Abstract
The “Digital India” drive has improved the digital infrastructure in India. Post‐demonetization, the adoption of digital online payments has seen a substantial increase. With increased digital penetration and a variety of digital payment options, the Indian gaming industry has witnessed substantial growth.
The anti‐gambling laws of most Indian states (“gaming legislations”
The SC has also held that conducting skill games does not amount to “gambling” but is a commercial activity and therefore entitled to constitutional protection. 3
Except in the state of Nagaland, and to some extent the state of Sikkim, no other Indian state requires an operator to procure a license for offering skill games.
Need for Central Skill Gaming Law and Self‐Regulation
Various general laws such as the Consumer Protection Act, 1986; the Information Technology Act, 2000; the Competition Act, 2002; as well as various anti‐money laundering laws and industry codes such as the Code for Self‐Regulation by the Advertising Standards Council of India, apply to skill gaming operators. However, it would be prudent to have a common set of rules that govern skill game operators, primarily for player protection, fair play, good governance of the gaming industry, and providing certainty to online operators and players. To elaborate, since the gaming laws in India are state‐specific, divergent state dynamics are creating uncertainties for the online gaming industry. To illustrate, rummy is considered a game of skill by the SC and is therefore entitled to constitutional protection. However, the state of Telangana has banned all skill games. Furthermore, in one state the statute gives safe harbor to poker, while in another state, poker has been prohibited through an order of the high court of that state. In so far as player protection is concerned, we understand that internationally, the difference between games of skill and games of chance are blurring. This is because one of the main purposes of these regulations is prevention of harm to players and, therefore, whether the game is one of skill or chance becomes irrelevant.
Accordingly, in our view, there should be a federal law that regulates the online skill gaming industry, rather than state‐specific laws. The most effective regulatory framework would be that of co‐regulation. There should be a licensing regime for skill games at the central level with a skill gaming commission. The law should be a light touch. The industry bodies should be encouraged to adopt self‐regulation on specified aspects. This would give them the flexibility to adapt to demands for quick changes in response to new technologies, business models, and player protection issues. The other role a self‐regulatory framework can play is to establish consistency of approach for compliance with various laws, especially when laws and regulations lack complete clarity.
Industry Initiative
Even in the absence of a central law or state laws regulating skill gaming as mentioned above, it is important that the entire skill gaming industry adopts and maintains a very high standard of governance.
At present, two industry bodies have taken the initiative to adopt self‐regulation. The All India Gaming Federation (AIGF) 4 is a not‐for‐profit organization that focuses on policy advocacy, research, and a forum for discussion amongst various stakeholders associated with the gaming industry. The Indian Federation of Sports Gaming (IFSG) 5 is also a not‐for‐profit company, which focuses on sports‐based games of skill. IFSG has adopted transparency, integrity, and responsibility as its guiding principles and has also launched its self‐regulation.
The proposed skill charter (“the Charter”) to be adopted by AIGF, inter alia, will cover the following:
The Charter will establish an Expert Committee comprised of experts from various fields and professions such as the judiciary, data analytics, academics, psychology, and economics. The Expert Committee will determine whether a particular game format is a game of skill or not. This will assist operators in getting an independent view on the skill element in their game formats, and protect players from chance‐based games. The operator will be able to communicate on its platform that the game has been approved by the AIGF Expert Committee. The Charter will promote and provide guidance to operators on know your customer (KYC), transparency, disclosures, integrity, security, responsible gaming, fraud prevention, self‐exclusion mechanisms, and financial integrity. The Charter may also introduce a seal for the approved operators. AIGF will also organize audits of the operators before issuing the seal. The Charter will require operators to adopt effective dispute resolution mechanisms for player disputes. In case of breach of obligations under the Charter, AIGF may suspend or cancel a member operator's AIGF membership.
At present, the Charter provides details of acceptable game formats for rummy, poker, and daily fantasy sports. However, AIGF may expand the scope of its Charter to encompass other skill games as well. AIGF also proposes to introduce a detailed code for advertising through all media.
Way Forward
For the success of such self‐regulation, it is important that all skill game operators adopt and follow it, and efforts are taken to create player awareness in relation to the AIGF seal and its importance. For any self‐regulation to be effective, there needs to be teeth in its enforcement. In the absence of legal enforcement, the market forces such as better player confidence may provide such teeth. As stated above, even if laws were to be introduced to regulate the skill gaming industry, the role of an industry body and self‐regulation will continue to be of paramount importance.