The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 was recently amended and is called the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 ( Rules ). The objective of the said Rules is to facilitate and regulate the online gaming eco-system and attempt to eliminate false and misleading information about the government.

AMENDMENT

In accordance to the Rules, the intermediaries are obligated to not host, publish, or share any online game that might harm a user or that has not been certified as a legal online game by one or more self-regulatory bodies for online gaming designated by the Central Government. The intermediary must also make sure that no advertisement or surrogate advertisement of a non-permissible online game is hosted on its platform.

Further, the self-regulatory body shall have a framework created regarding safeguards against user harm and contain measures to safeguard through parental control, and the authority to inquire and satisfy itself that the online game does not involve wagering on any outcome. The online gaming intermediary and the game must comply with the rules and the legal requirements for being competent to enter into a contract i.e. at 18 years, sound mind etc.

The said Rules have further imposed obligations on the online gaming intermediaries to appoint a Chief Compliance Officer ( CCO ), a nodal contact person and a resident grievance officer all of whom must be residents of India. CCO will be the person in charge of ensuring compliance with the Information Technology Act, 2000 (21 of 2000) on behalf of the gaming entity under the Rules.

In relation to online games that use real money, the said Rules also have enforced further responsibility on such online gaming intermediaries. These include (a) having a physical contact address in India published on its website, mobile based application or both; (b) showing a seal of approval or verification mark from the self-regulatory body on such games; (c) informing their users of the policies for withdrawal or refund of deposits; (d) how winnings are calculated and distributed, fees, and other charges that are due; and (e) obtaining the KYC information of the users; and refusing to extend credit or allow third parties to finance the users.

The Rules provide that the requirements will not take effect until a sufficient number of self-regulatory bodies have been designated and appointed, giving the online gaming sector sufficient time to fulfil its commitments.

Further, the said Rules now require intermediaries to refrain from publishing, disseminating, or hosting fictitious, inaccurate, or misleading information regarding any activity of the Central Government.

The Central Governments Fact Check Unit will be informed and will identify any fake, inaccurate, or misleading information. It should be highlighted that the intermediaries were already compelled by the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 to take reasonable precautions not to host, publish, or share any information that was obviously incorrect and deceptive in nature.

These Rules have laid down the obligation of intermediaries to make reasonable efforts not to transmit, disclose or post information which is false, untruthful and incorrect in nature.
 

MHCO COMMENT

The recent amendment has invited a plethora of dismay against the Fact Check Unit of the Central Government. The said Rules though operational, are currently sub-judice and challenged through a Writ Petition filed before the Bombay High Court. Even the obligation to have a physical contact address in India for all online real money games (including foreign online real money games) is challenging to comply with. However, given the ever-growing pace of the online gaming ecosystem it is essential that the same to be regulated under the Indian laws.

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Author: Bhushan Shah - Partner | Shreya Dalal - Associate Partner | Alisha Dsouza - Associate

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This update was released on 17 Apr 2023.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.

Legal Update Team
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