The Great Gamble: New Regulations Answer to Online Gambling Menace?

13th May, 2024 - 10:49 am Categories: Online Gaming 0 Comments

In recent years the online real money games have grown at a stupendous rate in India, coupled with general growth of online gaming industry. The latest amendments by the Indian Ministry of Electronics and Information Technology (MeitY) in the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 can be seen as the state’s attempt to regulate the burgeoning Gaming market and protect consumer rights, as well as make online gaming safer and secure. But the question remains that whether these amendments would be successful in curbing the menace of online gambling.

At present the online gaming industry has grown by Compound annual growth rate (CAGR) of 28% reaching INR 16,428 in FY23[1]. The industry in further expected to double in FY28 and reach a whooping INR 33,243 crore. With this there has been a rising concern when it comes to the protection and safety of the users involved in online gaming. Online real money games usually involve gambling and are perhaps one of the most concerning issues relating to the gaming industry currently.

“…online rummy–related suicides in Tamil Nadu have been gaining attention recently, with more than 30 reported cases. This led the state government to form an expert committee that had unanimously recommended a total ban of online rummy.’’[2]

The excerpt above from the report published in National Library of Medicine paints a grim picture of some of the dire consequence of online real money games. The figure would continue to rise as more and more people continue to involve themselves in online real money games. One of the biggest challenges when it comes to regulation of gaming platforms is online gambling. It has been made possible due to the loophole created owing to the ambiguity that exists in the when it comes to regulation of online gaming in Indian Laws.

The Indian law makes gambling illegal, any activity or game involving gambling is henceforth non-permissible. The gambling and betting of all kinds are regulated by Public Gambling Act, 1867. The act is severely outdated and is inadequate to deal with the problem arising in the modern times. Loopholes are being used by gaming companies to take unfairly continue gambling on their respective platforms. Henceforth a lot of expectations attached to the new amendments that the government has brought in. The latest amendments say among other things that all online games need to be registered with the Self-Regulating Body (S.R.B). The Amendments imposes additional compliance requirements on Online Gaming Intermediaries in an attempt reform online gaming. Three SRBs are recognized to enforce these new rules.

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In spite of the numerous amendments on the issue they have failed to address the elephant in the room that is the rampant online gambling happening in online real money games through Fantasy applications and other platforms. Fantasy applications are basically online prediction games connected through real life sports games. Dream 11 is one such online sports Fantasy platform connected through Cricket. The users bet on which team or player is likely to win the match. However, many experts believe that these games are no different from regular gambling. Surprisingly enough the probability of user winning is less than 1%. India is the biggest Fantasy online market with rampant unregulated online gambling. Other online real money games such as card games like Poker, rummy, Teen Patti etc. work along similar lines.

The online gambling when compared to offline gambling is more harmful, due to sheer participation and involvement of the public, due to which a public at large is affected and influenced. Factors such as easy availability, accessibility, affordability, anonymity, and convenience contribute to the continued growth of online gambling. Additionally, the online gambling games on an average have a significantly higher participation of minors than offline ones. Factors such as poor impulse control and poor decision-making which are inherent to the young age coupled with external factors such as online peer pressure and aggressive online marketing really highlight the potential harm that online gambling can cause to young vulnerable individuals.

The latest amendments constitute a Self-Regulatory Body (S.R.B) which is expected to help maintain a fair and regulated market for online real money games in India. It is also said to provide guidelines for the protection of users from financial losses and addiction. This is welcome step but in hindsight it seems implausible. Reports suggest, that these online gambling platforms have been linked to inducing addiction, depression and affecting mental health of person. The guidelines provide no relief to the individuals who are already in debt or have become addicted.

These gaming platforms are able to escape scrutiny and regulations by identifying their gaming services as ‘game of skill’ rather than ‘game of chance’. The Supreme court in R.M.D. Chamarbaugwala v. Union of India[3] said that games involving gambling are termed as ‘game of chance’ where the chances of the winning depend solely on luck rather than the skill of the player whereas the ‘game of skill’ is the one in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the players. All ‘game of chance’ barring few exceptions are constitute as gambling and are illegal on the other hand ‘game of skill’ are permissible. However, no clear demarcation exists as to which particular game would constitute as game of chance or a game of skill. This has been left at the discretion of the State, as per the Public Gambling Act, 1867. This is used as leeway by Gaming companies to bypass anti-gambling laws. Also, as the consequence the States arbitrarily decide as to whether to allow gambling or not. States like Goa permit licensed brick-and-mortar gaming activities, while some States (such as Meghalaya, Nagaland and Sikkim) have introduced licensing regime in a bid to regulate online gaming activity. Such differing rules and regulations amongst various states further jeopardises efforts to bring gambling under control.

CONCLUSION

The latest regulations seem to be inadequate in dealing to curb online gambling. The problem would continue to persist unless a uniform legislation isn’t brought about by the Centre. All the initiatives, guidelines and amendments would be all for nought till one common law is passed by the Centre to curb gambling in the gaming industry. The rising market for online gaming cannot be allowed to left to its own devices, it is likely to create a huge hazard in the society. Gambling and betting being the State Subject creates needless problems ranging from different interpretations on the same subject, creating a haphazard situation in society.

Regulations for gaming in one state might not be applicable in other state. There should be limited time on gaming applications for the users to play these online games, so as to not get addicted to these online games, and some guidelines should be issued for the minors playing these games.  There is also some authority to look into the financial aspects involved in the gaming industry and provide relief to those who are adversely affected.

Author: Prajjwal Singh, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

[1] Lumikai Gaming Report 2023, pg. 2-4 (2023)

[2] Lakshmi Vijyankar & Vinayak Vijyankar, Online gambling and suicide: Gambling with lives, NCBI NLM, pg. 1-2 (2023)

[3] R. M. D. Chamarbaugwalla vs The Union of India, AIR 1957 SCR 930.