Promotion and Regulation of Online Gaming Act 2025
Gajendra Singh Godara
Sep 30, 2025
15
mins read
India's online gaming sector has become one of the fastest-growing segments of the digital economy, reaching $4.3-5.76 billion in market value by 2024-25.
The industry encompasses 591 million gamers (20% of global gaming population) with 488 million online players as of 2024. Mobile gaming dominates with 8.45 billion downloads annually, making India the world's largest mobile gaming market by downloads.
Real Money Gaming (RMG) commands 85.7% of total revenue at $3.2 billion, driven by fantasy sports and skill-based games during major cricket events like IPL. The sector employs 1.3 lakh professionals across 1,900 gaming companies and has attracted $3 billion in FDI.
However, the 28% GST on deposits and new regulatory challenges have pushed some users toward offshore platforms.
The introduction of real money into many games raised concerns akin to gambling: addiction, debt, and fraud. In this context, the government introduced the Promotion and Regulation of Online Gaming Bill in 2025. It represents a major policy shift, completely banning real-money games while promoting skill-based esports and educational gaming. Despite regulatory uncertainties, the market is projected to reach $9.1 billion by 2029 and potentially $15.2 billion by 2033, driven by 5G expansion, vernacular content, and growing digital payment adoption.
The Promotion and Regulation of Online Gaming Act, 2025 in India is scheduled to be implemented from October 1, 2025, after extensive consultations with industry stakeholders.
The Promotion and Regulation of Online Gaming Act, 2025 (Online Gaming Act) is a law passed by Parliament on 22 August 2025. It provides a framework for all online games in India and bans all “online money games” (games with financial stakes). This action effectively outlawed India’s ₹1.7 lakh crore (US$23 billion) online money gaming industry.
Industry bodies warned of massive job losses, though the government disputed those figures. The Online Gaming Act has thus triggered intense debate on regulating digital entertainment versus preserving individual freedoms.
By 2025, India’s online gaming market was worth about $4.3-5.76 billion and rapidly expanding. Millions of users, many of them under 25, played online games daily. Policymakers identified several pressing issues:
Addiction and Youth Welfare: Media reports linked online betting games to compulsive behaviour. Surveys suggested up to 70% of gamers under 25 showed addictive patterns, and cases emerged of young players suffering financial and mental health crises after gambling losses.
Fraud and Crime: Because money was involved, some platforms were exploited by fraudsters. Investigations found rigged algorithms and “ghost players” in apps that cheated users. Security agencies warned that anonymous gaming transactions could be used for money laundering or illegal funding.
Regulatory Vacuum: Before 2025, India had no clear national law on online games. The colonial-era Public Gambling Act (a state subject) did not explicitly cover digital games. Individual states took different approaches: some banned online gaming outright (Telangana, Andhra Pradesh), while others tried limited regulation (Sikkim, Goa).
Industry Growth and Investment: The gaming sector has become significant for the economy. Estimates noted revenues around ₹31,000 crore (with ₹20,000 crore in taxes). Stakeholders argued that a unified policy would legitimize the industry, attract investment, and allow India to capitalize on this digital opportunity.
The Act introduces a comprehensive regulatory regime:
National Online Gaming Commission (Authority): The Act establishes a new regulator headed by experts in law, IT, and economics. This Authority will oversee any state gaming bodies it authorizes, classify games, grant or revoke licences, and handle player complaints.
Licensing: Every online gaming platform (including foreign websites/applications targeting India) must obtain a licence from the Authority. Only licensed platforms may advertise or run prize-based competitions. Licences will carry conditions (e.g., compliance with technical and user-safety standards) and can be suspended/cancelled for violations. This covers fantasy sports companies, poker apps, and all other digital gaming businesses operating in India.
Game Classification: The Act defines three categories of games: E-sports (competitive skill-based games recognized as sports, where only entry fees and performance prizes are allowed); Online Social Games (games played for entertainment or educational purposes without any monetary betting); and Online Money Games (any game where players pay fees or stakes for a chance to win money). Notably, Online Money Games are fully illegal under the Act. Any game falling into this category (regardless of skill or chance) is prohibited.
Ban on Money Games: The law prohibits any online money gaming. It forbids offering, operating, advertising or facilitating any game where users stake money. Financial institutions are also barred from processing payments for such games. (Importantly, the Act does not criminalize individual players – only operators, advertisers and payment providers can be punished.)
