The Promotion and Regulation of Online Gaming Act, 2025: Between Innovation and Prohibition

By Adv. Umesh Jadon (Advocate, Delhi High Court)

Introduction

India’s digital economy has reached an inflection point where entertainment, technology, and law converge. Among its fastest-growing segments is online gaming ranging from casual mobile games to organised e-sports with international recognition. According to industry reports, India’s online gaming user base crossed 500 million in 2023, making it the largest in the world after China[1]. Yet, this rapid growth has been accompanied by disturbing trends: gambling-like “money games,” aggressive celebrity advertising, and instances of addiction-related suicides.

The Promotion and Regulation of Online Gaming Act, 2025 (Bill No. 110 of 2025), introduced in the Lok Sabha by Minister Ashwini Vaishnaw, is India’s first attempt at a centralised legal framework to address this paradox. The act adopts a dual strategy: it seeks to promote e-sports, educational and social games as tools of innovation and digital literacy, while simultaneously imposing a blanket prohibition on online money games that operate on stakes, wagers, or deposits.

The proposed law’s ambition is clear from its preamble: safeguarding youth, vulnerable populations, financial systems, and national security, while also positioning India as a global leader in the gaming value chain. But as we shall see, its design, particularly its hard line against money games has sparked debates reminiscent of earlier judicial controversies around “games of skill vs. games of chance.”

Legislative Context and Policy Rationale

The Statement of Objects and Reasons of the Act make for sobering reading. It describes how online money games, fuelled by low data costs and mobile proliferation, have “led to grave social, financial, and psychological consequences”[2]. These harms are not abstract. Courts across India have been confronted with petitions involving gambling addictions, suicides linked to betting debts, and even criminal misuse of gaming platforms.

For instance, in K.R. Lakshmanan v. State of Tamil Nadu[3], the Supreme Court distinguished between “games of skill” and “games of chance,” holding that rummy involved a substantial degree of skill and thus did not amount to gambling. Decades later, companies like Dream11 relied on this precedent to argue that fantasy sports are skill-dominated and therefore legal. High Courts in Bombay and Rajasthan upheld this reasoning[4]. Yet, the proliferation of money-based gaming apps demonstrated how easily this doctrinal gap could be exploited.

The Centre’s intervention through a comprehensive national law is thus both a constitutional assertion (to override fragmented State laws under Entries 31 and 97 of the Union List) and a pragmatic response to cross-border challenges. Many platforms operate from offshore jurisdictions, evade taxation, and complicate enforcement. As the Act notes, these activities have been linked not only to financial fraud but also to money laundering and terror financing concerns that elevate the issue from public morality to national security[5].

Key Definitions: Redrawing the Legal Boundaries

One of the Act’s most significant contributions is its effort to clarify the taxonomy of online games. Definitions have historically been the fault line of gaming jurisprudence. The new law seeks to cut through ambiguity:

E-sports are defined as competitive, rule-based multiplayer games recognised under the forthcoming National Sports Governance Act, 2025. They may involve participation fees and prize money but strictly exclude betting. This recognition is crucial, placing e-sports in the same category as traditional sports grants them legitimacy in India’s policy landscape.
Online social games cover recreational or educational games that may involve subscription fees but not stakes or winnings. For instance, an app teaching coding through gamified challenges would fall here.
Online money games are the law’s target. Importantly, the definition (Sec. 2(g)) includes all games played for stakes or deposits with the expectation of monetary returns, regardless of whether based on skill, chance, or both. This approach effectively overrides the Lakshmanan skill/chance distinction by declaring the entire category illicit.

This definitional reordering has sweeping implications. The long-debated legal argument that “fantasy sports = skill, hence legal” may no longer hold water under central legislation. In fact, the Act appears to adopt the view expressed in Mahalakshmi Cultural Association v. State of Tamil Nadu[6], where the Supreme Court emphasised that even skill-based games could attract gambling-like harms when played for stakes.

Promotion of E-Sports and Social Gaming

Unlike earlier State bans, the Act does not treat all gaming with suspicion. Instead, it seeks to encourage socially beneficial forms of gaming. Chapter II of the act requires the Central Government to take steps to register and recognise e-sports as a “legitimate form of competitive sport” (Sec. 3). This includes establishing training academies, research centres, and incentive schemes for e-sport innovation.

This policy direction is consistent with India’s recent international engagement. E-sports debuted as a medal event in the 2022 Asian Games, and Indian players participated under official recognition. By embedding e-sports into law, India signals its intent to develop professional leagues, broadcasting rights, and athlete training akin to cricket or badminton.

