By Ariel Yosefi, On Dvori & Liron Adar

On January 2^nd, 2023, the Indian Ministry of Electronics and Information Technology has released draft modifications (“Draft“) to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules (“Rules“), for public review and consultation.

The Draft forms a part of India’s efforts to promote the growth of the gaming industry in India and reach the one trillion-dollar digital economy goal by 2025-2026, by providing more clarify and certainty to operators. The aim of the proposed Draft is to regulate the real-money gaming sector in India and safeguard the users of such games from potential harm.

According to the Draft, companies offering online games, in which users can make a deposit with the expectation of earning winnings, including any prize, in cash or in kind, to the Indian market, will be subject to the existing obligation under the Rules, as well as a set of new requirements designed specifically to such games. Once starting to apply on online games provider, the Rules will require them to comply with various obligations including transparency, data retention, security and data protection and harmful content.

We are setting out below a concise summary of the key new requirement introduced by the Draft:

1. Registering with a self-regulatory body, which will be established under the proposed Draft. Operators will also be required to make a proof of registration publicly available.

2. Conducting AML/KYC checks to users at the time of registration and account creation. The AML/KYC checks will need to adhere to the requirements of the Reserve Bank of India for regulated financial institutions.

3. Establishing grievance redressal mechanisms, including the appointment of a grievance officer, which shall be an employee of the operator and shall reside in India.

4. Appointing a Chief Compliance Officer, who shall be responsible for ensuring compliance with Rules and maintaining communications with law enforcement agencies. In addition, operators will be required to appoint a contact person for 24/7 cooperation with law enforcement agencies, both of which shall reside in India.

5. Implementing responsible gaming measures to protect users from the dangers of gaming addiction and financial loss, such as presenting users with frequent warning messages beyond a reasonable duration of game session, self-exclusion and time and expenditure limits. In addition, putting in place measures to protect children and safeguard users against risks of financial fraud.

6. Obtaining Random Number Generator and no-bot certificates from a reputable certifying body. Such certificates shall be publicly available to users.

7. Adhering with enhanced transparency requirements, including rules, policies on the distribution of winnings, disclosures concerning risks of financial loss and addiction, as well as strict policy change notification requirements.

Under the proposed Draft, the Ministry of Electronic and Information Technology shall have the power to declare non-real money games as being required to comply with the Rules, if it believes such games may create a risk of harm to the sovereignty and integrity of India or security of the State or friendly relations with foreign States or public order, on account of causing addiction or other harm among children.

The Draft also imposes obligations on app stores and advertising networks to ensure that the games distributed on their networks are registered with a self-regulatory body as required.

The Draft is open for public consultation until January 17^th, 2023. Considering the anticipated conclusion of the public consultation phase, and despite the uncertain timeline for implementation, operators of real money games offering their services in India, are encouraged to familiarize themselves with the provisions outlined in the Draft.

Feel free to contact us if you have any queries regarding the Draft and its potential implications.