascertain what and who it seeks to regulate through the same.

If the answer to this fundamental query is, indeed, online gaming intermediaries, such as the PlayStation store, and their acts of, inter alia, making available third-party online games, then the due diligence requirements sought to be imposed on such entities require a major revamp. Contrarily, if the intent is (as it appears to be) to regulate publishers of online games, the draft amendments arguably amount to legislative overreach, and a misguided attempt to regulate subject-matter which ought to be governed by uniform central legislation.