Ahlawat & Associates


Meaning and extent of ‘harm to users’ under the Online Gaming Regulations in India

The Government of India has (as of April 06, 2023) notified an amendment to the Indian Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”) by way of which players in the online gaming industry have been brought under the aegis of the IT Rules.

For context, the IT Rules read with the Indian Information Technology Act, 2000 (“IT Act”) constitute the primary legislation that governs online intermediaries operating in the country. The statutory definition of intermediary [under the IT Act] is rather encompassing. Section 2(w) of the IT Act provides that an intermediary “with respect to any particular electronic records”  broadly means any person who on behalf of another person “…receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cyber cafes’.

Following the amendment in April, the IT Rules now include a statutory definition of an “online gaming intermediary” [under Rule 2 (qa)]. An online gaming intermediary has been defined thereunder as “an intermediary that ‘enables the users of its computer resource to access one or more online games”. Further, the term “online game” has been expressly defined as any “…game that is offered on the Internet and is accessible by a user through a computer resource or an intermediary…”.

Interestingly, the amended IT Rules provide that an “online real money game” means any online game “…where a user makes a deposit in cash or kind with the expectation of earning…” any winnings(viz. any prize in cash or kind “…which is distributed or intended to be distributed to a user of an online game based on the performance of the user and in accordance with the rules of such online game”)  on that user’s deposit. Further, these categorically distinguish that a “permissible online game” comprises of either a “permissible online real money game” or “…any other online game that is not an online real money game…”. The amended IT Rules also provide for the establishment of an “online gaming self-regulatory body” inter-alia for the determination and regulation of permissible online real money games.

Legislative Intent: It is pertinent to mention that with the advent of technological advancement in the gaming industry, coupled with the ease of accessibility to a wider demography, there has also been an increase in the number of studies citing the risks associated with excessive gaming. The intent behind the promulgation of the latest amendment in the IT Rules seems to be to protect the users (particularly children, but also adults) from any harm that may befall one while engaging in online gaming, (which may comprise financial, psychological as well as physical harm). The Indian government thus seems to have exercised its jurisdiction in order to curb and mitigate such harm (actual and potential) to the highest extent possible by ensuring that the industry remains regulated in all aspects.

As one of the leading gaming law firms in India, our team of gaming lawyers in India have perused the references to the term “user harm” under the amended IT Rules and reproduced our analysis of the meaning and intent behind the use of this term hereinbelow.

User Harm and its Extent in IT Rules: Under the IT Rules (read with the IT Act) different kinds of intermediaries are subject to various compliances. The latest amendment has added online gaming intermediaries to the list of intermediaries obligated to adhere to the compliances listed thereunder.  As part of the due diligence to be observed by all intermediaries (including online gaming intermediaries), the IT Rules (under rule 3) not only impose a responsibility upon the online gaming intermediary to “…cause the users of its computer resource to not host, display, upload, modify, publish, transmit, store, update or share any information…” that could be in the nature of an online game that causes “user harm” – these also mandate that an intermediary, including an online gaming intermediary, itself must make reasonable efforts to do the same.

The amended IT Rules clarify that the references made to “user harm” and “harm” (as cited hereinabove) mean any effect that is detrimental to a user or a child, as the case may be. It is pertinent to mention that while the IT Rules, even prior to the amendment, had covered the aspect of harm to children, under the amended IT Rules an intermediary as well as its users are specifically prohibited from sharing information that could be harmful to a child.

From the above, it is clear that the terms “harm” and “user harm” have been quite broadly defined in the amended IT Rules. The intent seems to have been to define such terms in the widest possible manner so as to ensure that any act or omission that could be likely to cause harm to a user and a child has to be avoided to comply with the law.

It is to be noted that the principle of “safe harbor” enshrined in the IT Act for intermediaries has previously allowed them to disclaim liability in acts done without their active involvement. The amended IT Rules have however ensured that in order to claim the “safe harbor” (or legal immunity) provided under the IT Act for intermediaries, intermediaries must now actively adhere to the IT Rules and other applicable laws. This obligation of prevention of user harm has been imposed upon all intermediaries. All intermediaries, and not just online gaming intermediaries, are required to ensure that they are not part of any information dissemination that involves an online game that could be harmful to a child or a user.

Furthermore, as mentioned above, the IT Rules prescribe that the verification of online real money games will be undertaken by an online gaming self-regulatory body. In order to assess whether an online real money game qualifies as a permissible online real money game, the IT Rules provide that the self-regulatory body (as set up under rule 4A) will determine, among other things – whether an online game contains adequate safeguards against user harm, including self and psychological harm – and will further provide a framework for the same. It is to be noted that this provision of the IT Rules is directly applicable to any online gaming intermediary interested in making available an online real-money game.

With respect to curbing activities that could lead to user harm, the IT Rules have further bestowed power on the Indian Government under rule 4C (wherein obligations in relation to online game other than online real money game have been covered). As per the relevant provision,  the Indian Government, if it considers it necessary to do so in the interest of preventing user harm, may, by notification direct an intermediary to observe (in relation to online game other than online real money game) the due diligences provided under IT Rules, as if the intermediary were dealing with a permissible online real money game. In this particular provision, the IT Rules provide that the reference to user harm means any effect that is detrimental to users.

In light of the aforementioned, it is evident that prevention of harm to users, including adults as well as children, has been kept as a high priority by the Indian Government while drafting the latest amendment to the IT Rules. The amended IT Rules have obligated all categories of intermediaries being governed by the IT Rules, and not just online gaming intermediaries, to avoid the dissemination of information pertaining to an online game that causes or is likely to cause user harm. Further, the IT Rules have imposed an obligation on the online gaming self-regulatory body (proposed to be set up therein) to ensure that the online game verification process determines its verification based upon the criteria that the online game contains safeguards against user harm of both self and psychological kind. The IT Rules have additionally imposed upon an obligation upon the Indian Government to identify any additional online games that may need to be treated like permissible online games in order to prevent user harm.

Therefore, in order to ensure compliance with the provisions of the IT Rules, intermediaries (and online gaming intermediaries especially), must obtain assistance from gaming lawyers in India. As one of the leading gaming law firms in India, our team of qualified and efficient gaming lawyers in India are well-versed and well-equipped to provide advisory concerning the nuanced legal and regulatory landscape surrounding gaming and the online sphere in India.

Ahlawat & Associates
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