*Saksham Agrawal, Jairaj Singh Basur, Arush Sarma
(Source:Wikipedia)
This article critiques India’s recently introduced Promotion and Regulation of Online Gaming Act 2025. It argues it is both unconstitutional and ineffective. The Act intrudes upon state legislative competence, ignores the skill–chance distinction, and arbitrarily targets online formats. Enforcement hurdles further weaken it, rendering prohibition illusory while undermining consumer protection and lawful industries.
On 22nd August 2025, The Promotion and Regulation of Online Gaming Act, 2025 (‘the Act’) came into effect after receiving presidential assent following a rushed procedure of the Bill being passed through both houses of the Parliament without any meaningful debate or deliberation. The Act prohibits the offering and advertising of any online money game, or service associated with the same. The legislation prohibits offering online money gaming services (Section 5), advertising such services (Section 6) and financial facilitation by banks and payment processors (Section 7). It focuses largely on the actions of companies providing such platforms and services, rather than the user himself. The stated justification for the Act rests on concerns of addiction, financial harm, and illicit activities. Yet the method adopted raises complex constitutional questions that demand careful scrutiny.
This paper attempts to evaluate such infirmities in the Act, aiming to establish that the Act is not only unconstitutional, but also suffers on grounds of policy. In doing so, it proceeds in three parts. First, it examines the federalism issue by situating online gaming within the State List. Second, it critiques the Act’s disregard of the skill–chance distinction from both a logical and constitutional standpoint. Finally, it evaluates the Act’s enforceability challenges.
Federal Overreach – When the Union Plays a State’s Hand
As per Article 246(3), State Legislatures have the exclusive power to make laws for their respective States with respect to any of the matters enumerated in List II in the Seventh Schedule (‘State List’). Entry 34 of the State List includes “betting and gambling”. Further, Entry 62 includes “taxes on…betting and gambling”. Ex facie, the aspects of the Act governing “online money gaming” squarely fall within the scope of “betting and gambling”.
The Oxford English Dictionary defines “gamble(-ing)” as “play(ing) games of chance for money”. Section 2(1)(g) of the Act defines “online money game” as “an online game, irrespective of whether such game is based on skill, chance, or both, played by a user by paying fees, depositing money or other stakes in expectation of winning which entails monetary and other enrichment in return of money or other stakes.” It would be an egregious stretch of language to argue that what the Act defines as an online money game does not fall within the domain of gambling.
It may be argued that the Act concerns the Internet, computer resources, digital resources and/or online gaming and hence is not within the scope of Entry 34 or 62 of the State List. It may be argued that the domain of the Act is separate from that of ordinary “betting and gambling”, due to its online/digital nature. The contention may be that what is being prohibited is not the Act of betting or gambling, but the use of computer resources and the Internet to carry on and promote betting and gambling through the said ‘online money games’. It may be contended that such online gaming was not in existence at the time of the drafting of the Constitution and thus, could not have been contemplated by the Constituent Assembly while placing the matter of ‘betting and gambling’ in the State List.
However, the doctrine of ‘pith and substance’ applies to the instant case. The doctrine was established by the Supreme Court (‘SC’) in State of Bombay v F.N. Balsara, where it was observed that “the impugned statute is examined to ascertain its `pith and substance’, or its true nature and character, for the purpose of determining whether it is legislation with respect to matters in this list or in that.” What is relevant is not incidental features but the primary purpose of the legislation.
