Regulating Online Gaming in India: A Legal Perspective on a New Era of Protection and Policy

Introduction
On August 19, 2025, the Indian Union Cabinet approved the Promotion and Regulation of Online Gaming Bill, 2025, which was promptly introduced and passed by both Houses of Parliament in August 2025. This landmark legislation- now the Promotion and Regulation of Online Gaming Act, 2025 – marks a legal pivot in India’s approach to online gaming regulation, particularly by prohibiting real-money games while formally promoting e-sports, casual gaming, and safe digital recreation.
Rather than being a mere statutory update, the Act aims to resolve deep-seated tensions in Indian jurisprudence between games of skill vs. games of chance, state vs. central regulatory competence, and consumer protection in the digital economy. In the following, I analyse the legal architecture, constitutional challenges, industry responses, and the practical implications for stakeholders.
Table of Contents
Why India Needed a National Online Gaming Law
Over the last decade, India’s online gaming sector spanning casual games, e-sports, educational games, and real-money gaming (RMG) has grown explosively. However, it operated under a patchwork of state laws, judicial precedents, and voluntary self-regulation. Without a unifying national law, many operators circumvented state controls by incorporating offshore or out-of-state platforms, challenging enforcement efforts.[1]
This fragmentation also led to regulatory arbitrage different states (e.g. Karnataka, Tamil Nadu) attempted to pass their own bans or restrictions, provoking legal uncertainty. A national statute promised uniformity, clarity, and legal certainty.
Social, Consumer, and Fraud Risks
From a policy standpoint, the central government flagged real-money gaming as a vector for addiction, financial losses, money laundering, tax evasion, and even terrorist financing through untraceable digital flows. Reports[2] suggested that 45 crore people in India lose about ₹20,000 crore annually through such games.
Simultaneously, numerous anecdotal and media reports documented cases where small sums were deposited by users, but withdrawal became impossible; platforms sometimes employed bots or opaque systems to deny legitimate wins. These patterns raise strong consumer protection and fraud concerns.
Thus, the government’s stated aim was twofold: (1) promote safe gaming, esports, innovation, and (2) clamp down on harmful real-money gaming, under a modern legal framework.
Key Features of the Promotion & Regulation of Online Gaming Act, 2025
Below is an overview of the most legally consequential features, along with commentary on their implications.
Feature | Description / Provision | Legal Significance / Commentary |
Territorial & Extra-Territorial Reach | The Act applies to all of India and to any online money gaming services offered within India or operated from outside but accessible by Indian users. [3] | This ensures that offshore operators cannot evade Indian regulation by merely locating servers abroad. |
Licensing & Regulatory Authority (NOGC) | Creates a National Online Gaming Commission (NOGC) to license and regulate platforms. | The NOGC is intended to be the apex supervisory authority, streamlining approvals, oversight, compliance monitoring, standards, and enforcement. |
Game Classification / Permissibility | Games will be classified (by NOGC) into: • Permitted games (skill-based e-sports, social, educational) • Prohibited “online money games” involving deposit and wagering • Hybrid games (elements of both) subject to regulation | This classification is legally critical, as it embodies the skill vs chance test. Hybrid games require granular regulatory rules. |
Consumer Safeguards & Responsible Gaming | Platforms must: • Verify identity, age, disallow minors • Offer features like self-exclusion, deposit/time caps • Disclose mechanics transparently • Maintain grievance redressal and data protection norms | These impose positive duties on platforms, akin to financial regulation or gambling regulation in mature economies. |
Financial & AML Oversight | Platforms must segregate user funds, ensure refunds, comply with PMLA (Prevention of Money Laundering Act, 2002) and FEMA (Foreign Exchange Management Act), anti-fraud systems | This allows financial regulators to supervise edge flows, detect suspicious transactions, and ensure money laundering checks. |
Dispute Resolution | The Act sets up an Online Gaming Appellate Tribunal (with civil-court powers); appeals from it go to the Supreme Court. | This provides a specialized forum, reducing overload on regular courts with domain expertise. |
Offences & Penalties | • Offering real money games: up to 3 years imprisonment, fine up to ₹1 crore [4] • Advertising prohibited games: up to 2 years, ₹50 lakh fine • Payment facilitation: penalised similarly to offering games • Corporate liability: directors, managers held liable; those proving lack of knowledge or preventive efforts may escape liability | The severity of sanctions highlight the seriousness with which the state intends to deter violations. |
Incentives & Promotion | The Act formally recognizes e-sports as a competitive sport, mandates setting of standards, training centers, research institutions, public campaigns, inclusion in national sports policy | This opens the door for public funding, grants, education programmes, and aligns gaming with India’s broader “Digital India” and innovation goals. |
One must also note that Rules under Section 19 of the Act are expected to be drafted (the government released a Draft Rules version in October 2025).
Constitutional Issues & Judicial Risks
No major legislation concerning high-stakes activities passes without constitutional challenge and the Online Gaming Act is no exception. Below I analyse the main legal battlegrounds.
1. Right to Trade & Profession (Article 19(1)(g))
Operators and platforms are likely to argue that the Act violates their fundamental right to carry on trade or business, guaranteed under Article 19(1)(g). A blanket ban on real-money gaming may be challenged as manifestly disproportionate if it fails to distinguish between bona fide skill-based operations and pure gambling. Several industry news reports already indicate that major platforms (e.g. Dream11, Gameskraft) are considering writ petitions on this ground.
