It also submitted that online gaming platforms and apps clearly do not fall within the category of intermediaries as contemplated under Section 79(2) of the IT Act.
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The Centre in its reply to a petition challenging IT Amendments in relation to online gaming, stated that the amendment has ensured safeguards for children and youth from being afflicted with various harms such as psychological injury, risk of gaming addiction, financial loss, financial fraud, etc.
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The Centre through the Ministry of Electronics and Information Technology (Meity), stated in its affidavit in the Delhi High Court that the IT Rules, 2021, as amended on April 6, 2023, are the uniform regulatory procedure prescribed by the Union Government, which mandates that online gaming intermediaries undertake the same due diligence procedures across the territory of India.
Such due diligence and the prescribed verification processes shall serve as necessary safeguards to protect vulnerable youths and children across the country and, at the same time regulate the online gaming industry and offer online games in a responsible manner.
Meity's reply stated that an Inter-Ministerial Task Force for Online Gaming Regulation (IMTF) was constituted by the Respondent/MeitY in May 2022, which had nine members, including secretaries of eight different Ministries of the Central Government and the CEO of NITI Aayog to comprehensively examine issues related to online gaming, global best practices and due diligence mechanisms in the online gaming industry.
Extensive consultations were held by the Central Government as part of the IMTF deliberations, involving state governments, industry stakeholders, lawyers and legal firms, psychologists, educationists and gamers. The IMTF submitted its report to the Cabinet Secretariat in September 2022. In the consultation held with state governments, the need for implementing a central law for online gaming was expressed, as stated by Meity.
The affidavit was recently filed in the Delhi High Court as one of the petitions challenging the constitutional and legislative validity of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023, in relation to online gaming.
According to the petitioner, the NGO, namely the Social Organisation for Creating Humanity (SOCH), stated that there should not only be effective control and regulation of online games and gambling or betting activities but there should also be an effective mechanism for such regulatory measures, and that the same should conform to the four corners of powers granted under the Constitution and other legislative provisions.
The plea further stated that the impugned rules seek to create a framework for regulating online gaming, including online real money games, by classifying them as 'intermediaries' under the IT Act, 2000 and imposing several due diligence requirements and compliances such as Know Your Customer (KYC) verification, the appointment of grievance redressal and nodal officers, taking registration and membership in the Self-Regulatory Body (SRB), and tasking these SRBs with certifying certain categories of online real money games as permissible online games, etc.
It also submitted that online gaming platforms and apps clearly do not fall within the category of intermediaries as contemplated under Section 79(2) of the IT Act. Online gaming platforms actively select and modify the transmission information on their websites and apps by as they decide the content of the online games, the nature and category of games to be hosted, the stakes to be played, the rules of the game and the users that have to be matched against each other in competing in various category of games, etc.
The IT Amendment Rules 2023 are beyond the legislative competence of the Union government. Entry 34 of List II of the Seventh Schedule of the Constitution of India clearly and categorically gives power to state legislatures to enact laws on the subject of 'gambling and betting', the plea stated
The power to enact laws on gambling and betting extends to all forms of gambling and betting, including online gambling and betting. The Minister in Charge of the Respondent Ministry has on several occasions stated in Parliament that the power to regulate all forms of gambling and betting falls within the domain of state legislatures.
It is further stated that even in the case of 'games of skill' that fall outside the ambit of 'gambling and betting', the regulatory power lies with the states by virtue of entries 1 (public order), 26 (trade and commerce within the state) and 33 (sports, entertainments and amusements) of List II of the Seventh Schedule of the Constitution.
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