Govt to ban money-based online gaming, bill likely in Parliament on Wednesday

The proposed promotion and regulation of online gaming bill, cleared by Union Cabinet on Tuesday, prohibits online money gaming or its ads, and prescribes imprisonment or fine, or both, for those offering or advertising them, as it seeks to differentiate such games from e-sports or online social games, according to a source.

At the same time, the bill calls for promotion of e-sports and online social games, the source said, adding that it acknowledges that formal recognition of e-sports will enable India to tune into global competitive gaming landscape, spur innovation, create opportunities for Indian startup ecosystem and make the country a global magnate for game development.

The bill proposes that any person offering online money gaming service in violation of the stipulated provisions will face imprisonment of up to three years or a fine that may extend to Rs 1 crore, or both. The provisions also stipulate imprisonment of up to two years and or a fine of up to Rs 50 lakh, or both, for those indulging in advertisements in contravention of rules.

Also, those engaging in any transaction or authorisation of funds will be liable for up to three years imprisonment, or a fine up to Rs 1 crore or both, according to the source.

Repeat offences for violation related to online money gaming attracts higher stringent jail term (3-5 years) as well as fine.

The bill, however, does not criminalise anyone playing online money games, to avoid any harassment. The idea is to treat them as victims, rather than perpetrators of crime, the source said, adding that the bill cracks down on those promoting and abetting it. It prohibits banks, financial institutions from processing or transferring funds related to real-money online games.

Sources said that the bill aims to regulate online gaming by promoting online social games and e-sports, while prohibiting online money gaming in larger public interest.

They pointed out that although the gaming landscape in India has seen explosive growth, the regulatory environment has remained fragmented and grey. At the same time there have been rising concerns around addictive nature of online games, especially monetary incentives, as well as mental health ramifications.

Moreover, there have been instances of individuals falling victim to financial losses on account of online money gaming, resulting in extreme outcomes like depression, even suicide.

Online money gaming has also been leveraged as channels to facilitate money laundering, and other illicit activities.

The bill, on the one hand, seeks to promote and regulate e-sports and online social games (say, the likes of Candy Crush), while clearly prohibiting online money gaming in India.

The Cabinet cleared the bill on Tuesday, and it is expected to be tabled in Parliament on Wednesday.

Notably, the bill seeks to establish a statutory regulatory authority for oversight and accountability. It calls for registration, compliant mechanism for online gaming platforms.

The regulatory authority will have the power to determine whether or not a particular online game is an online money game, after making due enquiries.

The bill defines online money game as an "online game, irrespective of whether such game is based on skill, chance or both, played by a user by paying fees, depositing money or other stakes, in expectation of winning in return of money or other stake" but specifies that it does not include e-sports.