Analysing the Promotion and Regulation of Online Gaming Act, 2025

(Please note that this was originally written on 30.08.2025)

This piece proceeds in two parts.

It first undertakes a structured examination of The Promotion and Regulation of Online Gaming Act, 2025, focusing on its statutory architecture, key definitions, prohibitions and the emerging regulatory and compliance framework governing online gaming in India. 

It then transitions to a critical analysis, wherein the author evaluates the constitutional, economic and policy implications of the Act, and advances a considered view on its broader impact and sustainability within India’s evolving digital regulatory landscape.

INTRODUCTION

The rapid ascent of online gaming in India was nothing short of meteoric. 

From being a nascent ecosystem a few years ago, the market expanded into a major digital industry, and soon enough, it was supporting hundreds of millions of participants and attracting substantial domestic and foreign capital. 

Industry studies recorded an estimated 488 million online gamers in 2024, with approximately 110 million engaging daily in these games. The online-gaming market grew at 28% to reach ₹16,428 crores in 2023, and employment in the sector was projected to expand markedly, with analysts forecasting up to 250,000 jobs by 2025.  These promising figures led to investor confidence, and substantial sums of investments were made in start-ups and platform operators. 

Real money gaming was at the heart of this growth. Fantasy sports, poker and other stake based formats accounted for the lion’s share of 82.8% of the revenue and marquee operators commanded valuations that attracted global venture capital. Projections circulated widely that India’s gaming sector would continue to multiply in size and economic significance, with forecasts suggesting that the Compound Annual Growth Rate would reach upto ₹33,243 crores by 2028. 

However, this commercial boom came with social and regulatory anxieties. Reports of acute financial loss and distress among players; investigative coverage and government statements pointed to instances where users exhausted savings, incurred debts or suffered severe personal consequences after engaging with certain apps and platforms. 

Cases were filed and judgments were pronounced. The test of Game of Luck vs Game of Skill was brought in but this did little to change the demography.

In this backdrop, last week, the Parliament enacted the Promotion and Regulation of Online Gaming Act, 2025 (hereinafter referred to as ‘The Act’)

The statute aims to curb the social harms associated with unregulated money-based gaming and to create a unified national framework to regulate and promote legitimate forms of online play such as e-sports and social (non-stake) games. The biggest takeaway of the Act is that it puts a blanket ban on ‘online money games’. 

To delve into this in detail, it becomes important that we analyse certain key definitions under the act.

THE DEFINITIONS THAT MATTER

To understand the legislation and its implication, it would become pertinent for us to understand the way certain terms are defined;

1 - E-sport – Section 2 (c) (ii) of the Promotion and Regulation of Online Gaming Act, 2025 defines ‘e-sport’ as an online game that forms part of multi-sports events and consists of organised, competitive multiplayer contests run under predefined rules. 

2 - Crucially, e-sports must be formally recognised under the National Sports Governance Act, 2025 and registered with the Authority set up by the Government as mandated by Section 2 (c) (iii) of the Promotion and Regulation of Online Gaming Act, 2025.

3 - Section 2 (c) (iv) of the Promotion and Regulation of Online Gaming Act, 2025 states that the outcome of an e-sport is mandated to be determined solely by player attributes such as physical dexterity, mental agility or strategic thinking. 

4 - Section 2 (c) (v) of the Promotion and Regulation of Online Gaming Act, 2025 states that organisers may charge registration or participation fees (to cover entry/administration) and may award performance-based prize money. 

However, a caveat is imposed by Section 2 (c) (vi)of the Promotion and Regulation of Online Gaming Act, 2025 states that these events must not involve bets, wagers or any third-party stakes or winnings derived from such stakes. 

Online Money Game -  Section 2 (g) of the Act defines online money games irrespective of whether it is based on skill or chancewhereby it is played by a user after paying fees/ depositing money or other stakes in expectation of winning the game  which entails monetary and other enrichment in return of money or other stakes. However, any game that falls under the purview of 

E sports is not included under this definition.

The term 'online social game is defined under Section 2 (i) of the Act whereby it is said that an online game is a game that does not involve monetary staking or participation with an expectation of monetary gain. 

