14 September 2024 – The Hindu

Issues associated with online gaming

• Playing games online allows players to interact with each other and play cooperatively even when they are not physically in the same place. It may be accessed on a number of devices, such as smartphones and desktops. Participating in online gambling is putting bets or wagers on games and events in the hopes of winning cash or rewards. It uses virtual chips or digital currencies in place of real money and may be played on a variety of devices.

• Depending on how much talent is required, gaming and gambling can be distinguished from one another. Online activities that don’t demand skill will be classified as gambling as opposed to gaming. Whereas gambling activities depend on chance, gaming activities depend on skill.

What is the Indian online gaming ecosystem’s current state of affairs?

• Growth Prospects: The Indian online gaming market is mostly a homegrown start-up ecosystem, with a 27% compound annual growth rate. Online gaming and artificial intelligence (AI) are predicted to boost India’s GDP by $300 billion by 2026–2027.
• The mobile gaming industry in India is expected to generate USD 5 billion in revenue by 2025, up from USD 1.5 billion in 2020, according to a 2021 research released by Boston Consulting Group (BCG).
• Legislation to Regulate the Gaming Industry: The Online Gaming (Regulation) Bill, 2022 was presented as a Private Members Bill in the Lok Sabha during the Parliamentary Budget Session.
• The Bill aimed to establish an online gaming regulatory framework and preserve integrity in online gambling.
• The MeitY-constituted task force has completed its final report with suggestions for regulating India’s online gambling market.
• Previously, legislation prohibiting online gaming were passed by states including Karnataka, Telangana, Andhra Pradesh, and Tamil Nadu.
• State High Courts, however, overturned them on the grounds that a complete ban would be unjust to games of skill.
• The Rajasthani government released a draft bill to control online gaming, particularly fantasy sports.
• Growing Gaming Companies: Infosys Limited, Hyperlink InfoSystem, Fgfactory, and Zensar Technologies are just a few of the more than 400 gaming companies operating in India at the moment.
• Is it legal to play games and gamble online in India?
• Legal Jurisdiction: The exclusive authority to enact legislation pertaining to gaming, betting, and gambling is granted to state legislators by Entry No. 34 of List II (State List) of the Seventh Schedule of the Indian Constitution.
• The majority of Indian states control gaming by making a legal difference between “games of skill” and “games of chance.
• Public gaming Act, 1867: There is currently only one central law in India that regulates all forms of gaming. The Public Gambling Act of 1867 is an antiquated statute that is ill-suited to deal with the problems posed by virtual casinos, internet gambling, and gaming.
• The Indian Finance Ministry has declared that internet gambling, horse racing, and casinos would be subject to a 28% Goods and Services Tax (GST).
• The Lotteries Regulation Act, 1998: In India, lotteries are regarded as lawful. The state government should be in charge of organising the lottery, and the draw should take place there.
• Foreign Exchange Management Act (FEMA), 1999: The FEMA Act of 1999 forbids the remittance of earnings from racing or riding or winning the lotto.

What Kinds of Issues Do Indians Have with Online Gaming?

Exchequer Loss:

• Due to a lack of proper regulation, illicit offshore gambling markets have flourished, harming consumers and costing the government a significant amount of money.
• India invests USD 100 billion annually into the illegal offshore gambling and betting business, which has grown at a rate of 20% over the last three years.

Issues Regarding Compulsive Online Gaming:

• The addictive nature of some online gaming activities is causing increasing worry since it may result in obsessive conduct, abandonment of obligations, and detrimental effects on mental health.
• These problems show how important it is to look more closely at the psychological repercussions of prolonged gaming.

Online Gaming’s Financial Risks:

• Excessive gaming spending can put people at risk for financial difficulties, such as debt and hardship, especially those in vulnerable demographics.
• This highlights the significance of ethical concerns in the gaming business and calls into question responsible customer engagement.
• Regulating Ambiguity in Differentiating Between Gambling and Skill-Based Gaming:
• The absence of precise delineations distinguishing skill-based gaming from gambling creates regulatory uncertainty, giving rise to moral discussions and differing perspectives regarding the characteristics of different gaming pursuits.
• For the gaming business to have fair and reasonable laws, it is imperative that this issue be resolved.

Techniques for Laundering Money:

• Because players can deposit significant sums of money into their online accounts and subsequently withdraw those funds in a legal manner, online gambling can be utilised as a conduit for money laundering.

Cyber-attack-prone:

• Online casinos are susceptible to cyberattacks, which could result in the theft of players’ private and sensitive financial information, breaking data protection laws and compromising user privacy.
• Social Disengagement:
• Because gamers might spend hours playing games online and without interacting with friends and family, internet gambling can result in social isolation. There’s a chance that this will turn kids into criminals.

New Trends in Cybercrime:

• The use of foreign online betting sites for money laundering is one of the trends in cybercrime that the Parliamentary Standing Committee on Finance has recognised.
• These problems are a result of insufficient regulation, which emphasises the necessity of a specialised regulating body.

What Actions Can Be Taken in India to Control Internet Gaming?

Strong Regulation of Online Gaming Is Critical:

• Robust regulation of the internet gaming business is desperately needed. Due to the internet’s cross-border nature, attempts by certain state governments to outlaw online gaming have encountered difficulties.
• The Online Gaming (Regulation) Bill, 2022, which was presented by private members, ought to be revised and approved by the legislature.

Britain’s Centralised Regulatory Framework:

• Online gaming is regulated by a centralised government body in the UK, which releases reports on its impacts every quarter.
• A centralised regulatory approach has been beneficial as seen by the decrease in disordered gaming and medium-to-low risk gaming conduct brought about by strict enforcement and focused efforts.

Juggling Market Segments That Are Regulated and Unregulated:

• A market without regulations might not be the most advantageous for society as a whole.
• The Indian online gambling business demonstrates how a lax approach to regulatory enforcement fosters the growth of a shadow economy, according to the International Monetary Fund (IMF).
• To ensure that the industry grows responsibly, a balanced strategy is required.
• Rules for Information Technology as a First Step in Oversight:
• One positive step towards industry oversight was the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
• Nonetheless, the tardiness of Self-Regulatory Bodies’ announcement has impeded the advancement, underscoring the necessity of stringent regulations to safeguard India’s substantial gaming community.

Providing for the General Welfare of Society:

• It is imperative to establish a framework to safeguard digital citizens and national interests, as well as to ensure the appropriate expansion of the online gaming industry.
• The general welfare of society, player safety, and damage reduction should be the main priorities.
• The legislative framework ought to conform to the Information Technology Act of 2000 and the Digital India Act of 2023, which stipulate data privacy standards.
• Online gaming companies’ ethical responsibilities:
• All corporations, regardless of size, function based on profit-driven objectives. The ethical obligation of gaming firms to make sure their platforms don’t exploit players or promote addictive behaviours is ignored.
• It becomes essential to put user welfare ahead of business interests, highlighting the moral responsibility that businesses bear in creating a safe and responsible gaming environment.

Extensive Investigation and Evaluation:

• Invest in in-depth studies on the psychological and socioeconomic effects of online gaming to support the creation of efficient regulatory frameworks, data-driven decision-making, and evidence-based legislation.

• The rapidly changing digital market environment, especially in the online gaming sector, highlights the critical problem of market failure brought on by insufficient regulation. Despite the potential for economic growth, the rise in online gaming has given rise to a number of worries, including financial fraud, mental health disorders, addiction, and threats to national security. It is clear that India urgently needs a strong regulatory framework to protect users and national interests, promote responsible growth in the online gaming industry, and address the concerns of tax evasion and the growth of the shadow economy.