Balancing innovation and responsible gaming: Policy for the growth of online skill gaming in 2024

The online gaming landscape is experiencing an unprecedented wave of innovation, propelled by technological advancements and the increasing prevalence of smartphones.

As per a recent EY report, India has the second-highest number (42.5 crore) of online gamers in the world, with real-money gaming (RMG) accounting for 83% of the total market. To tap into this vast potential, a forward-looking policy framework that embraces innovation is essential.

Progressive policies can spur economic growth, job creation, and tech development, nurturing a robust industry and making India a global gaming hub.

The need for stringent advertising and marketing regulations

The government has issued advisories outlining advertising standards for online gaming intermediaries and has urged digital media companies to adhere to ASCI’s guidelines.

Moreover, they have explicitly advised against advertisements that promote betting and gambling platforms. Despite such advisories, offshore platforms openly advertise with impunity using mass broadcast mediums. In August 2023, the government empowered the Ministry of Information & Broadcasting (MIB) to regulate policies governing gaming content platforms and online advertisements.

MIB will likely soon introduce a strict Code of Advertisements applicable to all digital media entities including online gaming platforms. The industry is in favour of policies that clearly define and legally mandate these advertising standards.

Responsible gaming policies and guardrails to protect consumers

The industry eagerly awaits clarity from the Ministry of Electronics and Information Technology (MeitY) on the way forward for regulation, particularly on whether Self Regulatory Bodies (SRBs) would be created, as originally envisaged.

In the interim, the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 for online gaming are ineffective in differentiating ‘permissible online games’ from fraudulent or illegal operators in the market right now.

While major online skill gaming operators already implement responsible gaming measures such as robust age verification processes, algorithms to limit excessive game play, and educational resources to self-exclusion options and transparent transactions - a more explicit policy framework would be advantageous. Trust symbols, granted to compliant platforms, could help consumers identify and choose responsible gaming environments over exploitative ones.

Financial transparency and compliant payment processes

The Reserve Bank of India (RBI) has scrutinised India’s payment gateways to identify aggregators that are providing services to illegal entities, including gambling and betting platforms.

The distinction between ‘permissible’ and ‘non-permissible’ online games, intended by MeitY, would have simplified this process, but delays have resulted in regulatory gaps. Illegitimate platforms masquerading as ‘games of skill’ continue to operate, misleading consumers.

As per the RBI, the onus lies on the payment aggregators to restrict access. Consequently, it is imperative that legitimate companies adhere to RBI-compliant payment processes that ensure traceability of funds, so bad actors can be identified and filtered out.

Tech-enabled responsible play

Companies today are taking substantial steps to promote responsible gaming on their platforms. From robust age verification processes, machine learning algorithms for limiting excessive gaming, and educational resources, to self-exclusion options and transaction transparency, these initiatives aim to create a safer gaming environment.

These advancements have been instrumental in implementing robust measures to address concerns such as addiction, harassment and inappropriate content online.

The AI algorithms analyse player behaviour in real-time, identifying patterns indicative of problematic gaming habits. By doing so, companies can proactively intervene, offering support or implementing restrictions when necessary to promote a healthier gaming environment. These systems continuously learn from user behaviour and ensure a dynamic and responsive approach to maintaining user well-being at all times.

A level-playing field for smaller startups

The ability to distribute an app in a cost-effective, scalable manner is critical for all digital companies, especially smaller or new start-ups.

Real money gaming startups face a unique challenge in this aspect as well; Google’s pilot program to offer daily fantasy sports and rummy apps on Google Play Store to users in India is set to expire on Jan 15, 2024.

While companies are hopeful Google will extend the deadline or continue to host the existing apps on its Play Store until further policy clarity from the Government, this is a disruption that could stifle innovation, and which should be addressed through policy changes.

Role of collaborative efforts in shaping policy

India has witnessed successful collaborations between industry and the government in various sectors, fostering progressive regulatory changes. Collaborative efforts in the past have led to policy initiatives promoting connectivity and affordable access in the telecommunications sector. Similarly, the IT sector's growth benefited from proactive measures, driving innovation and global competitiveness. Now, the gaming sector, while self-regulating, needs more defined operational clarity from the Government.

The Indian online gaming sector is poised for significant economic development, with a rapidly growing user base and technological prowess. With effective policy harnessing, the industry is set to make substantial economic contributions.

Sumanta Dey, Senior Director - Public Policy & Corporate Affairs, Head Digital Works