Authors: Nakul Batra (Partner), Aankhi Anwesha (Senior Associate) and Daksh Krishnan (Associate)
- Introduction
The Indian Parliament has passed a critical piece of legislation set to transform the entire Indian gaming industry: the Promotion and Regulation of Online Gaming Bill, 2025 (“Bill”). The Bill now requires the assent of the President of India before being notified into law.
The Bill introduces a new regulatory regime and seeks to establish a central authority for oversight. The online games are classified into three categories: (1) online money games, (2) online social games, and (3) e-sports. The Bill prohibits the first category, i.e., online money games played for monetary stakes or winnings, and provides for the regulation, development, and promotion of the other two categories, i.e., e-sports and social games.
The introduction of the Bill is premised on the Government’s recognition that India’s fragmented, state-led framework for online gaming has resulted in regulatory inconsistency and enforcement challenges. The Bill’s statement of objects and reasons notes that central legislation is necessary to ensure uniformity across states and to address associated risks, including cybercrime, money laundering, and the potential misuse of online gaming platforms for unlawful activities.
- Background
The Bill proposes a regulatory overhaul of the online gaming framework by introducing a nationwide blanket prohibition on games involving monetary stakes or winnings, including on games of skill, where previously only games of chance were restricted. For clarity, until now the legal framework governing online gaming in India has been shaped in particular by two decisions of the Supreme Court of India, i.e. Dr. K. R. Lakshmanan v. State of Tamil Nadu[1] and M.J. Siwani v. State of Karnataka[2], both of which drew a clear distinction between games of skill and games of chance, categorising games of skill as permissible. Platforms offering real-money games have historically relied on this judicially recognised exemption for games of skill, with the case of Varun Gumber vs. Union Territory of Chandigarh[3] affirming this position by pronouncing that daily fantasy sport is a ‘game of skill’, which set the foundation for the rise of several players in the gaming industry in India. Once the Bill is promogulated as a law in India, it will negate all judicial precedents by imposing a prohibition on all real-money games, including those previously classified as games of skill, such as daily fantasy sports, rummy, and poker.
- Analysis of the Bill
3.1 Key Definitions and Categorizations
Online Money Games: Online games, whether chance or skill based, that are played by a user upon payment of a fee with the expectation of earning winnings in monetary form or other material enrichment. The definition of online money games is similar to the popular definition of “real-money gaming” (‘RMG’) as provided under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”). The operative section to regulate the real-money gaming under the IT Rules never came into force.
Online Social Games: Online games that do not have an element of monetary stake or are played without the expectation of monetary gain, and are offered solely for entertainment, recreation, or skill-development purposes. Online social games may enable access through payment or subscription fee or one time access fee so long as the payment is not in the nature of a stake or a wager.
E-sports: Online games played as part of multi-sport competitive events between individuals or teams, where the outcome is determined on factors such as physical dexterity, mental agility, strategic thinking, and other elements of skill. To be categorised as an e-sport, the online game must be recognised as a designated sport under the National Sports Governance Act, 2025, and registered with the authority to be constituted under the Bill, which may be either a newly established body or an existing agency (“Authority”).
3.2 Prohibition and Penalty – Online Money Games
Section 5 of the Bill imposes a blanket prohibition on indulging in, aiding, or offering online money games or related services. As iterated earlier, this prohibition extends to both games of chance and games of skill, when played for monetary stakes or winnings. Contravention of Section 5 is punishable with imprisonment of up to three years and/or a fine of up to INR 10,000,000 (Indian Rupees Ten Million).
Section 6 extends the prohibition to any form of advertisement, direct or indirect, for online money games, with violations attracting imprisonment of up to two years and/or a fine of up to INR 5,000,000 (Indian Rupees Five Million). The prohibition on advertisements is driven by the pervasive marketing practices of online gaming platforms, which are often promoted through high-profile sponsorships and celebrity/influencer endorsements. The Bill specifically highlights that such advertising campaigns significantly amplify the reach and impact of online money games, particularly amongst the youth and other vulnerable groups.
To reinforce these prohibitions, Section 7 prohibits financial institutions from facilitating transactions or authorising payments towards online money gaming services. Non-compliance with Sections 5 and 7 is classified as a cognizable and non-bailable offence under the criminal code of India, Bhartiya Nagrik Suraksha Sanhita, 2023.
3.3 Development and Recognition – Online Social Games & e-Sports
Section 3 of the Bill seeks to promote and recognise e-sports across India, requiring all e-sports to be registered with the Authority constituted under the Bill. The Central Government may also take measures to support e-sports, including issuing guidelines and standards for organisations, establishing training academies, and introducing incentive schemes. Section 4 of the Bill indicates that online social games would likely have to be registered with the Authority under a mechanism to be prescribed. The Government is also empowered to create platforms for the development and distribution of such social games and to undertake public-awareness programmes.
3.4 Blocking Orders and Power of Search and Seizure
Chapter VI of the Bill empowers the Central Government to authorise any class of officers to conduct investigations and, without a warrant, enter any premises, whether physical or digital, to search and arrest any person reasonably suspected of having committed an offence.
In the event of non-compliance with the provisions of the Bill, and in addition to the prescribed penalties, the Government may block access to a platform, irrespective of whether the grounds of sovereignty, integrity, security of the State, or public order under Section 69A of the Information Technology Act, 2000 are satisfied.
- Conclusion
The Bill is poised to fundamentally reshape the online gaming sector by imposing a complete ban on online money games. In adopting this approach, the Central Government has clarified that even though the industry represents a lucrative sector with significant potential for tax revenue, the protection of citizens from the psychological, social, and economic harms of online money gaming outweighs potential revenue loss.
The Bill is likely to receive a considerable push-back from the gaming and other associated industries, as future of businesses and employees operating in the sector hangs by a thread. The Bill reflects a marked policy shift from the Government’s earlier inclination to regulate online money games to its present stance of outright prohibition. In 2023, the Government had amended the IT Rules to regulate the online gaming sector, proposing the creation of a self-regulatory body (“SRB”) to verify whether an online money game qualified as permissible under the IT Rules, indicating a regulatory approach. However, the SRB was never formally notified by the Central Government. The Government now points to this non-operationalisation as evidence that it had assessed and reconsidered the regulatory framework, ultimately deciding to impose a blanket prohibition on online money games. While the Bill awaits presidential assent and comes into force, businesses are likely to re-evaluate their gaming models to align with the forthcoming regulatory framework.
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Disclaimer: This article is general in nature and is not intended to be a substitute for specific legal advice. Please contact the author(s) for specific legal advice in this regard.
[1] AIR 1996 SC 1153
[2] (1995) 6 SCC 289
[3] 2017 SCC OnLine P&H 5372