Section 2 (i) (ii) of the Promotion and Regulation of Online Gaming Act, 2025 permits such games to charge subscription or one-time access fees as long as those payments are not in the nature of stakes or wagers. 

As Section 2 (i) (iii) of the Promotion and Regulation of Online Gaming Act, 2025 states, these games must be offered solely for entertainment, recreation or skill-development. 

PROHIBITIONS AND PENALTIES 

Sections 5 to 7 of the Bill impose a three-pronged statutory bar on the online money gaming ecosystem. 

Section 5 forbids the offering, aiding, abetting, inducing or otherwise engaging in the conduct of any online money game or the provision of an online money gaming service;. The prohibition is expressed in broad, purposive terms and targets operators, facilitators and intermediaries. 

Section 6 outlaws advertising of online money games in any medium. Whether the promotional material directly or indirectly induces participation, it is barred. Hence, the ban captures not only operator marketing but also third-party endorsements and influencer promotions. 

Section 7 extends the prohibition to the financial and payments chain; whereby no bank, payment service provider, financial institution or other person authorising funds may engage in, permit or facilitate transactions for online money gaming services. 

The Act complements these prohibitions with substantial penal consequences (including imprisonment and fines) and makes breaches under sections 5 and 7 cognisable and non-bailable. They are dealt with Sections 9-12 of the Act. 

Section 9 prescribes penalties for varied offences as found under; 

1. Offering an online money gaming service in contravention of Section 5 attracts imprisonment up to three years, a fine up to ₹1 crore, or both. 

2. Advertising in breach of Section 6 carries imprisonment up to two years, a fine up to ₹50 lakh, or both.

3. Facilitating funds in contravention of Section 7 attracts imprisonment up to three years, a fine up to ₹1 crore, or both. 

4. Repeat convictions increase mandatory minima and maxima: a second or subsequent offence under Sections 5 or 7 attracts imprisonment not less than three years and up to five years, and fines not less than ₹1 crore and up to ₹2 crore; 

5. Similarly, repeat offences under Section 6 attract imprisonment not less than two years and up to three years, and fines not less than ₹50 lakh and up to ₹1 crore.

6. Section 10 states that offences under Sections 5 and 7 are declared cognisable and non-bailable, notwithstanding provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023. Therefore, arresting the violators is permitted without the prior sanction of a magistrate and thereby restricts immediate judicial release.

7. Failure to comply with directions or orders issued by the authority may attract administrative penalties up to ₹10 lakh, suspension or cancellation of registration and prohibition from offering, facilitating or promoting games for a period determined by the Central Government or the Authority. 

8. The legislation also prohibits online gaming being played with ‘Other Stakes’. This is as defined under Section 2 (j) of the Act, whereby it prohibits games being played with financial instruments that are equivalent to money or may be convertible to money, whether real or virtual.

THE ROAD AHEAD FOR ONLINE GAMING: THE POSITIVES  

Sections 3 and 4 of the Act cast an obligation on the Central Government to take steps so as to: recognise, register, and Promote E-sports and online social games through the Authority created under the Act. 

The Act goes a step ahead and lists non-exhaustive measures the Authority may adopt to develop and promote e-sports and Online Social Games in India.

For E-sports, the suggested measures include; 

1. Formation of conduct and standards guidelines for events; 
2. Establishment of training academies and research centres; 
3. Incentive schemes, awareness and outreach programmes to stimulate e-sport technology enterprises; 
4. Coordination with State Governments and recognised sporting federations;
5. Other prescribed measures are necessary to develop the sector. 

For online social games, the suggested measures are; 

1. Registration mechanisms;
2. Platforms or programmes for development and distribution;
3. Public access and age-appropriate content initiatives;
4. Awareness campaigns highlighting educational and recreational benefits;
5. Coordination with state and educational institutions; 
6. Other prescribed promotional steps.

Therefore, the recognition and structured promotion of e-sports and online social games under the Act offers a favoured landscape for entities and investors. By creating a transparent registration system, codified standards and government-backed initiatives such as training academies, incentive schemes, and outreach programmes, the sector is being positioned as a legitimate part of India’s digital economy, somewhat similar to the policy on GCCs. 