The primary purpose of the Act is to prohibit gambling, the fact that its scope is limited to the digital medium is incidental. Mere usage of nomenclature such as ‘online money game’ or ‘real money gaming’ does not mean that such activities do not fall within the scope of betting or gambling. The activities involve the playing of games in the hope of winning money – if this is not gambling, what is? No doubt, there is a difference between traditional forms of gambling and such online gambling, as enumerated in the Act’s preambulatory clauses – easy availability, opaque algorithms, links to illegal activities, etc. No doubt, these may be valid considerations in adopting a law regulating online gambling, with specific provisions keeping in mind the distinct nature of the digital medium. However, this does not, by itself, take away the States’ power to legislate on the matter of gambling, digital or otherwise. Rather, these become considerations that the State governments may keep in mind while legislating on this subject. Such an application of the doctrine of pith and substance to online gaming was upheld by the Madras High Court in Play Games 24×7 Private Limited v. State of Tamil Nadu where it upheld the constitutional validity of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act (‘Tamil Nadu Act’). Earlier, All India Gaming Federation vs State of Tamil Nadu had applied the doctrine in a similar manner.
The question of legislative competence becomes particularly pertinent when it comes to the question of revenue. Not only is the regulation of ‘betting and gambling’ itself exclusively within the legislative domain of the States through Entry 34, but also taxes on such ‘betting and gambling’ are exclusively under the States due to Entry 62. While the concerns noted by the Union are legitimate, they must be balanced with the fact that online money games are a significant source of revenue. Given that both the subject itself and taxes on the subject are part of the State List, decisions on this matter lie within the States’ domain. Even if it is contended that Article 246A places GST on online money games within the Union’s domain, this does not preclude the States from imposing taxes under Entry 62, especially as such taxes are in the nature of “luxury taxes”. In short, the choice is up to the States individually, not the Union.
The next section will deal with the act’s elimination of the distinction between games of skill and games of chances, its fallacies and the consequences arising from the same.
All Bets are Off(line) – Lost in Translation?
The Act’s definitional clause of what constitutes an “online money game” is significant because it collapses the traditional and judicially entrenched distinction between games of skill and games of chance. What the Act proposes is that once money is staked, it is immaterial whether the underlying activity requires strategic acumen or mere luck: both are equally prohibited, as long as it is online.
This legislative move represents a sharp departure from the consistent position adopted by the SC articulating the conceptual and constitutional divide between chance-dominated gambling activities and skill-based competitions. It has repeatedly emphasised that games where skill predominates constitute legitimate trade and commerce protected by Article 19(1)(g), whereas games of pure chance fall within the category of “gambling” and may justifiably be proscribed.
The Act’s definitional collapse is therefore problematic at two levels. While it may not necessarily conflate skill and chance, it definitely ignores the difference as being irrelevant once monetary stakes are involved. The difficulty lies in this decision to treat the distinction as immaterial, despite its entrenched recognition in judicial doctrine and its practical regulatory implications. This legislative disregard is problematic for two reasons. First, the judiciary has consistently held that the distinction has constitutional significance under Article 19(1)(g); it is not open to Parliament to negate this faultline without inviting constitutional challenge. Second, the difference has policy relevance as mere prohibition based on a different platform arguing that online money-based games must be prohibited while offline equivalents continue unscathed produces disproportionate and arbitrary outcomes.
The Skill v Chance Problem
The Act’s refusal to distinguish between games of skill and games of chance is not merely a matter of constitutional doctrine but also of logical coherence. At the most basic level, games of skill and games of chance are conceptually different categories. The former are characterised by the predominance of human judgment, training, experience, and strategy in determining outcomes, whereas the latter are determined primarily by randomness or fortuity. In R.M.D. Chamarbaugwala v Union of India, the SC expressly recognised that competitions involving substantial skill fall outside the realm of “gambling” because the essence of gambling lies in the reliance on chance rather than ability.