2. Equal Protection & Non-Arbitrariness (Article 14)
A major test will be whether the law discriminates arbitrarily or is too broad. If the Act fails to provide a principled distinction (e.g. in classifying hybrid games) or imposes draconian penalties without mechanism for appeal, it could be struck down as disproportionate.
3. Legislative Competence: Centre vs State
A crucial question is whether the Union Parliament can legislate on gaming, an area partly within Entry 34 (Betting & Gambling) of the State List (List II) under the Seventh Schedule. Historically, states have regulated gambling and betting, while the Centre regulates ancillary matters (currency, interstate trade). The Act’s extraterritorial application and its broad classification may be attacked as an overreach.
However, in All India Gaming Federation v. State of Karnataka (2022), the Karnataka High Court struck down the Karnataka Police (Amendment) Act, 2021 provisions that criminalised games of skill, holding them unconstitutional for infringing Articles 14 and 19 and for being outside the state’s competence to legislate such bans
In that case, the Court held:
- Games of skill and chance must be distinguished via the “predominance test”: if skill predominates, it is not gambling.
- Absolute prohibition of all such games (including skill) was excessive and violated the right to trade.
- The state lacked competence to impose such broad regulation over online platforms.
Operators may rely heavily on this precedent or even seek a transfer of cases to the Supreme Court. Indeed, the Supreme Court has already transferred all pending and future challenges to central gaming legislation from high courts to itself.
4. Due Process and Proportionality
The imposition of criminal penalties, increased fines, and stringent compliance obligations will be scrutinised under due process doctrines. Platforms may argue that vague definitions (e.g. “inducement,” “hybrid games,” “aid or abet”) give excessive discretion to regulators and law enforcement, violating the principle of certainty in penal statutes.
5. Ex Post Facto & Vested Rights
If the law invalidates ongoing operations or deprives users of funds already deposited, litigants may argue violations of rights accrued prior to the law. The government will need to ensure transitional safeguards (e.g. allowing withdrawals of existing wallet balances). Some platforms have publicly assured users that funds will be withdrawable.
Industry Reaction & Economic Fallout
The industry’s response has been vociferous:
- The All India Gaming Federation (AIGF) warned that the ban could drive users to unregulated offshore platforms, encourage illegal gambling, and lead to massive job losses.
- Analysts estimate that more than 20,000 jobs could vanish, and 300+ startups might shut down.
- Legal action is already in preparation: Dream11, Gameskraft and other major platforms are expected to file writ petitions in high courts (or jointly) challenging the constitutionality of the Act.
- Some advertisers and celebrity endorsers will be caught in the crossfire: the Act bans not only gaming operations but also advertising and sponsorship of prohibited games.
- High-stakes tax litigation looms: a pending ₹2.5 lakh crore GST case over whether skill-based online gaming is subject to GST is now further complicated by this Act.
One dramatic consequence: Dream11 is reportedly in negotiations to terminate its jersey sponsorship with the BCCI, since advertising or sponsoring a banned game may now attract severe penalties.[5]
How Stakeholders Should Navigate the New Regime
Gaming Platforms
- Immediately audit existing offerings to identify prohibited games.
- Avoid any deposits or wagering features in India unless licensed.
- Build compliance systems for identity verification, AML/KYC, grievance redressal.
- Plan legal strategy: prepare for constitutional challenge, maintain records of user funds and transactions.
Investors & Startups
- Reassess business models dependent on real-money gaming revenue.
- Pivot toward permitted gaming, esports infrastructure, gamification, educational gaming.
- Include regulatory risk as a key variable in valuations.
Users / Consumers
- Before depositing funds, check whether a platform is licensed (once regulations roll in).
- Request transparency: odds, payout ratios, refund policies.
- Use self-exclusion or deposit caps where available.
State Governments
- Coordinate with central authority (NOGC) rather than enacting conflicting laws.
- Redirect legislative energy toward enforcement and support services (e.g. counselling for addiction).
- Monitor hybrid games (e.g. “loot boxes” in video games) for regulatory relevance.
Lawyers / Compliance Advisors
- Be ready to litigate on constitutional grounds (Article 14, Article 19).
- Monitor the final Rules, which will flesh out definitions and procedures.
- Advise clients on safe-harbour features, transitional compliance, user fund protection.
Conclusion
The Promotion and Regulation of Online Gaming Act, 2025 is more than a regulatory tweak, it is a paradigm shift. It criminalizes real-money gaming, bans advertisement and facilitation thereof, and carves out a protected zone for skill-based esports and digital recreation. While its public policy goals consumer protection, fraud prevention, mental health safeguards are commendable, its legal architecture will be stress-tested in court.
The fate of India’s fast-growing real-money gaming industry will now depend on constitutional adjudication, regulatory clarity in the forthcoming rules, and how stakeholders (platforms, users, states) adapt. For those shaping this legal frontier including lawyers, entrepreneurs, and policymakers, this Act sets the stage for the next decisive chapter in India’s digital economy.
[1] https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=155075&utm
[2] https://indianexpress.com/article/business/ban-real-money-games-penalties-endorsements-warrantless-searches-india-gaming-bill-10200148/?utm
[3] https://www.pib.gov.in/PressNoteDetails.aspx?ModuleId=3&NoteId=155075&utm
[4] https://prsindia.org/files/bills_acts/bills_parliament/2025/Bill_Text-Online_Gaming_Bill_2025.pdf?utm
[5] https://www.reuters.com/world/india/indias-dream11-talks-end-cricket-sponsorship-due-new-gaming-law-report-says-2025-08-24/?utm
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