This regulatory clarity can reduce uncertainty and compliance risks, thereby unlocking access to institutional capital, venture funding and strategic partnerships. 

For established gaming companies, it provides a pathway to expand operations in a secure environment; for start-ups, it lowers barriers to entry by aligning with state and educational collaborations; and for global players, it signals a maturing ecosystem worthy of long-term investment. 

REPERCUSSIONS 

The Act has had an immediate and material effect on the economics of the sector. Major operators paused or curtailed real-money operations. 

Investors and Venture Capitals such as Tiger Global which had valued the industry to be worth $3.6 billion in India by 2029 are reassessing exposures as billions in value premised on RMG revenue have been placed at risk. 

The restrictive approach adopted by the legislation risks investor write-downs and valuation losses, sharp tax/GST revenue declines and material job cuts across platforms and their supply chains and also removes substantial transaction volume. It also pressures fintech and KYC vendors and could prompt startups to disband as the question of going offshore simply does not exist. 

The Act’s extraterritorial reach covers services operated from outside the territory of India, asserting regulatory authority over offshore operators targeting Indian users.

Further, it grants authorised officers broad powers to ‘enter any place, whether physical or digital’ and override security controls, making clear that offshore operations will not shield providers from compliance. 

The ban threatens near-term job losses and reduced tax receipts and it has prompted concern among global backers that India’s regulatory approach is abrupt and unpredictable.

LEGAL ARGUMENTS AGAINST THE ACT

The constitutionality of the Act is now under consideration before the Supreme Court of India, and its validity will likely turn on established doctrines of legislative competence and the protection of fundamental rights. 

One can argue that the centre has overstepped with the enactment of this act as “Betting and gambling” is listed in the Seventh Schedule, List II, Entry 34, a State subject. 

Applying the doctrine of pith and substance, the Court will assess whether the legislation in substance regulates gambling, a State subject, or whether it can be legitimately anchored in a Union field such as inter-State trade, telecommunications, or digital intermediaries. 

Precedent provides a nuanced framework. In State of Bombay v. R.M.D. Chamarbaugwala and K.R. Lakshmanan v. State of Tamil Nadu, the Supreme Court recognised the “dominant element” test, holding that activities where skill predominates fall outside the ambit of gambling, constitute protected business and cannot be subjected to blanket prohibitions.

Against this backdrop, a sweeping restriction that fails to distinguish between games of skill and chance may be vulnerable to challenge under Article 19(1)(g), which guarantees the fundamental right to practise any profession or to carry on any trade or business, subject to reasonable restrictions under Article 19(6).

Therefore, a core argument will be with regard to the pith and substance of the legislation and considering that it is a state subject, it can be said that the Parliament lacked competence to pass this legislation.

While the State may invoke Article 19(6) of the Constitution of India, which allows the state to impose reasonable restrictions on the right to practise any profession or carry on any trade or business in the interests of the general public guaranteed under Article 19(1)(g). 

The state can also rely on directive principles of state policy. Particularly Article 38, which states that the State has to strive to promote welfare. Therefore, the Act could be justified as a necessity to curb addiction, protect youth and the middle class and prevent predatory offshore operators. 

But at the same time is also noteworthy that DPSPs are persuasive but non-justiciable and do not automatically trump Fundamental Rights.

Hence, in a balancing act, the Government could have considered the following Global practices. 

This matter is currently pending adjudication in the Supreme Court of India.

AASHUTHOSH OPINES;

THE ROAD THAT COULD HAVE BEEN TAKEN 

Rather than a blanket prohibition, a leaf could be taken out of international regulatory models that target harm while preserving legitimate, skill-based activity and tax/compliance benefits.

United Kingdom

The UK Gambling Commission attaches strict licence conditions to remote operators while identifying high-risk games and imposing technical and commercial limits. For example, online slot stake limits (£5 per spin generally; £2 for younger adults). There are also requirements to remove or slow down “predatory” game mechanics, and mandatory product safety testing.  

The UK Gambling Commission and other EU practices prioritise front-line protections: robust age and identity verification, credit checks or affordability reviews where appropriate and active intervention for at risk players. They also restrict gambling advertising (timing, content and targeting) which requires clear consumer warnings and press industry bodies to adopt codes that limit incentives and exploitative promotions . This protects minors and vulnerable cohorts.

