OVERVIEW
Just recently Indian Online gaming industry was regulated by the Hon’ble Supreme Court Judgment in Varun Gumber v State of Tamil Nadu 2017 (Dream11 Case) which differentiated between skill base gaming and chance base gaming and regulated skill-based gaming and categorising chance-based gaming as illegal. Over the years many platforms are operating in India like PokerBaazi, MPL, 1xBet, Junglee Rummy etc., are offering skill-based games with flow of money. Quite recently, On August 20, 2025, the Government of India introduced the Promotion and Regulation of Online Gaming Bill, 2025, in the Lok Sabha. Within 72 hours, the Bill secured approval from the Union Cabinet and the Rajya Sabha, and subsequently received Presidential assent from Hon’ble President Smt. Droupadi Murmu on August 22, 2025.
The new Act introduced some new laws that strike a balance between new technological innovation in the gaming and gambling market and social safeguards by promoting e-sports and online social games, prohibiting online money games (OMGs), and restricting the gambling fragment of the game that poses financial, psychological, and security risks to the person and their family.
The proposed legislation provides statutory recognition to e-sports under the Ministry of Youth Affairs & Sports, Government of India and encourages online social and educational games through support from the Ministry of Electronics & Information Technology and the Ministry of Information & Broadcasting. At the same time, it imposes a comprehensive ban on online money gaming services, including chance-based as well as skill-based such as fantasy sports, poker, rummy, lotteries, and other real-money games, along with a prohibition on related advertisements, promotions, and financial transactions.
Online gaming is now among the fastest-growing entertainment sectors in India. India’s online gaming industry has witnessed significant growth over the past decade. Reports estimate that the sector, valued at around $3.7B in 2023, is expected to reach more than double the amount by 2028-29. Unfortunately, millions of users, particularly the young generation, play different types of online games every day that have monetary stakes and skill-based games. Although this popularity is a boon to the economy, it also causes addiction, fraud, money laundering, and gambling among various classes of people enticed by these fantasy money games.
The Promotion and Regulation of Online Gaming Act, 2025(hereinafter referred to as the Act), reflects India’s effort to balance digital innovation with public safety. Prompted by rising concerns over addiction, financial distress, suicides, fraud, money laundering, terror financing, and misuse of gaming platforms, the new legislation aligns digital regulation with the Bharatiya Nyaya Sanhita, 2023, and state gambling laws. Its objective is to promote safe and responsible online gaming while protecting citizens from exploitative practices and addressing national security risks.
Key Provisions Of The Online Gaming Act, 2025
The Act lays down a comprehensive framework to prohibit harmful online money games while simultaneously encouraging the growth of e-sports and social gaming. Its key proposals, backed by specific provisions, are as follows:
1. Ban on Online Real-Money Games: The games/services involving monetary stakes have been prohibited from operating in India under Section 5 of the Act. Any person or company is barred from offering, facilitating, or hosting Online Money Games (OMGs) involving real stakes. This includes games that require an entry fee, deposit, or any other monetary stake. It also categorised both games of skill and chance as Online Money Games.
2. Prohibition of Advertisements: Any form of advertisements and promotions relating to Online Money Games (OMGs) is prohibited under Section 6 of the Act. This ban covers all media sources, including but not limited to print, digital, broadcast, and outdoor media, ensuring that such platforms cannot be promoted in any manner. It is important to note that the law also extends liability to promoters, sponsors, and endorsers, making them equally accountable if they participate in illegal activities such as advertising or endorsing such games as per the new Act.
3. Prohibition on financial facilitation: Indian Banks, payment gateways, and other financial institutions or intermediaries are expressly barred from facilitating or processing any form of transaction connected to Online Money Games (OMGs) under Section 7 of the Act. This includes activities such as accepting deposits, enabling payments, routing transfers, or providing settlement and withdrawal services for such platforms.
By imposing this prohibition, the law tries to break down the financial ecosystem or grey areas that sustain the operation of these money-based gaming services. In effect, it cuts off the monetary backbone of OMG operators, making it impossible for them to function or generate revenue within the country. This approach ensures that even if such platforms attempt to operate illegally, they are deprived of legitimate financial support channels, thereby stopping them from reaching and impacting society.
