Background

Amidst increasing calls for clarity on the regulation of online gaming, the Parliament has passed the Promotion and Regulation of the Online Gaming Bill, 2025 (“Bill”). Today, online gaming in India operates within a regulatory patchwork: state-specific laws often prohibit gambling and distinguish between games of skill and chance, rules that operate on a central level under the Information Technology Act, 2000 impose intermediary due diligence obligations on online gaming platforms, and a complex tax regime treats real money games differently from other online services. 

The push for reform proposed by the Bill comes in the wake of several instances of online real money games being linked to financial fraud, money laundering, tax evasion, and even terrorism, raising questions of national security and public order. Enforcement challenges are compounded by the fact that several gaming platforms often operate from offshore locations to exploit jurisdictional gaps, making enforcement difficult. At the same time, the rapid growth of India’s gaming sector underscores the need for a clear and consistent regulatory environment.

Against this backdrop, the Bill represents the central government’s effort to consolidate the fragmented legal framework, anchored by a single regulatory authority. This note summarises key developments under the Bill.

Categorisation of games

A notable feature of the Bill is that it delineates and regulates three categories of online games separately: e-sports, online social games, and online money games.

The Bill prohibits online money games irrespective of whether the games are skill-based or chance-based, which is a departure from existing Indian jurisprudence. Courts have repeatedly held that skill-based games played for stakes are protected under the Indian Constitution. By carving out e-sports and online money games as separate categories and prohibiting online money games of skill, the Bill blurs this well-established distinction.

The Bill now makes it an offence to :

• offer online money games;
• advertise, promote, or induce persons to play online money games; and
• enable or facilitate financial transactions linked to online money gaming services (including by banks, financial institutions, or other intermediaries).

This prohibition has significant consequences for gamers, platforms, advertisers, and employees in the sector. A key concern is the lack of clarity on whether users will be able to withdraw funds (or equivalents like tokens or credits) already held in in-game wallets once the prohibition comes into force. Both Indian and offshore platforms also face the risk of being blocked in India, in addition to monetary and criminal liability. The Bill prescribes stringent penalties: advertisements of online money games may attract fines of up to INR 50 lakhs (~USD 57,000), imprisonment of up to two years, or both, while other offences such as offering or facilitating online money games may lead to fines of up to INR 1 crore (~USD 114,000), imprisonment of up to three years, or both. These underscore the government’s intent to deter unlawful gaming activities, but they also create compliance risks for legitimate businesses, advertisers, and intermediaries who may inadvertently fall within the Bill’s scope.

Regulatory Authority & Registrations

Under the Bill, the central government has the power to appoint a single regulatory authority (“Authority”) to categorise and register online games, determine whether a particular online game is an online money game, and respond to complaints. The Authority may issue directions, orders, guidelines, and codes of practice to regulate online games. 

Notably, the Bill recognises e-sports as a legitimate form of competitive sport in India, but requires each e-sport to be registered with the Authority before release of the game. This development also underscores the significant regulatory interest in the development of e-sports. For example, the government is empowered to form standards and guidelines for e-sports events, establish training academies and institutions, introduce incentive schemes, awareness campaigns and public outreach programmes, and expand sporting policy initiatives to include e-sports. 

As for online social games: apart from registration requirements, the Bill follows a similar approach to the regulation of e-sports, and empowers the government to create programmes to support and develop these games, create initiatives that increase public access to age-appropriate content within these games, and create awareness programmes around digital literacy and skill development – to name a few measures.

Non-compliance with the Authority’s directions may attract monetary penalties of up to INR 10 lakhs (~USD 11,400), and could also result in the cancellation of registrations or prohibition of the games concerned.

While a grievance redressal forum for consumers is laudable and frameworks and policy incentives are a welcome move, the requirement to register online social games and e-sports is puzzling. This could create compliance burdens and additional bureaucracy for gaming studios, potentially delaying game launches, increasing costs, and discouraging investment in India’s gaming ecosystem. In practice, this approach may diverge from most global markets, where e-sports are encouraged as part of the digital economy rather than treated as activities requiring prior approval.

Conclusion

While the proposal to appoint a regulator is a welcome step, it is clear that the Bill has many creases to iron out. The biggest of such creases is the prohibition on skill-based online money games. Indian courts have consistently upheld the legitimacy of skill-based games played for stakes, and the constitutionality of such a blanket ban is likely to be tested.

At the same time, the risks linked to online money gaming cannot be overlooked. Financial fraud, money laundering, gambling addiction, and consumer harm are concerns that justify closer regulatory scrutiny. The challenge lies in balancing these concerns with the sector’s potential for economic growth, innovation, and employment. A prohibition-driven approach risks pushing users to offshore or unregulated platforms, undermining user safety and reducing government oversight. A regulatory framework that accounts for the significant social, economic, and psychological risks to users while preserving the sector’s economic contributions could be a more productive move.