The United States of America

New Jersey and other US states require real-time telemetry and automatic triggers (e.g., deposit spikes, chasing patterns, repeated withdrawal cancellations) and combine KYC rules with operator monitoring obligation whereby regulators require a suite of protective tools: mandatory age verification and KYC; affordability and source-of-fund checks for higher-risk customers; deposit limits and voluntary or mandatory pre-commitment; self-exclusion registers; time-out and cooling-off mechanisms; mandatory activity statements and loss limits for specified products. These measures have proven effective in focusing enforcement on problem behaviours rather than on all players.  

CONCLUSION 

The Promotion and Regulation of Online Gaming Act, 2025 marks a watershed moment for India’s digital economy. 

On one hand, it finally creates a single, robust legal framework (with licensing, penalties and an oversight authority) covering all internet gaming and bringing everything under centralized control. However, on the other hand, the blanket ban on real money games is extremely far-reaching. It abruptly halts an industry that has been flourishing, with significant economic and social promise.

By weighing public interest against economic benefit, India is essentially betting on cautious protectionism. The full impact remains to be seen, and to comment without awaiting the regulations and rules would be premature.

In the coming months, policymakers and courts will test whether a blanket prohibition was wise or whether India will ultimately adopt global best practices.

In a fast-growing sector, a heavy-handed solution entails risks. The Act could indeed curb addiction and illicit finance, but only if enforcement reaches every corner of the web, or it might give rise to proxy illegal platforms too. 

If not, India may have sacrificed billions in growth for uncertain gains. As other countries watch, this law will stand as a case study in how or how not to regulate the new frontier of online gaming.

REFERENCES / BIBLIOGRAPHY

Legislation

1. The Promotion and Regulation of Online Gaming Act, 2025

2. The Constitution of India

3. The Bharatiya Nagarik Suraksha Sanhita, 2023

4. The National Sports Governance Act, 2025

Cases

1. State of Bombay v. R.M.D. Chamarbaugwala

2. K.R. Lakshmanan v. State of Tamil Nadu

3. All India Gaming Federation v. State of Tamil Nadu

Reports & Industry Studies

1. Kalaari Capital, Gameconomy Report 2023

2. Ernst & Young, New Frontiers: Navigating the Evolving Landscape for Online Gaming in India (December 2023)

News & Media Sources

1. Aditya Kalra & Aftab Ahmed, “India passes bill to ban money-based online games, app shutdowns loom,” Reuters (21 August 2025)

2. TOI Business Desk, “Online Gaming Bill 2025: Gaming regulation shake-up puts billions in VC investment at risk,” Times of India (26 August 2025)

3. Alim Shaikh, “Online gaming victims want crackdown on illegal apps,” Times of India (28 August 2025)

International Regulatory Materials

1. UK Government, “Statutory levy and online slot stake limits to be introduced to tackle gambling harm”

2. Betting and Gaming Council, “Safer Gambling Initiatives – Player Protection”

3. New Jersey Division of Gaming Enforcement, Regulations (Chapter 69O)

FOOTNOTE TRACE LIST (FOR YOUR RECORDS)

1. Kalaari Capital Gameconomy Report 2023; EY analysis

2. Ernst & Young Report (December 2023)

3. Times of India article on online gaming victims
   4–8. Definitions under The Promotion and Regulation of Online Gaming Act, 2025 (E-sports provisions)
   9–12. Definitions under The Promotion and Regulation of Online Gaming Act, 2025 (Online social games)

4. Section 3(2), The Promotion and Regulation of Online Gaming Act, 2025

5. Section 4(2), The Promotion and Regulation of Online Gaming Act, 2025

6. Reuters article on gaming ban and investor impact

7. Times of India article on VC exposure and regulation impact

8. K.R. Lakshmanan v. State of Tamil Nadu (1996)

9. All India Gaming Federation v. State of Tamil Nadu (2023, Madras HC)

10. UK Government policy on gambling stake limits

11. Betting and Gaming Council – player protection framework

12. New Jersey gaming regulations (Chapter 69O)