Regulation to Restriction: An Exploration of the Quiet Erasure within India’s Online Gaming Law

The Indian online gaming sector has been experiencing exponential growth and the continued dynamism reflected by the industry tends to make it stand out. The last decade in India has been a testament to the fact that our country has been the fastest growing market for online gaming.¹ Further, the sector has always been credited to possess a potential to not only generate revenue but also generate a wide variety of jobs. While the industry was becoming one possessing immense potential for overall growth, it has been hit with a sudden roadblock by the introduction of the Promotion and Regulation of Online Gaming Bill, 2025, which became an Act on 22-8-2025.² The roadblocks resulting from the enactment of the law began to surface ever since the Bill was tabled before the Lok Sabha on 20-8-2025³ by Ashwini Vaishnaw and subsequently passed by the Rajya Sabha on 21-8-2025.⁴

The intention of the Government of India since long has been to subject online gaming activities under a structured regulatory framework. However, its prima facie intent is to promote only free to play e-sports and casual games while placing a blanket ban on all forms of online real money game offerings. Though, one may argue that such a step tends to prohibit only a certain species of online gaming, but it can be inferred that such a step has been adopted in the wake of fulfilling their motive towards prohibiting online gaming rather than regulating it. The Press Information Bureau has categorically stated that this law is a “move to shield citizens from the menace of online money games while promoting and regulating other kinds of online games”.⁵ The intent of the law, even though it is noble, may in practice end up encouraging illegal betting and gambling thereby undermining the gaming sector even more than ever. Until this new law was enacted, online gaming would operate under the aegis of State-specific laws prohibiting gambling which would also take into account the extant jurisprudence of game of skill versus game of chance. Additionally, the sector would be governed by intermediary obligations imposed by the Information Technology Act, 2000⁶ and tax regimes as was applicable from time to time along with guidelines released by self-regulatory bodies operating in this sector.

The new law has introduced three noteworthy changes. Firstly, the law now recognises three categories of games, namely, e-sports, online social games and online money games. However, the law places a blanket ban on all online money games, also known as real money games irrespective of whether they are games of skill or chance. Secondly, the law makes it an offence to offer online money games, advertise, promote or induce persons to play such online money games and any act of enabling, facilitating financial transactions linked to online money games by banks, financial institutions and intermediaries. Stringent penalties and imprisonment terms are in place in order to keep offenders at bay. While this measure is being put forth as a mechanism to deter unlawful gaming activities, it may also pose a risk for platforms, advertisers and intermediaries who inadvertently come within the scope of this law. Finally, the law empowers the Central Government to appoint a centralised regulatory authority to characterise and register online games, determine if a particular game is an online money game and respond to any complaints which it may receive across all categories of games. The authority is also given the power to issue directions, orders, guidelines and code of practice for smooth regulation of online games. While the law recognises e-sports and social games as a legitimate competitive sport in India, it requires every such offering to be registered with the authority before its release to the public at large. The non-compliance of these processes is subjected to monetary penalties as well as prohibition of the games.

The steps taken by this law are indeed laudable given the noble cause it strives to uphold. However, the law having been drafted hurriedly and being enacted without any public consultations. As a result, the practical challenges that this legislation is set to bring forth given the nuanced nature of its subject-matter continues to remain unaddressed. I find it pertinent to highlight five major shortcomings which I shall be highlighting.

Firstly, the new law categorises online games into e-sports, online social games and online money games. While the classification appears reasonable, the blanket ban placed on online money games appears unreasonable. Such ban marks a sharp departure from the extant Indian jurisprudence in this regard wherein the judiciary has always protected games of skill even when played for monetary stakes. Further, the law by equating legitimate operations of skill gaming platforms to that of gambling not only gives rise to a dangerous precedent but also undermines judicial decisions delivered in the last decade as well as violates Article 19(1)(g)⁷ of the Indian Constitution⁸.

Secondly, the law tends to disadvantage most domestic gaming companies which predominantly offer skill-based online money games thereby affecting segments such as online fantasy sports and other micro-transaction and real money-based games. This in turn disincentivises Indian game developers, publishers and platform owners whose sole source of revenue are from the online money game offerings and also attracts investors who are often keen to invest in such offerings. As a result of the enactment of this law, it will in turn let international players continue dominating e-sports and online social games/casual games while wiping out most Indian platforms significantly.

Thirdly, the law has overlooked the aspect of real money mechanics which are commonly found in casual gaming, social gaming and video gaming as well. Since the law is intended at protecting the youth and the middle class, one can safely say that the chances of concern lie with respect to that of in-app purchases, micro-transactions and loot boxes as well which are often found in these games. These functionalities in the game not only ensure that players spend regularly in the quest of getting better skins, upgrades, etc. but also expose players to greater risk of addiction, financial ruin and social distress.

Fourthly, while the law aims to reduce harm, it would indirectly open avenues for encouraging illegal betting and gambling thereby exposing the players to a greater risk. This measure can pose a significant national security risk to the people of India. India at present has been significantly facing the problem of offshore betting and gambling platforms proliferating in huge numbers, luring customers without any accountability, consumer protection or compliance with Indian laws. Instead of tackling the rise of offshore gambling, the Government in practicality will encourage such illegal betting and gambling which will happen at the cost of wiping the legitimate online money gaming or real money gaming sector.

Fifthly, the law has failed to ignore some key realities and challenges posed due to sudden shutting down of these platforms offering online money gaming or real money gaming as well as for players. A significant concern lies with the platforms, players and banking partners who have to undertake transactions to settle the amounts deposited in their in-game wallets in the nature of tokens or any other form of in-game currency. Owing to a lack of transition mechanism, the players may be faced with a chance to lose their monies and winnings, platforms could be charged for keeping them and banking partners could be made liable for facilitating such transactions. These concerns must be looked into by prescribing a window for completion of all withdrawals before platforms go for a permanent sunset of such offerings in light of the new law.

In conclusion, it can be said that, while the law has been a progressive step on the part of the Government, there still lies a strong need to create a transparent system of disclosures before the offering is used by the public at large by setting up specialised committees to review the game, initiate age-appropriate protocols to ensure parental oversight especially for minor players as well as introduce a self-regulatory model whose compliances may be monitored by independent regulators or by the Government. Further, it would not be a stretch to hold that the rest of the world is now moving towards regulating online gaming and gambling, while we have taken a step backwards by placing a blanket ban on all online real money even disregarding the stance of the Indian judiciary which has always upheld the cause of games of skill. Further, the decisions in K.R. Lakshmanan v. State of T.N.⁹, State of A.P. v. K. Satyanarayana¹⁰ and Varun Gumber v. State (UT of Chandigarh)¹¹, have time and again applied the test of preponderance of skill and observed that games of skill cannot be equated to gambling. However, this movement of the Government will render online gaming companies to pivot into adjacent verticals like e-sports, content, and broadcasting to survive while rendering a vast number of professionals unemployed and deter future scope of employment for countless professionals. The established players may find ways to adapt, but for smaller businesses, this could mean a complete wipeout. And for all those of us who believe in being an online money gaming or real money gaming geek, the time has come where we need to patiently wait for the day when we can once again make our own fantasy sports team or play other games with the intent of getting real monetary rewards from the game.