The Promotion and Regulation of Online Gaming Act, 2025 ("Gaming Act") represents Parliament's first serious attempt to establish a unified statutory regime for digital gaming in India. For years, the sector has operated under a fragmented patchwork of state gambling laws and judicial distinctions between "games of skill" and "games of chance." The Gaming Act discards that distinction altogether, prohibiting all forms of online money games, whether premised on skill, chance, or a hybrid of both, while carving out a legal space for e-sports, educational, and non-monetary formats. In doing so, it centralises regulatory authority under the Union Government and prescribes criminal penalties for violations.
The move carries sweeping consequences for India's USD 3.8 billion gaming industry, which has attracted significant global investment and fostered household names such as Dream11, Games24X7, and Mobile Premier League. Industry resistance has been sharp, with gaming companies arguing that a blanket prohibition on real-money games is economically disruptive and ignores the distinction long recognised by courts. Yet, the Union Government estimates that nearly 45 crore Indians collectively lose close to INR 20,000 crore annually on online real-money games, figures deployed to justify the prohibition as a measure of public welfare.
At its core, the Act declares three legislative aims: (i) to recognise and promote e-sports as a legitimate competitive activity; (ii) to encourage social and educational gaming where no monetary stakes are involved; and (iii) to impose a complete ban on online money games in all their forms.
I. Key Provisions of the Gaming Act
The Bill begins by defining its key term: an "online money game" is any game played on the internet in which players put in real or virtual money with the expectation of winning something in return. The definition is deliberately broad, extending to games of skill, games of chance, and those that combine both.
From there, the Act adopts a three-pronged strategy to suppress the industry. First, it outlaws the games themselves. Nobody may offer them, run them, or even assist in hosting or promoting them. The prohibition reaches beyond operators to include intermediaries who facilitate distribution or marketing. Those who do so face the prospect of imprisonment for up to three years, a fine of as much as one crore rupees, or both.
Second, the Act attacks publicity. It bars advertising for online money games across all media including print, broadcast, and digital. The law treats the promotion of these games as an independent offence, punishable with up to two years in prison, a fine up to fifty lakh rupees, or both.
Third, it cuts off financial lifelines. Banks, payment systems, and other financial institutions are forbidden from processing transactions tied to online money games. Breaching this prohibition triggers penalties as severe as those for running the games themselves: up to three years' imprisonment, a fine of one crore rupees, or both.
These three prohibitions work together to outlaw participation, silence advertising, and block funding. To reinforce the deterrent effect, the Act prescribes harsher punishments for repeat offenders. A second violation of the rules against offering games or processing their transactions carries a mandatory minimum of three years in prison, rising to five, along with a fine ranging from one to two crore rupees. Repeat violations of the advertising ban bring at least two years in prison, rising to three, and a fine between fifty lakh and one crore rupees.
Finally, the Act creates a Central Gaming Authority to oversee the regime. This authority will register and categorize online games, issue binding guidelines for operators, monitor compliance, hear user grievances, and enforce sanctions. Its enforcement powers include blocking access to games, seizing assets, and cancelling registrations.
The central question, however, is whether such a sweeping ban, coupled with severe criminalisation, can withstand constitutional scrutiny on grounds of proportionality, freedom of trade under Article 19(1)(g), and legislative competence, given the history of state primacy over gambling laws. It is likely that the Central Government may invoke Entry 33 of List I (Posts and telegraphs; telephones, wireless, broadcasting and other like forms of communication.") or Entry 97, List I (Residuary powers) of the Constitution of India, to justify its legislative competence to pass such a law.
Notwithstanding the fact that the Act is yet to be notified by the Central Government, it has already become the subject of a challenge to its constitutional validity before the Hon'ble High Court of Delhi and the Hon'ble Karnatak High Court.
II. Prohibition of Online Money Games
The most controversial aspect of the Gaming Act lies in blanket prohibition on all online money games, irrespective of whether they are based on skill or chance by virtue of Chapter III. The broad definition of "other stakes" under Section 2(j) when read into the definition of "online money games" may lead to an expansive interpretation of "online money games" to include those games which involve virtual items, credits, and tokens etc which may bring even casual models under scrutiny, unless carefully structured.
The prohibited category includes fantasy sports, rummy, poker, and other fee-based formats that previously enjoyed judicial validation under the "substantial game of skill" test as laid down by the Hon'ble Supreme Court of India. The Gaming Act departs from the judicial line drawn in State of Bombay v R.M.D. Chamarbaugwal (AIR 1957 SC 699) and Andhra Pradesh v. K. Satyanarayana (AIR 1968 SC 825). Both decisions recognised that while gambling could be prohibited as res extra commercium, games of skill, such as rummy, constituted legitimate business activity.
