Is this the end game for fantasy sports and online gaming companies in India? The Ministry of Electronics and Information Technology introduced the Promotion and Regulation of Online Gaming Act, 2025 ("Act") for the purpose of regulating the online gaming industry in India. The Act was notified in the official gazette on August 22, 2025.
By the introduction of this Act, the government aims to (i) prohibit online money games and online money gaming services played through computer resource, mobile device or the internet, particularly where such activities operate across state borders or from foreign jurisdictions; and (ii) promote and regulate e-sports, educational games and online social games. The intent is to protect individuals especially youth and vulnerable population from the adverse social, economic, psychological and privacy-related impacts of such online money games. This article will analyse the key provisions of the Act, its challenges and impact on the gaming industry.
Key Aspects:
- Applicability: The Act is wide in its ambit and applies not only to operators and platforms incorporated in India, but also to any online money gaming service that is made available to users in India, even if it is being run from outside the country. This means that offshore platforms, foreign websites, mobile applications or gaming companies that allow Indian users to access, register or play real-money games online will now fall within the purview of the Act.
- Categories of online games recognized by the
Act: The Act classifies online games into the following
categories:
- E-sport: An online game1 which inter alia includes such games which are (i) played as part of multi-sports events; (ii) conducted through organised competitions between individuals or teams in multiplayer formats with predefined rules; (iii) recognised and registered under the National Sports Governance Act, 2025; and (iv) determined purely by skill, such as physical dexterity, mental agility or strategic thinking. E-sport games are permitted to charge participation or registration fees and award performance-based prize money. Importantly, E-sport games expressly exclude any game involving betting, wagering or other stakes2, whether by participants or third parties, including winnings arising from such activities.
- Online social games: An online game which (i) does not involve staking money or any other stakes nor permit participation with the expectation of monetary gain or return; (ii) allows access through a subscription fee or a one-time access fee; and (iii) and is offered solely for entertainment, recreation or skill-development purposes.
- Online money game: An online game, irrespective of whether such game is based on skill, chance or both, which is played by a user by paying fees, depositing money or other stakes with the expectation of winning and entails monetary and/or other enrichment in return of money or other stakes, but does not include any e-sports.
- Implication on online money games: The
ramification of the Act includes:
- Blanket prohibition: Online money games whether it is a game of skill or game of chance is prohibited and no person can offer, aid, abet induce or otherwise indulge or engage in the offering of online money game and online money gaming service.
- Advertisement prohibition: Any form of advertising or promotion, whether through print, television, social media or any other electronic means, that promotes or encourages users to participate in online money games is prohibited to curb visibility and access.
- Payment prohibition: Banks, payment gateways, wallet operators and any entity facilitating transactions are expressly prohibited from processing or authorising payments for online money gaming services thereby cutting off any and all funding, marketing and operational lifelines of such platforms.
- Penalties: The Act prescribes stringent penalties for violations which may attract fines up to INR 1,00,00,000 imprisonment of up to 3 (three) years, or both on offering an online money gaming service. Breaches relating to advertising or facilitating payments may lead to imprisonment of up to 2 (two) years and 3 (three) years respectively and fines of up to INR 50,00,000 and INR 1,00,00,000. Non-compliance with any direction or order of the Central Government can result in penalties up to INR 10,00,000, suspension or cancellation of registration or even a prohibition on offering games for such period as may be determined by the Central Government.
- Overriding effect: The provisions of the Act will operate in addition to all other laws currently in force and in case of any conflict or inconsistency between the Act and another law, the provisions of the Act will prevail to the extent of such inconsistency.
Impact:
- End of debate on Game of Chance and Game of Skill for
online platforms: Before the enactment of this Act, online
gaming in India operated under the ambit of various state laws and
in the absence of specific legislation, the Public Gambling Act,
1867 ("Gambling Act"). The legality of a
game earlier depended on its classification as a game of chance or
game of skill and various Courts have examined whether games such
as poker, rummy and ludo involved predominant skill or chance, with
skill-based games enjoying legal protection.
The Act changes this landscape entirely by removing the distinction between skill-based or chance-based game by banning all forms of online money games. Interestingly, the Act's scope is limited to online platforms and the offline skill-based games (involving monetary exchange) continue to be governed by the Gambling Act and/or the relevant state laws, where such activities are permitted.
- Severe economic and industry impact: The Act
is expected to have significant economic consequences for the
online gaming industry whose businesses get barred from operations
overnight. Not only are these gaming companies substantial
contributors to government's tax revenues, but they have also
created massive employment opportunities, fuelled the growth of
gaming developers, payment processors and content creators.
