The Promotion and Regulation of Online Gaming Act 2025: Yet Another Missed Opportunity?

[Priyansh is a student at Rajiv Gandhi National University of Law.]

The Indian online ‘gaming’ industry, along with the country’s broader startup ecosystem, finds itself at a defining juncture, after the recently introduced Promotion and Regulation of Online Gaming Act 2025 (Act) has been passed by both houses of Parliament and received presidential assent. The Act purports to promote and regulate the online gaming sector. Yet, at its apparent core, it imposes a sweeping blanket ban on ‘online money games,’ irrespective of whether such a game is based on skill, chance, or both. Taking the easy way out, the Act seemingly brushes aside India’s evolving jurisprudence on the regulation of online gaming, sidesteps the nuances of the industry, and discounts the legitimate concerns of its stakeholders.

This piece argues that the Act is yet another missed opportunity to effectively and proportionally regulate the country’s booming online gaming industry, while considering the interests of all stakeholders involved. In its ‘attempt’ to protect individuals from the adverse impacts of ‘online money games,’ the Act caves to a paternalistic attitude, disregarding the freedom of individuals offering and playing such games. While the Act justly encapsulates concerns about public order and the integrity of financial systems, disproportionate regulation may lead individuals to illegal and unregulated operators, thereby perpetuating the very same concerns.

‘Online Money Games’ and the Departure

While the enforcement date of the Act is yet to be notified, major players in the Indian online gaming industry, like Dream 11, Games 24x7, and MPL, have shut down their main operations. Other providers, such as A23 and Pokerbaazi, also ceased their services. This is by virtue of Chapter 3 of the Act, which provides for a blanket prohibition on any individual from offering or otherwise indulging or engaging in the offering of online money games and online money gaming services. Section 2(g) of the Act rather conveniently defines online money games as online games, where a user participates by paying a fee, depositing money, or placing other stakes, with the expectation of winning, where success results in monetary gain or other forms of enrichment in return for such payment or stakes, regardless of whether the game is based on skill, chance, or a mix of both.

This broad definition deviates from the jurisprudence of ‘games of skill’ and ‘games of chance.’  In essence, a game is classified as a game of skill if its outcome is primarily determined by the player’s skills, whereas a game reliant largely on the element of luck is considered a game of chance and is broadly considered gambling. This is, however, not the case with a game of a predominant element of skill. In judgments such as Dr KR Lakshmanan v. State of Tamil Nadu and Another and State of Andhra Pradesh v. K Satyanarayana and Others, the Supreme Court (SC) clearly distinguished between games of skill and games of chance, subjecting only the latter to stringent regulation under relevant laws. The SC in aforementioned cases held horse racing and rummy as games of skill, thereby not attracting the state legislations. Moreover, the courts in cases such as Varun Gumber v. Union Territory Chandigarh and Others and Ravindra Singh Chaudhary v. Union of India have held that fantasy games as provided by platforms like Dream11 do not amount to gambling, as the results of such games depend on the skills of the participant and not sheer chance. More importantly, it was held that platforms providing such games are protected under Article 19(1)(g) of the Indian Constitution.

Such a departure is problematic on two principal grounds. First, imposing a blanket prohibition, irrespective of whether the online game is casino slots, poker or fantasy sports, is manifestly disproportionate. The impact of different types of online games is vastly different on the “public order” and “financial security” of the country, and treating them as a single category ignores the crucial distinctions. Domestic gaming platforms, in particular, could be sufficiently regulated by mandatory KYC norms and other reporting and compliance obligations. By adopting a one-size-fits-all prohibition, the Act ignores the regulatory frameworks that could allow certain platforms to operate responsibly while still addressing legitimate concerns. Second, the Act ignores the avenue that the ‘online money games’ provide. The online gaming industry in FY20 to FY23 experienced a notable CAGR of 28% culminating in a market size of INR 16,428 crore in FY23. The industry can be regarded as a “sunrise industry” expected to double in size by 2028. It has also produced three gaming unicorns, all of which are indigenous startups: Game 24x7, Dream11, and Mobile Premier League. Moreover, the All India Gaming Federation and Federation of Indian Fantasy Sports, in their joint appeal against the Act, also emphasized that the industry generates around USD 3.55 billion in annual revenue and contributes more than USD 2.29 billion in taxes. By imposing a blanket ban, the legislation disregards this growth trajectory and the substantial fiscal benefits, effectively shutting the door on an industry with immense potential for innovation, employment, and investment.

The Missed Opportunity

Until the passage of the Act, online gaming in India was governed by state gambling and gaming laws, resulting in a fragmented and inconsistent regulatory landscape. For instance, legislations such Telangana Gaming (Amendment) Act 2017 and the Andhra Pradesh Gaming (Amendment) Ordinance 2020 impose blanket bans on online gaming regardless of whether they are based on skill or chance. By contrast, more progressive statutes like the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2016, and the Meghalaya Regulation of Gaming Act 2021 take a more nuanced approach to online gaming. The former not only acknowledges the complexities of online gaming but also attempts to arrive at an amicable stance for various stakeholders through a licensing regime. 

In this context, the introduction of a central legislation was not only desirable but necessary to ensure effective regulation across the country. As such, the Act is a much-needed step to address pertinent regulatory challenges in terms of “inter-State inconsistencies.” Yet, instead of adopting a stance similar to that of Nagaland to design a proportionate and nuanced framework, the State missed the opportunity to strike a balance between effective regulation, innovation, and consumer protection. The government’s intent to undermine the line between online games of skill and those of chance had already become evident at the 50^th meeting of the Goods and Services Tax Council, which placed all online games, irrespective of their nature, under the 28% GST slab. Even so, it was certainly hoped that the State would follow through with legislation along the lines of amendments to Information Technology Rules 2021, which introduced the classification of ‘online gaming intermediaries,’ mandated verification of real-money games, and established grievance redressal mechanisms, to ensure effective regulation without suffocating the industry.

Moreover, while the Act expressly brings the use of tokens and cryptocurrencies within the ambit of ‘online money games,’ it remains unclear how the State will regulate such financial instruments, particularly in the context of illegal gambling and offshore gaming platforms. It is also pertinent to note that imposing a blanket ban on online money gaming platforms may force individuals to use illegal gaming services, which are comparatively harder to regulate because of the use of mule accounts and domain ditching. Such an outcome would be counterproductive to the very objectives of the Act.

Conclusion and Way Forward 

The Act, in its present form, is likely to attract some significant litigation not only because it lacks proportionality in achieving its stated objectives but also because it infringes upon the rights of both providers and users. Comparatively, most EU countries operate a licensing and concession framework to comply with the fundamental freedoms of trade. The Court of Justice of the European Union, in many instances, have upheld that the proportionality must flow from any regulation over online gaming and such actions must not run counter to the objectives. Moreover, the European Consumer Centres Network has also developed educational toolkits for young consumers. The same can be done to protect the vulnerable population without infringing on their freedom.

The State must deliberate with the online gaming industry on a licensing regime with stricter compliance measures and penalties, rather than cutting off one of the growing industries in India completely. Also, it will be a more proportionate exercise to address the underlying legitimate concerns of public order and financial security more comprehensively than imposing a convenient blanket ban on online money games. Until then, a phased or delayed enforcement of the Act to protect individuals from the allure of illegal gaming platforms may potentially address the concerns of it being counterproductive.