Why Online Gaming Limits Don’t Work, ET LegalWorld

Recently, there have been reports suggesting that the Indian government is considering imposing time and monetary limits on real-money online gaming. This new direction of online gaming regulation, moving away from the co-regulatory regime introduced under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Regulations, 2021 (the “Gaming Rules”), is being considered in light of concerns about addiction among children and young adults. Given the lack of clarity on the operationalisation of the Gaming Rules since their announcement in April 2023, uncertainty has increased in this emerging sector of the Indian digital economy.

Considerations of imposing time and monetary limits on real-money online gaming are seen as an improvement on the certification approach set out in the Gaming Rules. It is therefore crucial to assess whether such policy interventions, if implemented, will effectively achieve their intended goals.

Given that this move is likely influenced by China’s online gaming regulatory model (as indicated in press reports), let’s take a closer look at international jurisdictions as a first step to assess the effectiveness of imposing time and monetary limits on real-money online gaming to curb addictive behavior.

International Perspective

China is known for its strict and restrictive approach to internet regulation. It is no surprise then that China’s attempts at prohibitive regulatory interventions in gaming date back to the early 21st century, including bans on access, aggravated closures, prolonged censorship, and sweeping controls over the gaming industry.

In 2019, China’s National Press and Publication Administration (“NPPA”) issued measures that reduced gaming time for minors to 1.5 hours on weekdays, 3 hours on weekends and holidays, and allowed gaming only during the day. In 2021, China tightened regulations, further restricting access for minors to gaming, which could only be played on Fridays, weekends, and holidays for a limited period of one hour.

Subsequently, in order to consolidate the existing regulations on online gaming and introduce new measures, the NPPA published draft regulations entitled ‘Administrative measures for online games‘ in December 2023 for public comment. While most of the proposed regulations simply repeat existing regulations, the introduction Article 18in particular, was controversial.

Article 18 required online gaming operators to set spending limits for users and ban rewards/features that would encourage gaming. This is by no means the first time Chinese regulators have imposed spending limits on players. However, until these draft regulations were issued, spending limits applied only to minors.

Draft regulations, among othersrequired online gaming operators to set spending limits for adults (apart from minors), disclose those limits in their terms of service, and provide pop-up warnings and alerts when users engaged in irrational spending behavior. Essentially, the draft regulations proposed spending limits set by operators, as opposed to the state dictating specific limits for individual users.

But given China’s heavy-handed approach to the gaming sector and recent crackdown on the tech ecosystem, the move was seen as the starting point for a very slippery slope. The mere suggestion that the government could restrict adult spending has sparked a significant backlash – seen as an exaggeration even by Chinese standards. As a result, the draft rules were removed from the official website.

On the other hand, in 2011, South Korea passed the Youth Protection Revision Act, colloquially known as “Cinderella’s Law,” which prohibited people under the age of 16 from accessing online games between midnight and 6 a.m. The law was passed to promote healthy sleep habits and address gaming addiction. Under this system, users under the age of 16 were required to enter age-coded ID cards to access online games and were automatically disconnected after midnight.

However, a decade later, in August 2021, the Korean National Assembly repealed the Cinderella Law provisions of the Youth Protection Act (effective January 1, 2022) on the grounds that they hindered player autonomy and violated the rights of game users and developers. Furthermore, impact assessments showed that the Cinderella Law did not achieve its intended goal of reducing gaming use by targeted youth.

Many studies have shown that the Cinderella law actually had a harmful effect – causing those under the age of sixteen to commit identity theft and increasing the overall potential for addiction, leaving “gamers wanting more.” As a result, South Korea moved from a prohibition policy to a voluntary system, where the Cinderella law was replaced by a “permission to choose” system, a system of choosing play hours that allows parents and guardians of users under the age of 18 to set play hours for their children or wards.

Therefore, the general conclusion from the above discussion is that:

Limited countries and most likely only China impose time and monetary limits. Moreover, such restrictive policy interventions have so far been largely and exclusively limited to minors.

Second, there is a lack of evidence to support the notion that restrictive interventions such as time and monetary limits have produced the desired results. Researchers examining the effectiveness of time limits in China suggest that there is no credible evidence to support the notion that the country’s strict gaming time policies have reduced excessive gaming among minors, undermining such state-controlled interventions.

Third, prohibition measures as a regulatory approach appear not only ineffective in combating gaming addiction and related disorders, but also violate people’s autonomy and individual decision-making.

Finally, the political economy of a country determines the approach to technology policy. The legal and social systems, along with the existing political structure in a country, greatly influence the operation and regulation of technology. The interplay of law, policy, and technology can manifest itself in many ways. We must therefore be wary of “copying and pasting” policies from other jurisdictions without proper consideration.

The way forward

According to the World Economic Forum, India is evolving into one of the most dynamic consumer environments in the world. This trend is being driven by factors such as the widespread availability of cheap internet, rising incomes and increased purchases of durable goods. As a result, more Indians are spending time online.

In 2022, Indians ranked eighth globally in terms of time spent on mobile apps, with 82% of that usage going to entertainment. Social media apps accounted for about 50% of that usage, and online gaming for 6%. These trends are expected to intensify in the future, with India set to become the world’s third-largest consumer market by 2030. This exponential growth will be accompanied by increased risk of harm to users, the emergence of new threats, and more complex issues.

Generally speaking, online gaming addiction is just one aspect of the broader problem of internet addiction – an inherently complex problem. Experts around the world have only just begun to scratch the surface of how to effectively deal with it. Recently, various studies have shown that the preventive measures that are usually the first step towards curbing online addiction do not work.

On the contrary, the evidence in support of a balanced approach is growing. According to an evaluation by the UK Gambling Commission, balanced and voluntary harm reduction efforts between 2018 and 2022 led to a decline in problem gambling and medium to low risk gambling behaviours. These measures are not only becoming an effective intervention tool, but are also proportionate and rooted in individual autonomy.

Therefore, any measures to minimize addiction or reduce harm underscore the urgent need for a rigorously designed regulatory framework based on evidence-based research. The first step in this direction will require a better understanding of the factors that cause addiction and effective ways to address such addictive tendencies. However, there is no research available on this topic in India. Countries around the world are recognizing that the lack of research in this area prevents appropriate action. Hence, there is an urgent need to fill this research gap.

Clarity on the regulation of the online gaming sector is also the need of the hour. Ideally, the already notified Gaming Rules should be implemented, which would at least address some of the aspects related to user harm and addiction. Then, appropriate policy measures could be implemented, in accordance with the Gaming Rules. However, the proposed time and money limits for real money online gaming cannot be a substitute for a regulatory regime.

It is also important to ensure that imposing restrictive policies does not drive the business underground, fueling illegal activities such as betting and gambling. All of these are valid concerns and should be considered before pressing the accelerator.