New Delhi: The Lok Sabha on Wednesday passed a bill that imposes a sweeping ban on online money games and regulates online social games and e-sports. Violations will entail sweeping penalties and imprisonment, not just for running and facilitating online money games, but advertising as well.
‘The Promotion and Regulation of Online Gaming Bill’ was passed without any debate within hours of its introduction. Explaining the rationale of the Bill, Electronics and IT Minister Ashwini Vaishnaw said: “Online money gaming has become a matter of concern as such platforms have led to addiction and have also been used for fraud and cheating.”
In certain cases, these platforms have been linked to illegal activities, including money laundering, financial fraud, the financing of terrorism, and use as a messaging platform for terrorists and terrorist organisations, thereby affecting the security and sovereignty of the State.
Game categories
The Bill identifies and bans ‘online money games’ irrespective of whether such a game is based on skill, chance, or both, played by a user by paying fees, depositing money or other stakes in expectation of winning, which entails monetary and other enrichment in return for money or other stakes.
At the same time, it promotes ‘online social game’ which refers to an online game that does not involve the staking of money or other stakes, nor participation with the expectation of winning monetary gain in return for money or other stakes.
Sections 5, 6 and 7 of the Bill ban all services facilitating online money games, advertisements and financial transactions. “No bank, financial institution, or any other person facilitating financial transactions or authorisation of funds shall engage in, permit, aid, abet, induce or otherwise facilitate any transaction or authorisation of funds towards payment for any online money gaming service,” the related provision said. It also bans advertisements promoting such games.
Penalties
Advertising money games is punishable with up to 2 years imprisonment or a fine of up to ₹50 lakh or both under Section 9(2). Facilitating financial transactions for money games is punishable with up to 3 years imprisonment or a fine of up to ₹1 crore or both. Repeat offences of running services or financial facilitation are punishable with a minimum of 3 years imprisonment and a fine between ₹1-2 crore. Repeat offences of advertising for money games are punishable with imprisonment of a minimum of 2-3 years and a fine between ₹50 lakh to ₹1 crore under section 9(5).
Policy risks
According to Anuraag Saxena, CEO at E-Gaming Federation, global experience shows that calibrated regulation delivers better outcomes than blanket restrictions, which can unintentionally nudge users towards unregulated offshore platforms.
Probir Roy Chowdhury, Partner at JSA Advocates & Solicitors, said the proposed law will harm the domestic gaming industry and undermine investor confidence.
“This move disregards numerous Indian Court rulings that have affirmed the legality of skill-based online games, which are distinct from gambling,” he said.
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