Online Gaming: A Self-Regulated Industry

6 min readSep 21, 2020

With the growing engagement of almost half a billion online gamers in India, estimates show that the online gaming industry is bound to reach a billion dollars in terms of revenue in the foreseeable future, consequently ranking India as one of the top 10 markets globally. This indicates huge prospects for entrepreneurship, employment and a strong collaboration between technology and innovation. As this industry picks up momentum in digitization, regulating the industry remains a top priority for the government and industry stalwarts.

The industry identifies the need to have a harmonized regulatory system which applies to all online gaming stakeholders unequivocally. Self regulation, which is adopted by most existing players, appears to be a promising starting point enabling transparency, integrity of systems, and safety and security of players. It furthers the overarching duty of online gaming platforms to ensure responsible advertisement of services and ethical execution of the gaming business.

Among some early self regulation initiatives, the All India Gaming Federation (AIGF) established in May 2016 is the umbrella industry body for online skill gaming. Its objective is to facilitate and enforce global best practices and self regulation frameworks for its members and stakeholders premised on the principles of transparency, integrity, and responsible gaming.

Another self regulatory body is The Online Rummy Federation (TORF), a not-for-profit society established under the Societies Registration Act. While TORF was conceptualized with a view to apply company learnings and state of the art practices from other jurisdictions specifically to rummy, TORF now also applies to other online games as well to support the responsible growth of the online gaming industry. To promote a responsible, secure, and fair gaming platform, any online rummy operator or online skill games operator in India can become a member of TORF. TORF norms act as guiding principles to monitor a myriad of issues namely, disallowing underage or vulnerable players, addiction, ensuring fairness and transparency, and preventing fraud and money laundering. The key stakeholders of TORF are online rummy operators, online skill games operators, policy analysts, industry experts, economists, law firms, consulting firms, technology providers, service providers, payment gateway, tax consultants, and game enthusiasts among others. RummyCircle, Rummy Passion, Ace2Three, and Junglee Games are amongst the most popular members of TORF.

To establish trust and fairness, TORF has set certain measures and these are:

To assure random distribution of cards, TORF imposes the use of software tools called RNGs or Random Number Generators to all rummy operators.
As a matter of policy, the RNGs used by numerous rummy portals must be tested by independent gaming software testing agencies such as iTech labs based in Australia.
Rummy operators then undergo regular checks to make sure that they conform with TORF guidelines.
Certain security tools are also arrayed by gaming companies to keep fake players away and to avoid any fraudulence. For instance, implementation of the KYC process restrains the entry of any fraudulent player(s).
Operators must adopt practices to avert players from collecting credit for playing games.
Players’ spending habits should be analyzed and should guide them not to spend more than they can afford.
Players under 18 should be barred from playing online rummy.
Persons who reside in the restricted areas of the country should be excluded from playing online rummy games.

What started as a bite-sized venture with just about 10 players, the online fantasy sport industry has earned over INR 80 crores in 2020. Identifying the growing demand and participation in online fantasy sports, the Federation of Indian Fantasy Sports (FIFS) formed in 2017 represents the sector as a self-regulating body.The fundamental premise of FIFS is to ensure that operators do not engage in any illicit activity on e-gaming platforms and that fantasy sports are furthered as a game of skill and not a game of chance. Some of the major fantasy sport platforms including Dream11, Myteam11, and My11Circle are members of FIFS. As a matter of policy, FIFS audits its members to monitor their activities. Although, non-members are assumed to follow FIFS’s Charter as guiding principles; however, its scrutiny is limited only to those who subscribe with them as members.

There remain loopholes that pose challenges over scrutiny of these self regulating bodies and it can be presumed that many players in the industry go unchecked. Due to a lack of entrenched federal legislation on online gaming, gaming platforms are largely left to their means to draft policies and curbs. In the recent move by Google Play, Paytm has been removed from the play store for repeat Google policy violations on grounds of banning unregulated gambling apps and online casinos. In such an instance, the onus then falls on the gaming platform companies to manage the business ethically and respecting dicta from other similar authoritative sources (such as observing how other jurisdictions approach self governance). For instance, some fantasy sport platforms ensure that their users are aware of their accrued profits/losses by notifying them when their accrued losses exceed INR 25,000. This ensures that the players are aware of their financial standing and enables them to make an informed choice.

Furthermore, with developing robust frameworks for self regulation, it is encouraged by gaming users to apply the principle of caveat emptor and conduct necessary due diligence before signing up. The four important factors users must pay due attention to are:

Verify the reliability of the gaming platform.
Assess legal aspects before registering.
Understand the structure and mechanism.
Read carefully the safety and privacy policies of the website.

Some Key Standards for Responsible Gaming

Among many platforms, Rummy Passion has stipulated some standards for responsible gaming which serve as a good template to consider for rummy:

The company is audited by TORF to ensure compliance and players’ safety and security.
Ensure the platform furthers enjoyment whilst promoting responsible and just gaming, and not just earn money.
Ensure the authenticity of every player who joins the platform by conducting KYC checks.
For those who cannot monitor players’ activity, the website should assist them to opt for self-exclusion. Players can get their account blocked on a temporary or permanent basis and later on come back afresh.
Those players who spend more on playing than they can afford to, the company can advise them to set a limit to their purchases.

Some of the general regulatory highlights in the space of fantasy sports are as follows:

To ensure transparent dealings, payments are routed only through secure payment gateways with relatively smaller transaction sizes between INR 25 to 40.
To preserve and protect players and their interests, amateurs can attend trial games for free to practice before playing paid versions. This allows players to understand, discuss and have access to resources to make an informed decision to select suitable players.
To provide a level playing field to users, some platforms bar their own employees from participating in such games.
To promote an equitable, fair and just platform, an age restriction of over 18 years of age is placed on users which is to be furnished by a prior government approved identity proof. Users found to be using automated computer models or bots are also disqualified from competing.

Written by Gayatri Rawtal, Legal Counsel at Eximius.

Eximius Ventures is a pre-seed stage investment firm investing in young and dynamic Indian Entrepreneurs with a precedence for female founders. You can reach out to us at pitches@eximiusvc.com.

Sources

Online Gaming: A Self-Regulated Industry

Written by Eximius Ventures