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NCPCR Raises Concerns Over KYC Lapses in Online Gambling, Impacting Child Safety

The NCPCR alerts MeitY to the absence of strict KYC norms in online gambling platforms, risking child safety and urging swift regulatory action to protect minors from unlawful online gambling activities.

A Call for Stringent KYC in Online Gambling

The National Commission for Protection of Child Rights (NCPCR) has spotlighted a significant gap in the online gambling ecosystem— the lack of rigorous Know Your Customer (KYC) protocols. This gap has reportedly paved the way for minors to access and participate in gambling activities, a development that could have far-reaching implications for their well-being.

The Alarm Bells Ring

Drawing attention to the issue, the NCPCR has approached the Ministry of Electronics and Information Technology (MeitY), urging immediate action. The trigger was a complaint from a New Delhi-based trust, highlighting the presence of numerous illegal gambling websites and apps ensnaring the youth. The NCPCR's plea includes a demand for a comprehensive report on such platforms operating within India, aiming for a swift response within 10 days.

Tackling the Menace of Online Gambling

The commission's concerns are not unfounded. With details of over a hundred gambling platforms that reportedly exploit social media and messaging platforms to attract minors, the urgency to act becomes apparent. These platforms, operating under the guise of gaming, often blur the lines between skill-based gaming and chance-based gambling, leading to a regulatory grey area.

Recent Regulatory Measures

In response to the growing concerns around online gambling, MeitY had previously introduced amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules in April 2023. These amendments aim to curtail the spread of illegal betting and gambling operations by imposing restrictions on the promotion and advertisement of non-permissible online games.

The distinction between "gaming" and "gambling" is pivotal in the legal framework, with the former often involving an element of skill and the latter relying purely on chance. Despite various state laws banning betting and gambling, games of skill have received constitutional validation from the Supreme Court, distinguishing them based on the predominance of skill over chance.

Taxation Troubles in the Gaming Sector

The gaming industry faced a jolt with the imposition of a 28% Goods and Services Tax (GST) on online gaming, affecting both skill-based and chance-based games. This move, coupled with non-retrospective clarifications from the government, has left Real Money Gaming (RMG) startups vulnerable to significant tax liabilities. Furthermore, the sector has been rocked by notices of alleged tax evasion, putting additional pressure on the industry's growth prospects.

Outlook for the Indian Gaming Industry

The recent tax revisions have led to a cautious reassessment of the revenue projections for India's gaming sector. Lumikai, a venture capital firm specializing in gaming, has adjusted its revenue forecasts for the domestic online gaming market, signaling a period of uncertainty and adjustment for the industry.