4. Heavy Penalties for Violations: As per Section 9 of the Act, any person operating an Online Money Game platform shall be punishable with imprisonment which may extend to 3 years, or with a fine which may extend to ₹1 crore, or with both. Any person who advertises, promotes, or endorses such platforms shall be punishable with imprisonment which may extend to two years, or with a fine which may extend to ₹50 lakh, or with both. Repeat offences attract enhanced penalties, including imprisonment of 3–5 years and fines up to ₹2 crore. The nature of the offences under sections 5 and 7 is categorised as cognizable and non-bailable.
5. Offences by companies: As per section 10 of the Act, if a company breaks the law under this Act, both the company and the people in charge of running it (such as directors, managers, or key officers) can be held personally responsible. A director or officer will not be punished if they can prove that the offence happened without their prior knowledge, or that they had taken proper care and due diligence to prevent it. If it is proved that the offence happened because of the consent, involvement, or negligence of any director, manager, secretary, or officer, that person will also be held guilty. Independent directors and non-executive directors, who are not involved in the day-to-day operations of the company, will not be held liable.
6. Promotion of E-Sports and Social Games: The Act acknowledges the growing importance and potential of digital gaming in different forms. Sections 3 and 4 make a clear distinction between e-sports, which are skill-based competitive sports, and online social or educational games, which derive a learning and cultural perspective. E-sports are formally recognised as legitimate competitive sports, placing them on par with traditional sports. The Government will actively support this sector by encouraging the organisation of tournaments, facilitating training opportunities, and promoting infrastructure for players and teams. This recognition is intended to nurture talent, provide career pathways, and encourage healthy digital competition. At the same time, the Act also provides for the recognition and development of social and educational online games. The Government will register such games and extend support for their promotion, provided they are free of monetary stakes or gambling elements. These games are expected to foster learning, culture, creativity, and skill-building among players while ensuring they remain safe and accessible to all.
7. Enforcement & Regulatory Powers: The Act establishes a devoted Online Gaming Authority under Section 8 to regulate, register, and categorise permissible games, ensuring only safe and compliant platforms operate in India. Sections 13 to 16 grant the Government and enforcement officers wide powers, including issuing directions, blocking unlawful platforms, investigations, search and seizure, and arrests to ensure compliance. Section 18 gives the Act an overriding effect, making it the final authority over any conflicting laws, thereby ensuring clarity and uniform regulation of online gaming.
WHY WAS THIS REGULATION NEEDED
The rapid spread of Online money gaming (OMG) companies has created significant social and financial risks for the citizens, affecting an estimated 45 crore people and causing losses of over ₹20,000 crores. These games exploited legal loopholes and operated in grey areas, resulting in addiction, fraud, and widespread harm to individuals and families, even at the point where one has committed suicide, leaving his/her family behind with a loan that they are unable to deal with.
At the same time, the online gaming sector remains one of the fastest-growing segments of India’s digital economy, with immense potential for innovation, jobs, and global competitiveness. However, the absence of a clear legal framework, coupled with challenges of offshore operators and inter-state inconsistencies, made policy intervention urgent. To address these concerns, the Government, through the Ministry of Electronics and Information Technology under the Allocation of Business Rules, enacted the Online Gaming Act, 2025, to protect citizens while enabling responsible growth of the sector.
COMPARISON WITH THE PREVIOUS JUDICIAL PRECEDENTS
Judicial precedents such as State of Andhra Pradesh v. K Satyanarayama (1968) consistently applied the predominance test, holding it skill overshadows chance, the game is considered as a game of skill and enjoys constitutional protection under Article 19(1)(g). Junglee Games India Pvt. Ltd. v. State of Tamil Nadu (2021), Hon’ble Madras High Court declared the blanket ban on games like Rummy and Poker to be unconstitutional, as such games are basically skill-based and cannot be placed at par with gambling. The Hon’ble Karnataka High Court, in a ruling in 2022, quashed provisions aimed at banning online games of skill, thereby reiterating the legal distinction between games of skill and games of chance.
