On Monday, the Indian government proposed the rules, which will be part of the Indian Intermediary Guidelines and Digital Media Ethics Code, due to concerns over the rising number of complaints of gambling addiction, especially among minors. For the first time, these regulations will oversee aspects of online gambling that stand in a “grey area” between entertainment and gambling practices.

As per the draft rules, the term “online game” includes every game which is played on the Internet and in which the player “makes a deposit with the expectation of earning winnings”. The Indian information technology ministry could determine the exact games, which are covered by the legislation.

“Self-Regulatory Bodies” Instead of a Sole Government Regulator

The proposed rules suggest the creation of “self-regulatory bodies” instead of the establishment of a sole regulatory agency. The board of these bodies should consist of “an independent person from the online gaming, sports or entertainment” sectors, a representative of the online game players, an expert in psychology or consumer education, and an expert in public policy who has to be appointed by the Indian government. Per the draft changes, companies should name a chief compliance officer and verify the user identity before the creation of an online account.

One of the main tasks of these bodies will be to elaborate rules for the online gambling segment, which would prevent players from suffering harm and addiction. The established framework of rules should also protect children and prevent financial criminal practices.

In case a self-regulatory body does not create efficient rules or fails to oversee the companies in the sector, the central government would take the respective measures, including suspension of the registration of such bodies.

A Boom in the Online Gaming Market in India

Roland Landers, chief executive officer of All India Gaming Federation, commented that this was a great first step for the regulation of the online gaming sector and would reduce the “state-wise regulatory fragmentation”, which causes difficulties for gaming companies.

The Indian information technology ministry published the draft rules after a recommendation was made by a government panel because the gambling sector is supposed to reach $7 billion by 2026. Recently, many US companies, such as Tiger Global and Sequoia Capital, have supported Indian start-ups, namely Dream11 and Mobile Premier League, which are popular with their “fantasy cricket”. The development and expansion of such games, especially among young people, has led to addiction, financial losses, and in some cases – suicides.