By defining “online money games” so as to encompass both skill- and chance-based formats, the Act might not erase the conceptual distinction between the two, but instead declares it irrelevant within the broader category of online gaming. In effect, rummy or fantasy sports are treated as legally indistinguishable from roulette or online slot machines merely because they occur in the digital sphere. While such a classification may be logically consistent at the level of legislative taxonomy, it is normatively indefensible. The distinction between skill and chance is not a mere sub-categorisation but a constitutionally entrenched line with practical regulatory consequences. Games of skill involve human judgment, training, and strategy, allowing for systematic improvement and consumer protection through proportionate safeguards; games of chance reward luck alone and justifiably attract stricter controls. By refusing to recognise this substantive difference, the Act adopts a classification that, though formally coherent, is substantively flawed in both logic and law. This conflation also produces absurd regulatory consequences. A law that treats fantasy sports platforms and online casino games as alike ignores their vastly different risk profiles and the regulatory possibilities available. Skill-based games can be subjected to proportionate safeguards such as age restrictions, spending limits, and KYC norms without extinguishing the activity altogether as done in the Tamil Nadu Act. Games of pure chance, on the other hand, may and have justifiably attracted outright prohibition or stricter control due to their inherently addictive and speculative nature. The Act ignores these fundamental differences and instead forecloses nuanced regulation and opts instead for a blunt instrument of prohibition that is both overbroad and misaligned with the realities of the sector.
Thus, the Act’s definitional collapse is logically untenable because it disregards the inherent differences between skill-based and chance-based games, imposes an artificial equivalence, and produces regulatory absurdities.
The more serious difficulty with the Act’s erasure of the skill–chance distinction lies in its constitutional incompatibility. The Court has, across a consistent line of cases, entrenched the principle that games where skill predominates constitute legitimate trade or business, protected under Article 19(1)(g). In R.M.D. Chamarbaugwala, the SC distinguished between gambling, which it defined as chance-dominated activity, and competitions involving substantial skill, which were held to be lawful business activities. This line was reaffirmed in State of Andhra Pradesh v. K. Satyanarayana where the Court upheld the legality of rummy as a game of skill, and K.R. Lakshmanan v. State of Tamil Nadu, where horse-racing and betting thereon were held to be games of skill falling within the protection of Article 19(1)(g).
The Karnataka Police (Amendment) Act, 2021 tried to impose a blanket ban on online games of skill when played for money. However, the Karnataka High Court in Galactus Funware Technology Private v. State of Karnataka declared the offending sections of the 2021 Amendment as unconstitutional. In All India Gaming Federation v State of Karnataka, the KHC held that acts regulating online gaming can only apply to games of chance, not games of skill like rummy and poker. It also pointed towards a potential violation of Article 19(1)(a). It stated that such online money games may serve as a medium for players to express their opinions, exercise judgment, and engage in speech.
The State had argued that online gaming, irrespective whether of skill or chance, posed heightened risks of addiction, financial harm, and money laundering, particularly given the ease of access and anonymity afforded by digital platforms. It therefore claimed that a uniform ban was the most effective way to protect consumers and maintain public order. While these concerns are legitimate, the Court held that they could not justify erasing a constitutionally entrenched distinction between skill and chance. To do so would disregard the jurisprudential line drawn since R.M.D. Chamarbaugwala, and would result in the wholesale prohibition of lawful occupations recognised under Article 19(1)(g).
The KHC decisions present two important points. First, it affirmed that the presence of monetary stakes does not automatically convert a skill-based game into gambling. What matters is the nature of the activity itself, a distinction the new Act has ignored. Second, it rejected the notion that the entire domain of online gaming can be brought down simply because money is involved. The Court stressed that the risks associated with online play can be mitigated through targeted safeguards instead of outright prohibition. In other words, the State’s legitimate concern with consumer protection does not justify collapsing all forms of online gaming into the category of gambling and extinguishing lawful skill-based enterprises.
The reasons given for the current Act’s introduction are virtually the same as that for the Karnataka Bill and thus, the KHC decisions clearly demonstrate such arguments, while facially persuasive, cannot justify legislative measures that are overbroad and disproportionate. The courts have already signalled that reasonable regulation is permissible, but outright prohibition of online money games is constitutionally indefensible and thus the current Act fails and must be struck down.
Another important case here is Internet and Mobile Association of India v. RBI, where the Court struck down the RBI’s circular prohibiting banks from providing services for cryptocurrency transactions. While RBI had invoked concerns over financial stability and consumer protection, the Court noted that a complete ban was disproportionate because less restrictive alternatives such as regulation and monitoring were available. Just as in that case, where consumer protection did not justify extinguishing an entire industry, here too the risks posed by online money-based gaming cannot justify the wholesale prohibition of constitutionally protected occupations.
