Should Online Gaming be Regulated by Government?

The AVGS (Animation, Visual, Gaming, and Comics) Task Force last week, highlighted the Centre’s commitment to the sunrise sectors and their capability to generate revenue, draw investments, and create employment opportunities. However, it will be required to examine some pressing questions regarding its legislative competence, especially when it comes to regulating gaming.

The issue becomes critical because three recent High Court judgements stated that the government cannot categorize Games of Skill such as fantasy sports, rummy, poker, horse racing, bridge, chess, etc., under Entry 34 (Betting and Gambling) of List II (State List) of Schedule 7 (segregating legislative powers in Centre, State and Concurrent Lists) of Indian Constitution.

The High Court reinstated the Supreme Court’s ruling in doing so, quoting that Games of Skill are a legitimate business activity protected under Article 19(1) of the Constitution. Theoretically, there is an option under Entry 26 of List II that deals with intra-State commerce and trade. Through this, online gaming can be regulated. However, its implementation is no calk walk since the users of these games come from different nooks and corners of the country.

Another issue with regulating them is that when States levy different taxes in the form of commission tax rates, licensing fee, etc., it goes against the Centre’s vision of simplifying tax slabs. One way through which this can be done is by incorporating the regulation under Entry 42 (inter-State and commerce) of List I under the Union List. An alternative could be Entry 31 of the Union List that allows the Centre to intervene in legislation matters pertaining to telegraphs, posts, broadcast, wireless, and other forms of communication, thus, positioning online gaming under the supervision of Ministry of Information and Broadcasting/Ministry of Electronics and Information Technology (MeITY).

With the rising user base in the gaming industry, a regulation is inevitable. Either the states, or the Parliament, will introduce a federal law to regulate the sunrise industry, especially as Web 3.0, Blockchain, and Metaverse will continue to pose a challenge in the digital space.