January 20, 2024

Regulating India’s online gaming industry

Regulating India’s online gaming industry is a complex issue with diverse perspectives. Check here all about the Online Gaming Industry in India.

There is a need for strong regulatory measures in India’s online gaming sector due to rising market challenges such as addiction, mental health risks, financial scams, and national security threats.

Current State Of Online Presence Of Indian Population

  1. India’s Internet User Base: India ranks as the second-largest in the world for internet users, boasting 692 million individuals online.
  2. Rise in Mobile App Usage: The average usage of mobile apps per day has reached 4.9 hours, marking a significant 32% increase from 2019.
  3. Media and Entertainment Usage: A dominant 82% of app activity is dedicated to media and entertainment, with social media platforms being a key component.
  4. Growth of Online Gaming Sector: Experiencing a rapid growth at a 27% compound annual growth rate (CAGR), the online gaming industry in India is expanding, albeit accompanied by potential issues such as addiction and the risk of financial fraud.

Issues Related to Online Gaming in India

  • Addiction and Mental Health Issues: The surge in online gaming has led to problems such as addiction, mental health disorders, and even cases of suicide.
  • Vulnerability to Financial Scams: Players often face financial frauds, partly due to the blurred lines between legitimate gaming platforms and illegal gambling or betting sites.
  • Growth of Illegal Offshore Gambling: The illegal offshore gambling industry in India receives around $100 billion yearly from Indian deposits, showing a 20% growth over the past three years.
  • Tax Revenue Losses: India’s exchequer loses an estimated $45 billion annually due to these unauthorised operations.
  • Threats to National Security and Laundering Risks: The online gaming sector is increasingly being associated with national security threats and money laundering activities, as pointed out by the Parliamentary Standing Committee on Finance.

India And Global Regulation Practices

India’s Approach

  • Development of New Regulations: The Indian government is actively developing new digital regulations to tackle the challenges posed by online gaming.
  • Introduction of IT Rules 2021: The Information Technology Rules, 2021, represent a major move towards digital regulation. However, the implementation of Self-Regulatory Bodies under these rules is experiencing delays.
  • Enforcement Issues with State-Level Bans: Several Indian states have tried to ban online gaming, but these bans are challenging to enforce effectively due to the internet’s transnational nature.

The UK Model

Centralised Regulatory Framework: The United Kingdom has established a centralised government body to regulate the gaming industry.

Regular Reporting and Enforcement: This regulator issues quarterly reports to assess the effectiveness of gaming regulations, including imposing substantial fines for non-compliance and reporting a decrease in problematic gaming behaviours.