Date: 14/04/2023

Relevance: GS-2: Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Key Phrases: Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, Online gaming sector in India, Financial distress, Indian mobile gaming industry, Skill over Chance, Rummy and Poker, Self-Regulatory Bodies.

Why in News?

• Tamil Nadu Governor has given his assent to the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act.
• The Bill prohibits online gambling and online games of chance played for money or other stakes.

Online gaming sector in India:

• The revenue of the Indian mobile gaming industry is expected to reach $5 billion in 2025.
• The industry grew at a compound annual growth rate (CAGR) of 38 percent in India between 2017-2020, as opposed to 8 percent in China and 10 percent in the US.
• It is expected to grow at a CAGR of 15 percent to reach Rs 153 billion in revenue by 2024, as per a report by VC firm Sequoia and management consulting company BCG.

Background of the Bill:

• The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act has had a bumpy journey toward becoming law.
• The Governor initially returned the Bill to the State Assembly, stating that it lacked the legislative competence to enact such a law. However, the House re-adopted it and sent it back to him.

The Governor's Change of Heart:

• The Governor's approach to the Bill has been a point of criticism, especially since he had previously approved an identical ordinance in October.
• His meeting with e-gaming industry representatives, while the Bill was under his consideration, did not go unnoticed.
• The Raj Bhavan's silence over the four months that the Bill was with the Governor also raised eyebrows.
• In March, when the Bill was returned to the Assembly, there was no official word from the Governor's side in support of his stand.
• All of this has led to speculation about the Governor's motives for the delayed assent.

The Need for Regulation:

• Online gaming has witnessed a massive surge in popularity in recent years, with millions of users playing various games online.
• However, this growth in online gaming has also led to an increase in the number of people becoming addicted to it.
• The addiction to online gaming has resulted in many individuals and families facing financial distress and has caused serious health issues, including physical and mental problems.
• Therefore, there is a pressing need for regulating online gaming to ensure the safety and well-being of players.
• The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act is a positive step towards regulating online gaming, ensuring that it is not a harmful activity and does not lead to addiction or other negative consequences.

The Skill over Chance:

• The Act defines online games of chance as those where both an element of chance and skill are involved, and the element of chance dominates over the element of skill.
• It also specifies that games can be presented as games of chance; the element of chance can only be eliminated by superlative skill; or games involve cards, dice, or wheel which work on random event generators.
• The Act explicitly names Rummy and Poker as games of chance.
• However, it is important to understand that while there is an element of chance involved in these games, skill plays a significant role in determining the outcome.

Impact of IT Rules

• The development is significant because the Governor's assent to the Bill comes days after the Centre notified amendments to the Information Technology Rules, 2021, regulating online real money games.
• Definition of Real Money Games:
  • The Ministry of Electronics and Information Technology (MeitY) defines real money games as online games where a user makes a deposit in cash or kind with the expectation of earning winnings.
• Setting Up of Self-Regulatory Bodies:
  • The amended rules require the setting up of multiple self-regulatory bodies (SRBs), whose approval will be necessary for online games with a monetary element.
• Prohibition:
  • Games that involve wagering on outcomes of events will not be allowed.
• KYC Procedures:
  • Online gaming companies will have to complete a KYC (Know Your Customer) procedure for users when they first make a deposit in their accounts to play a game.
  • They will also have to follow KYC norms laid down by the Reserve Bank of India (RBI) for its regulated entities.
• Possible Contradiction of State Legislation:
  • MeitY believes that while gambling is no longer regulated by state governments, state legislation that contradicts the Centre's rules is still possible.

Conclusion:

• The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act has finally become law, and it aims to put an end to online gambling and regulate online games in the state.
• The law should be enforced in conjunction with the IT Act, of 2000, and should create a balance between monitoring online game providers and not imposing restrictions on online games permitted under the Act.
• In an ever-evolving digital world, creating an environment for healthy online games is essential.
• While online gaming can be a source of entertainment and a way to hone skills, it should not lead to addiction or financial ruin.

Source: The Hindu

Mains Question:

Q. Examine the impact of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act on the online gaming industry in India. Evaluate the need for such regulations in light of the surge in popularity of online gaming and its potential negative effects on individuals and society.