Consumer Protection: To safeguard users, licensed platforms must enforce strict consumer protections. They must verify the age and identity of players to prevent minors from participating. They must offer self-exclusion tools and allow players to set deposit or time limits. Advertising aimed at children is banned. Operators must keep players’ deposited funds in separate escrow accounts and clearly disclose game rules. A formal grievance redressal mechanism is required.
Anti-Fraud Measures: The Act strengthens financial oversight. Platforms must follow anti-money-laundering norms (maintaining detailed KYC records and transaction logs). Any attempt to disguise a gambling activity as a social or skill game is a criminal offence. Regulators have the power to audit gaming algorithms and seize illegal operations under the IT Act, treating them like financial crime cases.
Penalties: The Act imposes heavy penalties for violations. For instance, running an online money gaming service can lead to up to 3 years’ imprisonment and ₹1 crore fine for a first offence (up to 5 years’ imprisonment and ₹2 crore fine for a repeat). Advertising such games carries 2–3 years jail and large fines.
Industry Promotion: Paradoxically, the Act also seeks to boost the gaming industry’s legitimate side. It explicitly encourages the development of esports and skill gaming by funding training academies, research centres, and national tournaments. By formally recognizing esports as a sport and endorsing educational or social games, the law aims to attract investment and talent into these areas.
Extra-Territorial Reach: To prevent evasion, the Act applies to any online gaming service offered to Indians, even if the operator is overseas. Non-compliant foreign platforms can be blocked under Section 69A of the IT Act, and operators prosecuted if they facilitate games for Indian users.
Economic Drivers
The start-up ecosystem, backed by initiatives like Start-up India and Atmanirbhar Bharat, has led to the rise of gaming unicorns such as Dream11 and Mobile Premier League.
Indian gaming companies attracted over USD 2.8 billion in investment from 2020-2025, marking strong expansion despite regulatory changes.
Digital India Initiative UPSC Explained: 10 Years of Digital India
Technological Enablers
Rapid 5G rollout and broadband initiatives (BharatNet, NBM) have enabled high-speed, low-latency connections critical for immersive gaming.
Smartphones now drive 90% of gaming revenue, with 85% of households owning a smartphone and over 86% having home internet access.
Policy & Cultural Shifts
IT Rules (2021), self-regulatory bodies, and the AVGC Task Force ensure a safer environment and structured sector growth.
The Covid-19 pandemic accelerated adoption, making gaming a recognized career path and boosting average daily playtime by 50%.
Information Technology Act, 2000 & Rules
The IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (amended April 2023), set standards for online gaming platforms, requiring them to prevent unlawful content and register money games with Self-Regulatory Bodies (SRBs).
Section 69A empowers the government to block illegal gaming and betting apps; over 1,500 platforms were blocked between 2022 and June 2025.
Bharatiya Nyaya Sanhita, 2023
Section 111 penalizes cybercrimes and illegal economic activities.
Section 112 enforces strict penalties for unauthorized betting/gambling, with imprisonment ranging from 1–7 years.
Integrated Goods and Services Tax (IGST) Act, 2017
Regulates both legal and offshore gaming platforms under a common tax regime.
Online gaming suppliers must register; unregistered or non-compliant platforms can be blocked by GST Intelligence.
Consumer Protection Act, 2019
Prohibits misleading and surrogate advertisements related to online gaming.
The Central Consumer Protection Authority (CCPA) investigates misleading promotions and restricts celebrities/influencers from endorsing betting platforms.
The Act’s breadth has generated several constitutional questions:
Federalism (Centre vs State): Gambling and betting traditionally fall under the State List. Opponents argue this intrudes on states’ rights. They note online gaming is a form of business/service, not communication per se.
Fundamental Rights (Article 19 and 14): Skill-gaming firms claim the ban violates Article 19(1)(g) (right to practise any profession/trade). The Supreme Court in R.M.D. Chamarbaugwala (1957) held that games predominantly of skill are business activities protected by Article 19; only pure gambling (chance) can be banned. Article 14 (equality) issues arise because the law treats very different games identically.
Proportionality: By designating these offences as cognizable and non-bailable, the Act treats them as grave crimes. The courts will evaluate if criminal penalties are a proportionate means to the stated ends of curbing addiction and fraud. Article 21 (right to life and liberty) requires restrictions to be reasonable and necessary, so proportionality arguments will be key.
Rule-making and Process: The law grants the executive broad rule-making powers (to define categories, adjust penalties, etc.). Petitions note that the Act was hurriedly passed with little stakeholder consultation, raising concerns about process fairness.
