Recently, the Ministry of Electronics and Information Technology amended the IT Rules 2021 to add provisions for online gaming. A self-regulation model has been applied for the online gaming sector where SROs will verify the games that can operate in accordance with the rules. These new online gaming rules have been included as an amendment in the IT Rules 2021.
The state governments across the country legislate on the subject of โgaming and bettingโ and have taken varying position with respect to online gaming. The governments of Tamil Nadu, Karnataka, Telangana and Andhra Pradesh have banned online gaming while Sikkim is one of the few states that has regulated online gaming and brought in a legislations. Many states continue to work without any specific framework for online gaming. Hence there is inconsistency in the gaming laws across the country.
Reports Boston Consulting Group (BCG) and Sequoia Capital have shown that there is consistent growth in the gaming market. By regulating it, the Government of India can tap into additional source of revenue. Currently, online gaming attracts 18% GST, however there is a proposal make it 28%.
In this regard, Ms. Vinita Bhatia authored an article in Outlook Business which discusses the benefits and challenges of the concerned amendment.
The article features views of Mr. Sumit Agrawal, Managing Partner, Regstreet Law Advisors and former SEBI officer who notes that till now, online gaming companies were functioning in regulatory limbo with a threat of overarching government interference at any time. The new rules show the government’s intent to regulate rather than restrict and will make the sector more attractive to investors. All stakeholders, including investors, have welcomed this regulatory clarity. With SROs, the government has opted for a light-touch regulatory approach as opposed to extreme measures such as imposing centralised licensing requirements, as seen in China, they feel. Investors are reassured that the government is providing legitimacy to the industry.
Interested readers in gaming laws can read SC judgement of State of AP vs. K. Satyanarayana and K.R. Lakshmanan vs. State of Tamil Nadu. Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.