Self-Regulation Rules In Online Gaming Hint At A Promising Vision For Regulating Digital India

As of March 2023, there are many more gamers in India than the total population of the United States of America. This digital transformation over the last decade has accentuated the difficulties of regulating innovation. However, inventive new governance models being introduced by the Central Government based on self-regulation could hold the key to addressing sector specific challenges of innovation.

Government Mandated Self-Regulation

Ideas of self-regulation are inspired by the notion that an industry can be made responsible, to some extent, for setting its own standards in public interest, monitoring compliance with these standards, and enforcing rules among its members. This is typically achieved through the constitution of ‘self-regulatory bodies’ made up of relevant industry, government and public stakeholders. In India, these bodies often serve as an ‘intermediate tier’ of regulation which establishes codes and procedures to meet broad benchmarks set by the Government. However, the most important element introduced by self-regulation is greater autonomy. These bodies also act as an effective conduit facilitating information flow between commercial entities and the various arms of the executive Government. Additionally, the flexibility and constant interface with regulators allows self-regulated industries to move quickly to address new challenges, and ensure the industry remains in line with evolving consumer safety standards.

This is not to suggest that self-regulation is without its flaws. It is not suited to all sectors, and is not a substitute for all forms of government oversight. However, self-regulation can make an strong case in complex environments where the attributes of autonomy, speed, and government engagement are extremely desirable. The established advantages of self-regulation are particularly well suited to rapidly evolving digital services such as gaming, where the rate of innovation far outpaces the adaptability of traditional governance approaches.

It is this hurdle of rapid innovation which has persuaded the Indian Ministry of Electronics and Information Technology to experiment with self-regulation for online gaming. Only five years ago, this would not have been fathomable. The draft Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, revealed in January 2023 by the Ministry, proposes that all real-money gaming companies must comply with specified due diligence responsibilities through a self-regulatory framework. Once these rules are notified, ‘online gaming intermediaries’ under this framework will be expected to form self-regulatory bodies, which will evaluate the design of online gaming products for conformity with the law. Thoughtfully, the draft rules create powerful incentives for self-regulatory bodies to perform their duties well, by making the official recognition of these bodies contingent on the track record of their members in promoting responsible online gaming, the reputation of their governing body, and the overall expertise of the body. By creating opportunities for industry-government interface, the framework will also assist real-money gaming companies in understanding where consumer and societal interests actually lie. 

Another benefit, in the context of gaming, is the increased scope for nuanced targeting of outlying regulatory or governance concerns. Rather than being made subject to a ‘one-size-fits-all’ imposition by the Government, a self-regulated gaming industry can tailor its solutions to the specific needs of the market. For instance, under the draft gaming rules, the development of measures safeguarding against ‘in-game’ financial frauds has been left to self-regulation. This provides self-regulatory bodies with the elbow room to analyse the risk of frauds by game genres and perhaps evolve differentiated and innovative compliance measures for high risk games. Such ‘micro-level’ targeting would be difficult to achieve in the absence of these self-regulatory bodies. This can also enable greater cost effectiveness, as the gaming industry can allocate resources towards regulation based on empirically assessed requirements, provided that the baseline conditions set by the Government continue to be met.

Continued Government Oversight

However, it is important to note that the IT Ministry’s draft rules for self-regulation are not a ‘free-for-all’ for the online skill-gaming industry. These draft rules still mandate high standards of accountability from that should be expected from the gaming industry in the interest of user protection. Online gaming intermediaries will need to follow strict customer identification standards in accordance with the draft rules when opening user accounts. Further, the gaming self-regulatory bodies will have to communicate reasoned reports on every game validated by them to the Central Government, and rigorously enforce two tiers of a grievance redressal system for users. Lastly, the Parliament of India and the Central Government will continue to retain overall control over the frameworks for digital regulation. Existing laws on information technology, data protection, fintech, and mitigating online criminal activity and other associated aspects of technology will ensure that the State will have the final say on gaming innovation. In essence the State can continue to set the regulatory guard rails and expectations, while leaving the industry to iron out granular issues relating to their increasingly technical products and services.

Digital innovation has now been wreaking havoc on law-making for over two decades. The Government’s forays into self-regulation should be viewed as constructive exploration which may solve India’s gaming conundrum. There is no doubt that initiatives such as the IT Ministry’s draft rules for online gaming will yield substantial insights which will inform governance of an Indian future that is replete with digital technologies.

I am an independent Delhi-based lawyer with interests in technology, law and policy. The views expressed in this post are my personal opinion.