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Digital media and entertainment space has seen significant growth in India and the market is likely grow by 3X in the next 6 years. This growth trajectory, is driven by digital platforms, OTTs, gaming etc.
While the traditional print media and broadcasting sector is heavily regulated (by sectoral regulators) including the foreign direct investment regulations; the regulatory mechanism and investment regulations around digital platforms and OTTs are relatively unregulated.
The digital platforms are covered under the laws dealing with information technology. Similarly, the gaming sector involving game of skill and game of chance is regulated under the state legislations and the judicial pronouncements lay the foundation for dealing with the gaming sector.
In 2023, Government of India introduced mechanisms and policies to deal with several issues relating to digital platforms, OTTs, gaming, advertising etc. From Ministry of Information and Broadcasting, Ministry of Electronics & Information Technology Prasar Bharti, Telecom Regulatory Authority of India to other ministries/ departments dealing with health, consumer and advertising related issues have an impact on the policy framework affecting media, broadcasting, advertising, entertainment and gaming companies.
This Media Law Briefing covers key legal and regulatory developments that businesses operating in media, entertainment, advertising and gaming sector should care about.
Partner credits: Anu Monga
Government of India includes online gaming & Fact-check Units for intermediaries in Intermediary Guideliness
Government of India ("GoI") amended the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 ("Intermediary Guidelines"), adding following new provisions:
Establishing a fact check unit to ensure that the intermediary does not "host, display, upload, modify, publish, transmit, store, update or share any information which is identified as fake or false or misleading by a fact check unit of the government in respect of any business of the government
Regulations regarding online gaming, including online real money games
Inclusion of provision regarding appeals to Grievance Appellate Committee, in case when grievance officers have not resolved the grievance within the period specified under the Intermediary Guidelines
As per the amendment to the Intermediary Guidelines, the 'online games' are defined as games offered on internet and accessible by a user through a computer resource or an intermediary. Similarly, an 'online gaming intermediary' is an intermediary that enables the users of its computer resource to access one or more online games.
Further, the amendment to the Intermediary Guidelines also includes definition of 'online real money games' to mean online games where a user makes a deposit in cash or kind with the expectation of earning winnings on that deposit.
The amendment to the Intermediary Guidelines requires that the online gaming intermediary must ensure that no advertisement or surrogate advertisement or promotion of an online game, that is not a permissible online game, is hosted on its platform.
'Permissible online games' are permissible online real money game or any other online game that is not an online real money game, and 'permissible online real money games' are online real money game verified by an online gaming self-regulatory body.
The amendment to Intermediary Guidelines also provide for additional obligations on online gaming intermediary that enables the users to access any permissible online real money game. In addition to obligations prescribed for significant social media intermediary, an online gaming intermediary that enables the users to access any permissible online real money game must:
Display a demonstrable and visible mark of verification by the self-regulatory body on such permissible online real money games
Inform their users of the policy for withdrawal or refund of deposit made with the expectation of earning winnings, manner of determination and distribution of winnings, fees and other charges payable
Intimate know-your-customer procedure followed by it for verifying the identity of the users of such online game;
Display measures taken for protection of deposit made by a user for such online game
Online gaming intermediary shall not itself finance, by way of credit, or enable financing to be offered by third party for the purpose of playing such online game
Further, for verification of permissible online real money games, the GoI may notify multiple self- regulatory bodies, which shall be representative of online gaming industry. The online gaming self- regulatory body may declare online real money game as a permissible online real money game if it is satisfied that the online real money game does not involve wagering on any outcome and the online gaming intermediary is in compliance with the provisions of Intermediary Guidelines.
This amendment was brought after GoI amended the Government of India (Allocation of Business) Rules in 2022, and the matters relating to online gaming and e- Sports were assigned to Ministry of Electronics and Information Technology and the Ministry of Youth Affairs and Sports, respectively.
Levy of GST on Online Gaming, Casinos & Horse Racing under CGST & IGST Acts
The GoI amended the Central Goods and Services Taxes Act, 2017 ("CGST Act") and Integrated Goods and Services Act, 2017 ("IGST Act"), vide Central Goods and Services Tax (Amendment) Act, 2023 ("CGST Amendment Act") and the Integrated Goods and Services Tax (Amendment) Act, 2023 ("IGST Amendment Act") on 18 August 2023, effectively from 01 October 2023, to provide clarity on the taxation of supplies in casinos, horse racing and online gaming. Under the CGST Amendment Act, 'online gaming' is defined as
"offering of a game on the internet or an electronic network and includes online money gaming"; and 'online money gaming' is "online gaming in which players pay or deposit money or money's worth, including virtual digital assets, in the expectation of winning money or money's worth, including virtual digital assets, in any event including game, scheme, competition or any other activity or process, whether or not its outcome or performance is based on skill, chance or both and whether the same is permissible or otherwise under any other law for the time being in force". Further, the CGST Amendment Act has added betting, casinos, gambling, horse racing, lottery and online money gaming under the definition of 'specified actionable claim' under Section 102A of the CGST Act and created a separate class. In Section 24 of the CGST Act dealing with "Compulsory registration in certain cases", an additional clause for "supply of online money game from a place outside India to a person inside India" has been added. Effectively, registration has also been made mandatory for every person supplying online money gaming from a place outside India to a person in India.
The CGST Amendment Act further states that "the amendments made under this Act shall be without prejudice to provisions of any other law for the time being in force, providing for prohibiting, restricting or regulating betting, casino, gambling, horse-racing, lottery or online gaming." Under the IGST Act, an amendment to the definition of "online information and database access or retrieval services" has been brought wherein the sub-clause (vii) dealing with online gaming, has been substituted which "online gaming, excluding the online money gaming as defined in CGST Act". Further, the IGST Amendment Act inserted Section 14A dealing with "Special provisions for specified actionable claims supplied by a person located outside taxable territory". Section 14A deals with supplier of online money games, and adopts the definition of 'supplier of online money games' from the CGST Act. It, further, requires that the supplier of online money gaming must obtain a single registration under the Simplified Registration Scheme under the IGST Act.
The IGST Amendment Act also requires suppliers of online money gaming outside India to comply with the provisions of IGST Act, failing which the information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such supplier shall be liable to be blocked for access by the public.
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