The ban is also expected to have a noticeable impact on India's advertising industry. Real-money gaming platforms, including popular fantasy sports apps like Dream11, were among the most active advertisers across television, digital and sports sponsorships. With these categories now off-limits, advertising revenues from this fast-growing segment are likely to immediately shrink.
Further, even a foreign gaming app accessible in India will face compliance challenges not just in operating the game but also in marketing and payment settlement, as Indian banks and payment gateways will be barred from supporting such transactions.
Legal Challenges:
The legal scrutiny and potential challenges to the Act have already started and it is evident that the industry will question the constitutionality of the Act on various fronts including:
- Centre v. State Powers and Legislative Competence and
Overstepping: Gambling and betting falls under Entry 34,
List II of the Seventh Schedule to the Constitution of India and
entertainment, sports and amusement falls under Entry 33, List II
of the Seventh Schedule, which are within the exclusive domain of
the states i.e., the states have the power to frame their own
gambling or gaming laws and in the absence of state-specific laws,
they can adopt the Gambling Act (which is a central legislation).
Against this backdrop, the enactment of a central law that places a
blanket prohibition on online real-money games (which falls within
the domain of the states) has sparked debates over whether
Parliament has overstepped its legislative authority.
The central government on the other hand is relying on several entries in the Union List, including Entry 31 (telecommunication and broadcasting), Entry 36 (currency and foreign exchange), Entry 41 (trade and commerce with foreign countries), Entry 42 (inter-state trade and commerce) and Entry 52 (industries of national importance) and claiming that online gaming is not a purely local activity but one that operates across states and national borders, often using offshore servers, digital wallets and sometimes cryptocurrencies. These cross-border features, according to the central government, transform online gaming from a state-regulated subject into a matter of national significance involving digital finance, cybersecurity and inter-state trade.
Further, the central government points to its obligations under Article 47 of the Constitution to improve public health and safety, arguing that unregulated online money games pose serious risks to users and to society at large ranging from addiction and financial losses to potential misuse for money laundering and illegal fund transfers. The central government also cites the absence of a uniform national law and the inconsistencies in court rulings across states as having created a regulatory vacuum, which, combined with technological complexities such as in-app purchases, virtual currencies and cross-border transactions, makes state level regulation inadequate.
Interestingly, Article 249 of the Constitution allows Parliament to legislate on State List subjects only when the Rajya Sabha passes a resolution in the national interest and such measures are temporary and require state ratification. The Act has bypassed this mechanism.
- Right to Trade and Violation of Constitutional
Rights: The blanket prohibition pursuant to the Act
impedes the right to trade guaranteed under Article 19(1)(g) of the
Constitution of India. Instead of providing reasonable restraints
or conditions, the Act imposes a complete prohibition and thus can
be challenged for being in violation of the fundamental right of
the citizens to practice trade and profession. A total ban can also
be argued as a disproportionate response by the government,
especially considering when other industries with higher fraud
potential, such as digital finance, continue to operate under
regulation rather than prohibition.
- Unequal treatment of online vs. offline gaming: As the Act singles out online money games while permitting offline gaming establishments, such as casinos in Goa and Sikkim, to continue functioning, the Act is likely to be questioned for being violative of Article 14 of the Constitution. Creation of an artificial and unfair distinction, especially when both formats involve monetary stakes and potential risks of addiction or misuse can be questioned as discriminatory and thus arbitrary.
Conclusion:
The Act is a decisive shift in India's approach to online gaming. While it shuts the door on real-money play across digital platforms leaving many gaming start-ups and industry reeling, the consumer safety and financial integrity is being prioritised. The constitutionality of the Act will certainly be tested in the near future but till then the Act has cast a death knell on the online money gaming industry in India.
Footnotes
1 The term 'online game' means "any game, which is played on an electronic or a digital device and is managed and operated as a software through the internet or any other kind of technology facilitating electronic communication".
2 The Act also goes on to define the term 'other stakes' to mean "anything recognised as equivalent or convertible to money and includes credits, coins, token or objects or any other similar thing, by whatever name called and whether it is real or virtual, which is purchased by paying money directly or by indirect means or as part of, or in relation to, an online game." This definition is wide enough to cover cryptocurrency and similar payment instruments.
Disclaimer: LexCounsel provides this e-update on a complimentary basis solely for informational purposes. It is not intended to constitute, and should not be taken as, legal advice, or a communication intended to solicit or establish any attorney-client relationship between LexCounsel and the reader(s). LexCounsel shall not have any obligations or liabilities towards any acts or omission of any reader(s) consequent to any information contained in this e-newsletter. The readers are advised to consult competent professionals in their own judgment before acting on the basis of any information provided hereby.
