The Ministry of Electronics and Information Technology has proposed amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 which require mandatory KYC for Online Gaming Platforms. This requirement aims to ensure that Gaming Companies comply with Indian laws and provide users with protection against potential harm due to the rapid growth in online gamers.
Many individuals have incorporated gaming into their daily routines, from simpler mobile games to more advanced console and PC gaming. Consequently, as the prevalence of gaming increases, it becomes increasingly vital to prioritize safety and security measures for gamers.
This blog post aims to examine the details and significance of the proposal, as well as its potential impact on both casual and professional gamers.
What is iGaming?
iGaming, also known as online gaming, refers to the use of the internet to place bets or wagers on the outcome of events. This term is often used interchangeably with online gambling, although different jurisdictions may have varying legal definitions for each term. iGaming includes activities such as online sports betting, poker betting, video game betting (eSports), and casino gaming. It can be conducted through websites or mobile apps, which are sometimes referred to as online casinos, virtual casinos, online sportsbooks, or virtual sportsbooks. Popular iGaming platforms today include DraftKings, FanDuel, and BetMGM, among others.
What is the proposed plan for online gaming platforms by the government?
The Ministry of Electronics and Information Technology (MeitY) has proposed an amendment to include online gaming within the scope of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
The proposed amendments aim to ensure that online gaming intermediaries carry out proper checks to prevent users from engaging in activities that violate Indian laws. This includes gambling, money laundering, or betting and mandates self-regulatory bodies to place a registration mark on all online games they register.
The Draft Rules
- Gamers should ensure they know all online games available through the gaming intermediary, including policies on withdrawals and refunds for deposits made with the anticipation of winning. Additionally, familiarity with how winnings will be determined and distributed and associated fees for each game is advised.
- A mandatory know-your-customer verification norm (KYC) is necessary.
- Users should understand the possibility of addiction and the financial hazards linked with every game.
- The self-regulatory entity establishes content criteria to ensure the gamer’s protection, including self-harm prevention, as a requirement for game registration.
- Only games authorized by the self-regulatory organization in India will be considered legal.
- The board of directors for the self-regulatory body will consist of five members who possess expertise in online gaming, public policy, IT, psychology, and medicine.
- The responsible party is responsible for checking that the registered games do not violate India’s sovereignty, defense, security, friendly relations with foreign countries, public order, or incite a cognizable offense.
- The Central Government must be notified of all online games registered by every self-regulatory entity, accompanied by a report outlining the standards for registering a specific game.
What is the reasoning behind these rules?
The purpose is to prevent harm to users from skill-based games.
- Due to the increasing regulation of online gaming platforms as intermediaries and their corresponding due diligence requirements, there will likely be a boost in promotion for the online gaming sector and encouragement for innovation.
- The Indian gaming community comprises around 40-45% female gamers, emphasizing the significance of ensuring safety in the gaming ecosystem for women.
- The Indian mobile gaming industry is forecasted to generate $5 billion in revenue by 2025 and has experienced a notable growth rate of 38 percent CAGR between 2017 and 2020. Comparatively, China and the US experienced a growth rate of 8% and 10%, respectively. Proper regulation is required to manage this revenue.
- Implementing this framework will increase transparency, consumer protection, and investor confidence. It is also expected to promote the growth of the legitimate real money gaming industry & domestic online gaming industry.
What are the advantages of implementing KYC on online gaming platforms?
The proposal for mandatory KYC on online gaming platforms & real-money games has sparked a debate with differing opinions. Some believe it is necessary to prevent underage gaming by age verification mechanism, while others argue it infringes on gamers’ privacy. In this article, we will examine the potential benefits of the policy.
- Implementing a policy requiring age verification for online gamers would aid in preventing access to age-inappropriate content by minors and reduce fraud.
- Requiring age verification may impede cheating as it would be more challenging for individuals to establish multiple accounts for cheating in online games.
- Verifying the age of online gamers would promote responsible gaming by discouraging excessive gameplay.
Our perception
The government suggests making Know Your Customer (KYC) compulsory for Online Gaming Platforms and gamers. This could safeguard citizens from online threats and fraud. With KYC, user identities will be secure playing games or interacting with others. Also, it can prevent illegal activities such as money laundering and identity theft, which have increased on gaming sites. In short, this measure could benefit players and regulatory authorities by promoting digital safety and security.
Challenges of KYC in the iGaming industry
The primary challenge that the iGaming industry faces in implementing KYC (Know Your Customer) requirements is the introduction of friction to the account creation process. This friction may frustrate some users or cause them to reconsider whether they truly wish to open an account. Therefore, it is imperative to strike a balance between user experience and KYC/AML (Anti Money Laundering) compliance.
Additionally, online gaming operators must abide by a patchwork of laws depending on the different jurisdictions in which they operate. This patchwork of state, federal, and international laws and regulations increases the chances that something may go wrong, making it very important to have clear compliance processes in place. This complexity of legal requirements can make it challenging for iGaming operators to ensure full compliance while providing a seamless user experience for their customers.
How Can Deepvue Help?
Deepvue is a platform changing how financial institutions onboard customers and businesses using digital means. Our APIs and platform follow low code integration, making it easy for online gaming platforms to integrate KYC verification seamlessly. With our AI-powered technology, we can help verify gamers’ identities in real time, preventing fraud. Our platform is also designed to comply with regulations and data privacy laws, safeguarding user identities and promoting a secure gaming environment. Platform speedy service has accelerated market time from six months to 1-2 weeks. Deepvue collaborates with over 24 financial institutions, including the few major banks in India.
By partnering with Deepvue, online gaming platforms can ensure compliance with the proposed KYC regulations while providing a seamless and secure user experience.
For further details or to get in touch with our team, please fill out this form or send an email to [email protected]
FAQ
What are the risks associated with not implementing KYC compliance in the iGaming industry?
The risks of not implementing KYC compliance in the iGaming industry include legal issues, fines, potential license revocation, increased fraud, money laundering activities, and harm to vulnerable individuals such as minors and those with gambling addiction issues.
What are the benefits of implementing KYC compliance in iGaming?
Implementing KYC compliance in iGaming helps operators prevent fraudulent activities, protect vulnerable players, maintain a trustworthy reputation, and comply with regulatory requirements.
How can iGaming operators effectively manage age verification through KYC compliance?
iGaming operators can effectively manage age verification through KYC compliance by using secure and advanced solutions like document and facial recognition verification provided by Deepvue platforms.