Supreme Court Review: On Sep 8, 2025, the Supreme Court consolidated all petitions from various High Courts against the Act. According to press reports, the Court identified four main questions: Parliament’s power to enact the law, trade rights under Article 19, equality under Article 14, and proportionality (Article 21). The final judgment will set the legal precedent for the Act’s validity.
The Act’s impact spans social welfare, economy and ethics:
Social/Public Health: The government justifies the ban as protecting citizens (especially youth) from gambling harms. The law aims to reduce addiction, debt and family distress.
Economic: Online gaming has become a significant revenue source. In 2025 it accounted for roughly ₹31,000 crore of the economy. With 86% of that from money games, the ban threatens almost the entire sector’s income.
Industry and Innovation: Startups are adapting by shifting to free-to-play models or global esports. The Act’s support for esports (with training programs and tournaments) could create new opportunities.
Ethical/Governance: Ethically, the law highlights the tension between individual freedom and state protection. The government clearly prioritizes public welfare, even if it restricts adult choices. For governance, it shows India’s proactive use of legislation to manage the digital space (alongside other laws like data protection).
Key criticisms include:
Overbroad Ban: Analysts argue the blanket prohibition is too harsh. One legal commentary observed that the ban may be “excessive” and simply drive users to unregulated foreign sites.
Skill vs Chance Ambiguity: By eliminating the distinction, the Act conflicts with established case law. Gaming firms claim this violates Article 19 and Article 14. This ambiguity has already led to litigation and confusion over which games remain legal.
Enforcement Difficulties: Completely policing the internet is challenging. Companies may use VPNs or offshore servers to bypass bans. Banks and payment services must rigorously block prohibited transactions.
Federalism Issues: Some states may prefer different approaches, risking conflicts. While the central law aims to supersede state rules, courts may need to arbitrate overlaps. Coordination between Union and State authorities will be critical in enforcement.
Lack of Consultation: Industry voices note the law was enacted without much public or expert input, calling this a “mockery of debate”. Such rapid legislation on a complex subject has raised concerns that stakeholder views were not adequately considered.
Privacy: The required KYC and monitoring raise data protection issues. The Act itself is silent on how user data is safeguarded. This creates a need for clear data privacy rules for gaming platforms.
UPSC Previous Year Question (PYQ)
Prelims
Q. Which of the following is/are the aim/aims of the “Digital India” Plan of the Government of India? (2018)
Formation of India’s own Internet companies like China did.
Establish a policy framework to encourage overseas multinational corporations that collect Big Data to build their large data centres within our national geographical boundaries.
Connect many of our villages to the Internet and bring Wi-Fi to many of our schools, public places and major tourist centres.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Ans: (b)
Frequently Asked Questions (FAQs)
Q. What does the Online Gaming Act 2025 aim to regulate in India?
A. The Online Gaming Act 2025 sets a comprehensive legal framework for online gaming companies, promoting responsible gaming practices while addressing financial fraud, unlawful platforms, and national security concerns.
Q. How are online gaming companies affected by the Digital Media Ethics Code and Information Technology Act?
A. Online gaming companies must comply with the Digital Media Ethics Code and Information Technology Act, ensuring financial transactions remain safe and platforms maintain a responsible digital environment for players.
Q. Why is responsible gaming important in social gaming and e-sports?
A. Responsible gaming practices protect users from financial ruin, encourage skill development programmes, and help promote e-sports as a competitive digital sport under national sports governance.
Q. How does the Online Gaming Authority safeguard consumers under the Consumer Protection Act?
A. The Online Gaming Authority registers games, monitors betting platforms, and ensures fair play, aligning with the Consumer Protection Act to protect players against unlawful economic activities and offshore operators.
Q. What steps is the Indian Government taking to promote e-sports and fantasy sports responsibly?
A. The Indian Government, through the Union Government and Ministry of Electronics and Information Technology, supports fantasy sports and e-sports while discouraging endorsing betting platforms and unlawful financial transactions.
Conclusion
The Promotion and Regulation of Online Gaming Act, 2025 is a watershed in India’s digital policy. It fills a longstanding gap by regulating online gaming and aiming to protect citizens from gambling-related harms. In doing so, it prioritizes social welfare over unrestricted market activity, illustrating the policy trade-offs between innovation and protection. It underscores that in the digital age, regulators must carefully balance rights, ethics, and economic growth when crafting new laws. Future court rulings on this Act will be important case studies for the examination of Indian federalism and constitutional rights.
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