Online Gaming Rules have established a lakshman rekha separating good from bad: Advocate Suhaan Mukerji

The online gaming arena in India is being updated, so to speak, after the Central government notified regulations that will govern all platforms offering such games..In a conversation with Bar & Bench’s Aamir Khan, Advocate Suhaan Mukherji, who has been at the forefront of litigation in the online gaming space since its inception, explains the structural changes brought in through the rules. He also sheds light on their impact on the online gaming landscape and reveals how the new regulatory framework will benefit the gaming community..Edited excerpts follow..Aamir Khan: What are the highlights of the notification?.Suhaan Mukerji: Most importantly, the Centre has finally occupied its legislative domain for games of skill. I would say jurisprudentially, there is recognition under the IT Rules of the judicially laid down preponderance of skill test.This will end the recent regulatory encroachment by states into the online skill gaming domain, which as you know, has been struck down by various High Courts. The Rules accord recognition to those undertaking the business of providing online skill games as online gaming intermediaries. In fact, they are elevated to the status of Significant Social Media Intermediaries in terms of compliance. This ends the uncertainty that both startups and unicorns faced and augurs well for foreign direct investment (FDI) and employment in this sector.The fact that the government has also met the industry halfway by giving it an opportunity to self-regulate with the necessary oversight is testament to enabling ease of doing business. I feel that if all goes well with this regulatory model, this article of faith by the government could be the future model that the Digital India Act might adopt for the digital sector..Since the Rules also clearly make a distinction between games of skill and games of chance (betting and gambling) and the latter is now prohibited in the online domain in India, it provides bright-line prohibition to operating both onshore and offshore gambling sites targeted at Indian users. Of course, in states where gambling is permitted - and there are online gambling platforms available to those located in that state - a mechanism will need to be worked out. I think it’s also good that the government has kept the option to direct anyone who is publishing an online game which is not necessarily a real money game and available to users in India to necessarily comply with this framework as well. Of course any limitations in the law will I am sure will be addressed under further rules and the new Digital India Act, which is under formulation. .AK: How will the online gaming community benefit from these Rules?.SM: The biggest benefit for the gaming community is the safety-first approach of the Rules. What this means is there is now a statutory standard for harm as well as clear do’s and dont’s for providers of online games vis-a-vis their users and those below 18 years of age. A formal grievance mechanism process with personnel in India, with appeals to the Grievance Appellate Committee established under the intermediary rules, is also a significant benefit to users. .As a user I can now see whether a game is a verified game under the Rules or not. Hopefully, this will ensure that internet users will decreasingly fall victim to online gaming scams.Suhaan Mukerji.Given that the Rules clarify what will be permitted in our online environment in India and what will not be permitted, users now have guidance under the Rules on what is safe and what isn’t.As a user I can now see whether a game is a verified game under the Rules or not. Hopefully, this will ensure that internet users will decreasingly fall victim to online gaming scams.I think the Rules will also ensure greater choice for the gaming community as more investment pours in and online gaming intermediaries innovate..I also believe the gaming community will benefit from the fact that these Rules will help streamline and rationalise the approach to the gaming sector by various arms of the government including the taxation and GST regime.The Ministry of Electronics and Information Technology was very clear that it would come forward and assist the industry in addressing all of these issues and the various litigation plaguing the industry because of the lack of clarity which was there till these Rules were notified..AK: In what way do you think self-regulatory bodies can impact the scheme of things?.SM: Self-regulatory frameworks succeed or not based on the intent of industry and the nature of the institution that is established. The Rules very clearly articulate the principles that necessarily have to be adhered to if a self-regulatory model is to work. This is a good step by the government to have enshrined the principles in the Rules. It is now upto the industry to take this forward and build on this. The key to success will be dependent on who will be the functionaries in the self-regulatory organisations (SROs). The fact that the government clearly has the power to accord as well take away recognition to an SRO under the Rules is also a good check and balance..Therefore, I think the way in which this regulation has been structured, it does encourage a framework that could potentially work. Kudos to the team that has worked on these Rules as well as the Minister of State for Information Technology Rajeev Chandrashekhar, who led the consultations with industry, the user community, the legal and regulatory community, etc in the run up to these Rules being notified. I can say that everyone has been heard and you have a balanced and fair set of rules..Kudos to the team that has worked on these Rules as well as the Minister of State for Information Technology Rajeev ChandrashekharSuhaan Mukerji.Given that the government has placed its trust and belief in the industry, I don't see them wasting it away. The self-regulatory model is also suited for this type of an industry, as it's a very fast moving industry requiring quick decisions and domain expertise. So the industry and users will benefit from the bureaucratic framework of traditional institutions having been done away with. Of course, the industry will have to come up with the finances to be able to support the self-regulatory bodies, otherwise it's going to be tough for the SROs to discharge their duties as custodians of the sector. Financial support and talent is going to be key to the success of the bodies that have to be established under the Rules..AK: What are your thoughts on the safeguards introduced through the Rules against addiction, warning, age limit?.SM: These safeguards are already there in most industry association codes, but were never accorded statutory recognition. The fact that the law recognises all of this is a great positive, because it lays down a legal standard as opposed to it merely being an industry practice .Most importantly, the regulation really separates the domain of skill and chance, because they've clearly prohibited online games which allows wagering on any outcome of a game. This is important to ensure that users on the internet don’t fall victim to gambling sites and games of chance..Obviously, games of chance licenses are given by states. We still need to figure out how to reconcile that, because there are states where games of chance are available online and the legal framework will need to accommodate what is in the domain of the states. But I am sure the industry and the Central government and the states will sit across the table and work things out..AK: Could you elaborate on games of skill and chance in the context of the regulations?.SM: Our jurisprudence is very clear. We have a standard which analyses the preponderance of skill o determine whether a game is a game of skill or a game of chance. In layman’s terms, it means that my ability to win a game is dependent on the level of skill I have and the the more I improve my skills through practicing or playing, my chances of winning actually goes up. So it's like in Rummy or Chess or Bridge - any game where my ability to succeed or win improves if I actually hone my skills. Therefore, it all boils down to the fact that you have a measurable standard where your skills are tested by a game or a task, as opposed to the result of playing a game being an indeterminate, random outcome, whatever one’s skill level. The Rules now require the self-regulatory bodies recognised by the Ministry to now apply this test and verify whether a game passes this test or not. Therefore, the simple mantra is skill has to, and must, outweigh chance..AK: Can we see wagering not happening now that the Rules are in place? .Suhaan: Many gambling sites were easily accessible from India. Today, these sites are prohibited under this current framework.The Rules have established a lakshman rekha separating the good from the bad. If Intermediaries have to continue to benefit from safe harbour, they will have to block access to gambling sites, or to games that are not in compliance with the Rules, or have not been verified per the Rules. All in all, we should have a safer digital environment as a result of these Rules..Mukerji is the Managing Partner of PLR Chambers, and specialises in public policy and regulatory affairs.