Govt proposes rules to regulate online gaming to create a safer environment and minimise negative social impact

NEW DELHI- Online gaming and igaming have been a fast emerging sector in India in recent years. Thanks to fast and low-cost internet access, casino games and betting online have become more accessible. Meanwhile, India has traditionally had strict laws and regulations in place to combat both land-based casinos and online gambling activities. However, due to the ease of internet access, it’s possible for Indian residents to access casinos in India digitally, offered by offshore companies. These are typically reliable companies offering online gambling services from Europe and North America. The problem is that the Indian government and states have little to no control over this activity. On the first Monday of the year, the Ministry of Electronics and Information Technology of India published a draft outlining rules which would address shortcomings in current legislation. This is a step which could open up for legalized gambling and help get a grip and control the narrative for online gambling in India. It could also help the online gaming industry reach the estimated $5 billion net value by 2025.

Additionally, the government has made further progress and included online games in the Financial Bill 2023, making a clear distinction between games of skill and chance. The move was seen as the government’s admission of the need for different tax rates and regulations, which the online gaming community happily welcomed. While the Financial Bill 2023 deals with definitions, users’ winnings and TDS (tax deducted at source), the GST rate has yet to be decided.

Besides the financial aspects of online gambling and regulations, there’s also a need to control the narrative around the social ramifications of gambling. Playing in casinos is addictive by design; as such, the activity of gambling can create problems. Far from all players develop significant gambling problems, but the risk is high enough for both the government and online casino operators to fight it proactively. Problem gambling is well documented in and outside of India and is one of the main reasons why there’s a tradition of strict laws in India. But as our society is rapidly conforming to digital reality, the attempt to forbid gambling strictly is futile. Then it becomes increasingly more important to conform to that new reality and implement processes to safeguard citizens from the potential harm of online gambling. That fight starts on a government level, typically in conjunction with providers of such online gambling services. The proposed rules from January 2, 2023, will be part of the Indian Intermediary Guidelines and Digital Media Ethics Code, addressing the concerns expressed above regarding the need of consumer protection needs.

Problem gambling is closely linked to proximity. The closer a person is to a casino, the more likely the person is to become a problem gambler. With the internet, anyone that can go online can access a casino. The problem with gambling problems is that there are no sole indicators available to show that a person has a problem. Typically what creates a problem is a myriad of behaviours that often does not have any relevant metrics or traces of data available, at least not easily available to analyse. What operators and legislators do is take a proactive approach, limiting the risks and effects of gambling problems. Typically, in a regulated online casino, the players would be offered a set of responsible gambling tools designed to help them control their gambling. The most common is that player can set their own thresholds for how much money they can spend during different time intervals and also how much time they can spend in the casino over a specific time period. Another is the importance of KYC (Know-Your-Customer), where a player provides documentation of their persona, often including financial references to bank statements and income statements. By having financial profiles of players, a casino can easily see if a person would be out-spending their general income and financial resources.

As India increasingly opens up the legislative landscape for online gambling, it becomes increasingly important to proactively fight problems derived from gambling. Thankfully, there are a lot of existing frameworks available from other countries and jurisdictions. Due to the fact that problem gambling is not isolated to India but rather a global problem stemming from human behaviour, there’s plenty of research and investments being made to curb the problems. While the focus on detecting problems has been on money spent and time played, there are more variables based on behaviour which can be accounted for. This includes cancelled withdrawals, shifts in timings for activity, and betting patterns such as the size of wagers. In online casinos, a lot of data could be collected and analysed to determine patterns that may point to problem gambling.

Currently, India is in a good position to get things right from the start if they emphasize the importance of responsible gambling and force regulated gambling operators to be both proactive and actively track and give feedback on the activity of players. After all, collecting taxes is a straightforward process, while regulations curbing bad behaviours among millions of individuals is a vastly more complicated process. This is why it’s important for state legislators to step in at an early stage and set a high standard for online casino operators and media outlets to limit advertising and better educate the masses on the potential risks of online gambling.