The consequence of this jurisprudence is clear. Enterprises organised around online money games, even where monetary stakes are involved, are recognised as lawful occupations entitled to constitutional protection. Any restriction on such activities must therefore meet the requirements of Article 19(6), which permits only “reasonable restrictions” in the interest of the general public. A blanket prohibition that conflates skill with chance cannot be characterised as reasonable, particularly when courts have repeatedly affirmed that the distinction is of constitutional significance.
By defining “online money games” to include both categories and then prohibiting them under Section 5, the Act disregards this settled jurisprudence. This disregard for binding precedent raises grave constitutional concerns. The legislature may clarify or regulate within the bounds of constitutional interpretation, but it cannot efface a distinction that has been judicially recognised as fundamental to the application of Article 19(1)(g). To do so is, in effect, to legislate in contradiction of the Constitution itself.
The Offline v Online Problem
What makes the Act’s approach especially problematic is that it does not simply ignore the skill–chance distinction but substitutes it with an altogether new and arbitrary line. The Act’s definitional framework does not ask whether the outcome of a game depends on skill or chance. Instead, the decisive criterion is whether its first, online and second, money or stakes are involved. If there is a risk of financial loss coupled with the expectation of gain, the game is banned outright, regardless of whether it is chess, fantasy sports, or roulette. Conversely, if the game is recreational, educational, or competitive without monetary stakes, it is permitted, even if the element of skill is minimal.
This redefinition creates legal uncertainty and undermines the rule of law. For decades, operators and participants in games like rummy, horse-racing, and fantasy sports have relied upon judicial pronouncements affirming their legitimacy. The Act renders such activities illegal overnight, not because their essential nature has changed, but because Parliament has chosen to redraw the boundary between permissible and impermissible activity by treating online and offline formats differently.
While the State may argue that this classification satisfies the test of reasonable classification since online games have peculiar risks such as ease of access, algorithmic opacity, and cross-border money flows, this collapses upon scrutiny. First, there is no intelligible differentia that justifies treating the same skill-based activity as legitimate offline but illegitimate online. The core element that determines the constitutional status of the activity is whether skill or chance predominates, not the medium through which the activity is delivered. This distinction lacks a rational foundation, as both formats involve the same core elements of skill and strategy. The absence of any meaningful difference between these activities beyond their medium of delivery creates an arbitrary classification that may not satisfy Article 14’s requirement for reasonable differentiation.
Secondly, the supposed rational nexus is absent, because the risks identified can be addressed through targeted safeguards like in the Tamil Nadu Act and other jurisdictions (see here and here), without prohibiting the entire class of skill-based online games. Further, the Act also arbitrarily differentiates between online games involving money and their offline equivalents. It denies equal protection to participants who are engaged in functionally identical activities, differing only in the medium of play. The rationale behind this distinction as explained above is based on a formalistic and arbitrary line. The Act extinguishes entire industries that have operated under constitutional protection, erodes legal certainty, and discards the principle of proportionality. In effect, it replaces a carefully reasoned judicial distinction with an arbitrary legislative fiat.
The next section deals with the failure of the act to meaningfully regulate online gaming due to its lack of effective enforcement mechanisms.
Ease of Circumvention – A War Lost Before it is Fought
The Act’s primary concern lies in its supply-side focus rather than demand-side consumption, akin to targeting drug dealers, rather than users. While such a focus on the supply is laudable, in practice, it renders the Act hamstrung, and incapable of appropriately promoting and regulating the gaming sector. This becomes a deliberate avoidance of the criminalisation of user participation, inadvertently making enforcement of the legislation largely impossible.