Similarly following the same principle, the Allahabad High Court in, DM Gaming Private Limited v. State of UP, and Madras High Court in Junglee Games India Private Limited Vs. State of Tamil Nadu (W.P. No. 18022 of 2020) have held that games such as poker or rummy are not gambling but games involving substantial skill. Presently, the ruling of the Madras High Court in Junglee Games (supra) is being tested by the Hon'ble Supreme Court of India. In view of the said Act, it remains to be seen how the Hon'ble Supreme Court of India as well as other High Courts will now deal with the pending cases involving games such as fantasy sports of various formats, Ludo, Rummy, and Poker.
III. E-Sports Definition & Industry Concerns
For the first time, "E-Sports" has been legally defined through the Gaming Act as being distinct from gambling or money-gaming. While this provides long-awaited legitimacy to professional gamers and tournament organizers, industry stakeholders are also likely to see this as challenge since the definition prescribes six cumulative criteria to qualify as an 'e-sport', including official recognition by a designated authority under the under the National Sports Governance Act, 2025. This may create practical difficulties for decentralized, global tournaments operated by foreign operators like Valorant Champions Tour (Valorant – a multiplayer first-person shooter game) or The International (DOTA 2 – a multiplayer strategy game).
The requirement that outcomes be determined 'solely' by skill, dexterity, or agility may pose interpretive problems, given the inherent influence of variables such as random number generation (dice based) games which still requires skill, dexterity or agility to compete.
IV. Impact on Casual & Subscription-Based Gaming
a. asual / free to play Games:
This segment includes puzzle, strategy, role-playing, action-adventure, and shooter games that are monetised primarily via in-app ads, cosmetic purchases (skins, avatars, maps, battle passes), or freemium upgrades rather than through contest fees or winnings. This segment may remain largely unaffected by the ban on 'online money games' since usually there is payout element involved. These titles may even see growth opportunities as sponsorship and ad budgets are redirected from now-prohibited real money gaming (fantasy, poker, rummy).
This segment may in fact see, India's growing youth demographic and high mobile penetration means publishers may benefit from a new regulatory comfort zone – being clearly separate from gambling-linked formats.
However, in this sector as well, the broad drafting of "other stakes" under Section 2(j) (covering digital credits, tokens, items of value) is likely to create a compliance risk for monetisation models like in-app rewards or tradable tokens etc, which might be construed as value-stake equivalents. Developers will have to ensure distinction between cosmetic spends (like skin upgrades or map passes) and stake-based progressions (like pay-to-participate) to stay compliant.
b. Subscription-Based / Social Gaming Platforms
These games run on one-time purchase models, subscription bundles, or premium access — often offering social formats such as trivia games, chess, multiplayer quiz apps, or gamified educational content. Chapter II of the Gaming Act recognises "Online Social Games", subject to them involving no money or valuables at stake.
Such platforms typically use subscription models (monthly passes, bundles, OTT add-ons) which may not fall foul of the ban, since payments towards the same, can arguably be considered as access charges for usage.
However, if a given subscription game operates on an in-game 'currency' or 'tokens' linked to performance for unlock mechanisms, it may risk being construed as involving "other stakes" under Section 2(j). For developers of such online games, it would be prudent to carefully structure the contracts and give clear disclosures to the users.
The Gaming Act, specifically under Chapter II, Section 4 provides the Central Government with the power to make rules for creating a mechanism for the registration of online social games. Similarly, the Authority under Chapter IV, Section 8(2)(b) to register 'online game', therefore it is possible that a regime for mandatory requirement for registration with the Central Gaming Authority can be introduced for this category of online games.
This is likely to entail compliance costs, reporting obligations, and periodic audits. Smaller developers delivering niche subscription games may find regulatory overhead burdensome. However, it cannot be ruled out that with statutory recognition, subscription-based gaming may stand on firmer legal footing. This format may attract greater investments as if the Gaming Act is enacted in its present form, this category would stand statutorily separated from "gambling".
V. Conclusion
The Act when enacted may transform India's gaming industry by separating "games of play" from "games of pay." By clearly distinguishing gaming from gambling, it legitimizes e-sports and casual play, potentially catapulting India into the global e-sports economy. At the same time, the outright ban on real money gaming may erode revenue streams, exacerbate the black market and may also attract a constitutional challenge.
Critically, for gaming companies, the implications are profound. Existing business models premised on deposits and winnings, regardless of whether the games are skill-based, will face legal prohibition, coupled with criminal sanctions and repeat-offender penalties that could potentially escalate to multi-crore fines. How the industry adapts, and whether future legislative or judicial developments soften the Act's prohibitions, will shape the long-term trajectory of online gaming in India.
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