These judgments have been instrumental in defining the legal framework for skill-based gaming in India, offering much-needed clarity and support for the conduct of such games both offline and online. Although many states have banned such games that have a gambling element, some states have allowed operations for Online Money Games, including Sikkim, Goa, and Nagaland. Due to the previous judgements, many online games were being operated in grey area such as poker, rummy and others, as they come under state subject, it has the right to frame the law as per the mentioned head ‘Gambling and Betting” in the Union List under Entry 34, List II (State List) of the Seventh Schedule of the Constitution. So as long as the central government does not interfere, the States can lawfully allow operations for the gaming industry, but if they do, they have to power to raise objection and scrutinize the process regarding states decisions. Therefore, many gaming companies were getting incorporated daily due to this ambiguity. The Promotion and Regulation of Online Gaming Act, 2025, however, shifts the attention away from this distinction by prohibiting all online money games rather than regulating the gaming industry regardless of whether they are skill-based or chance-based, permitting only games without monetary stakes.
On 28th August, 2025, online gaming company, Head Digital Works Pvt. Ltd., which offers online games in the name of A23, filed a petition before the Karnataka High Court arguing that criminalizing games like rummy and poker, long recognized as skill-based, goes too far. Further, there shall be a distinction between the skill and chance-based games. The case will test whether the age-old judicial distinction between skill and chance can survive under the new central legislation, and whether such a blanket ban meets the constitutional test of proportionality.
BENEFITS AND DRAWBACKS
Benefits:-
1. The Act paves the way for India to become a leader in the gaming sector globally for gaming innovation, exports, and entrepreneurship. By implementing a space for online gaming that is regulated, it encourages investment, supports homegrown developers, and creates a wide spectrum of employment opportunities across technology, design, marketing, and allied industries.
2. It provides a platform that is safe for India’s youth and structured for proper functioning to actively participate in e-sports and skill-based gaming. This not only helps sharpen cognitive abilities and strategic thinking but also enables talented players to showcase their skills on an international platform, thereby improving the level of competitiveness and opening new career pathways in legitimate and secure space.
3. By setting clear and extreme rules for real-money gaming practices, the Act prioritizes the well-being of the people. It aims to protect players and their families from issues like addiction, financial losses, and psychological harm. The purpose is to ensure that gaming remains an enjoyable as well as responsible form of digital engagement rather than a source of distress.
4. Through a forward-looking and responsible regulatory approach, India strengthens its voice in the global conversation on safe and sustainable gaming. The Act demonstrates the country’s commitment to promoting digital innovation while safeguarding national security, thereby positioning India as a thought leader in shaping fair and balanced online gaming policies worldwide.
Drawbacks: –
1. This Act lacks the distinction between skill-based and chance-based games, therefore overriding the legal precedents of the Supreme Court and lower courts. Further, this leads to the issue of misclassification, legal uncertainty, and regulatory ambiguity.
2. By centralising control over gambling and gaming laws, the Act encroaches upon powers traditionally vested in the States under Entry 34, List II (State List) of the Seventh Schedule of the Constitution. This raises concerns of legislative overreach and potential violation of Article 19(1)(g) (right to trade and profession) and Article 14 (equality before law) of the Constitution.
3. The Act grants authorities to the government officials with wide search and seizure powers without adequate judicial oversight. It also lacks a clear appellate mechanism for resolving disputes over the classification of games or any other issue that may arise in the future.
4. Penalties under the Act are severe even for first timers, with fines up to ₹1 crore and imprisonment ranging from 3-5 years. Additionally, it extends liability to company officers regardless of their direct involvement in the alleged violation, especially to the upper-level management.
5. The Act does not define a clear regulatory authority and its ambit or framework for implementation. It further overlooks industry and parliamentary consultation and fails to provide transitional mechanisms such as sandboxes or phased compliance for emerging technologies.
6. The stringent provisions of the Act threaten to undermine India’s $3.7 billion online gaming industry and jeopardize thousands of their employment. Such measures may drive innovation, talent, and investment offshore, which will deteriorate India’s competitive edge in the global digital economy.
CONCLUSION
The Promotion and Regulation of Online Gaming Act, 2025, marks a decisive step in India’s digital journey. It recognizes the dangers of unregulated money gaming and responds with firm safeguards to protect citizens. At the same time, it carves out space for e-sports and educational games that nurture skills and creativity. By balancing innovation with responsibility, the Act sets the tone for a safer and healthier digital future. It also strengthens India’s standing as a nation that can lead in shaping global digital policy. Most importantly, it ensures that technology serves society rather than harms it.