In practice, the provisions of the Act only apply to companies and individuals registered within the country. Online gaming platforms already rely on offshore servers, and VPN-based operations in order to mask their identity and location. Moreover, they frequently switch domains to evade blocking orders. Server hosts are also distributed across multiple jurisdictions, further complicating enforcement.
The Act’s enforcement authority is fundamentally constrained by its lack of territorial sovereignty. While Section 1(2) states that it covers online money gaming services offered within the territory of India or operated from outside the territory of India, authorities may not directly exercise jurisdiction over offshore entities. In order to hold such companies responsible for their actions, authorities must rely on Mutual Legal Assistance Treaties (‘MLAT’). Under Section 110 of the Bharatiya Nagarik Suraksha Sanhita, Indian courts may send summons or a warrant to countries with whom “arrangements have been made by the Central Government service or execution of summons or a warrant in relation to criminal matters”. However, major gambling havens such as Philippines, Cambodia, Laos or several Caribbean nations do not have standing treaties with India, thus allowing companies to operate freely. For instance, some of the largest gambling companies, such as Stake, are headquartered in Curacao, which does not have an MLAT with India. Most online casinos in Asia operate out of such gambling havens, allowing them operational freedom. Even with countries that have signed an MLAT with India, for coercive measures such as arrest and detention, the rule of ‘double criminality’ applies. Consequently, gambling must also be illegal under law in the jurisdiction that the company operates out of, complicating the application of these provisions. If such conduct is legal and regulated in the concerned state, the operation of that company is thus not illegal.
Under Section 7 of the Act, facilitators such as banks and payment processors will be held liable for their role in allowing the transfer of money for online money games. This section aims to constrain the avenues available to gambling sites to facilitate transfers, financial fraud, money-laundering, tax evasion, and even the financing of terrorism. In the instant case, however, isolating banks from the transaction will do little to limit such offences due to the plethora of alternatives available that have emerged in recent years. These systems enhance the ease, accessibility, and user-friendliness of financial transactions, while at the same time anonymising the identities of the parties to the transaction. Gambling websites, such as Stake, often deal primarily in cryptocurrencies such as Ethereum, ensuring peer-to-peer transactions without the necessity of banking intermediaries. With the presence of an alternative to the banking system which actively anonymises transactions, it is unclear as to how the provisions of Act help address the aforementioned issues.
Therefore, it is argued that while the legislation successfully establishes a comprehensive framework prohibiting real money gaming and promoting legitimate esports, its enforcement mechanisms remain severely constrained by jurisdictional limitations and technological realities.
Conclusion
In this paper, we have sought to examine the various shortcomings of the Promotion and Regulation of Online Gaming Act, 2025. By intruding into subjects placed squarely within the State List, the Act raises serious questions of legislative competence. More significantly, its abandonment of the judicially entrenched skill–chance distinction undermines Article 19(1)(g) protections, violates proportionality standards, and disregards decades of jurisprudence.
We also assessed the Act’s enforcement mechanisms against the technological realities of online gaming. The prevalence of offshore servers, VPN-based operations, and cryptocurrency transactions renders prohibition largely illusory, with the unintended effect of pushing players toward unregulated markets while suffocating legitimate, skill-based enterprises.
What this paper has attempted to show is that the Act, in both design and execution, fails to achieve its stated aims. A more constitutionally faithful and practically effective approach would be one that respects federal boundaries, preserves the skill–chance distinction, and embraces proportionate regulation over outright prohibition. Only such a framework can protect consumers, sustain innovation, and foster responsible growth within India’s gaming ecosystem.
*Saksham Agrawal is a third-year student at the National Law School of India University, Bengaluru and an Editor at the Law School Policy Review and National Law School of India Review. His interests lie in sports law and international arbitration.
*Jairaj Singh Basur is a second year B.A. LL.B (Hons.) student studying in the National Law School of India University, Bengaluru, and a Junior Editor at the Law School Policy Review. His interests lie in arbitration and constitutional law.
*Arush Sarma is a second-year student at the National Law School of India University, Bengaluru. His interests lie in international criminal law and arbitration.