Similarly, the Act recognises online social games (Sec. 4), envisioning them as tools for recreation and digital literacy. The emphasis on safe, age-appropriate content resonates with child protection obligations under the UN Convention on the Rights of the Child, to which India is a party. If effectively implemented, this could push developers to design educational games in STEM, language learning, and skill development, an area where India’s tech ecosystem has untapped potential.

Thus, while prohibition is a headline, the law’s promotion chapter demonstrates a nuanced attempt to differentiate “harmful” and “helpful” gaming cultures.

Prohibition of Online Money Games

Chapter III of the act makes its intent unambiguous: a blanket prohibition on online money games. The law criminalises:

Offering or facilitating money games (Sec. 5).
Advertising them in any form of media, including influencer endorsements (Sec. 6).
Financial transactions enabling them, by barring banks and payment gateways (Sec. 7).

The legislative choice here is radical. Rather than regulate money games through licensing (as some States attempted), the Act opts for outright prohibition. This aligns with the Supreme Court’s observations in State of Bombay v. R.M.D. Chamarbaugwala[7], where gambling was described as res extra commercium, activities outside the protection of trade and business under Article 19(1)(g).

Penalties are severe. First-time offenders face imprisonment up to three years and fines up to ₹1 crore, with escalated punishments for repeat violations (Sec. 9). Importantly, offences under Sec. 5 and 7 are declared cognizable and non-bailable (Sec. 10), underscoring the seriousness with which Parliament views the issue.

By targeting not only operators but also advertisers and financial intermediaries, the law adopts a supply-chain prohibition model. This resembles the approach taken in anti-money laundering laws, where facilitators (banks, accountants, advertisers) are held liable for enabling unlawful activity.

The Regulatory Authority on Online Gaming

Clause 8 establishes an Authority on Online Gaming, with powers to:

Classify whether a game qualifies as a money game.
Register and categorise online games.
Issue directions, handle grievances, and enforce compliance.

Structurally, this resembles the Telecom Regulatory Authority of India (TRAI), combining quasi-judicial powers with policy oversight. The Authority’s role will be pivotal in borderline cases, for example, whether a gamified stock-trading app constitutes a “money game” or a financial service.

Financially, the Act earmarks ₹50 crore in initial expenditure and ₹20 crore annually for the Authority’s functioning. While modest, this demonstrates the government’s willingness to institutionalise digital regulation. The Authority’s powers also include issuing “codes of practice” and enforcing compliance through suspension or cancellation of registrations (Sec. 12).

Notably, the Act provides that any information related to prohibited games can be blocked under Section 69A of the Information Technology Act, 2000 (Sec. 14). This creates a direct legal bridge between gaming regulation and India’s broader internet governance framework.

Enforcement Powers and Offences

Enforcement is where the Act departs from a purely regulatory posture and enters criminal law territory. Authorized officers (from the Centre, States, or the Authority) may:

Investigate offences (Sec. 15).
Enter physical or digital spaces, search, and arrest without warrant (Sec. 16).
Override access controls to seize digital evidence.

These wide-ranging powers are backed by protections: actions taken in “good faith” are immune from legal challenge (Sec. 17). However, civil liberties concerns may arise. Granting power to override encryption and seize digital devices without prior warrant could trigger constitutional challenges under Article 21, particularly after Justice K.S. Puttaswamy v. Union of India[8], where the Supreme Court elevated the right to privacy as a fundamental right.

The Act also makes company directors and managers liable if offences are committed with their consent or negligence (Sec. 11). However, it exempts independent and non-executive directors, reflecting lessons from corporate criminal liability jurisprudence in cases like Sunil Bharti Mittal v. CBI[9].

Critical Reflections

While the Act represents a bold step forward, its absolutist ban on online money games raises certain questions:

Will prohibition work? History of prohibition in India, from alcohol bans to betting laws suggests that outright bans often push activities underground rather than eliminate them. A regulated licensing framework might arguably provide better consumer protection while also generating tax revenue.
Overlap with State laws: States like Tamil Nadu and Telangana have already enacted prohibitions on money games. The Act overrides such laws by establishing central competence. But will this survive constitutional scrutiny under the doctrine of “federal balance”?
International comparison: Many jurisdictions (e.g., the UK Gambling Commission) regulate rather than prohibit online betting, focusing on age-gating, transparency, and addiction safeguards. India’s approach of promotion + prohibition is unique but may risk driving users to offshore platforms beyond enforcement reach.

That said, the Act’s attempt to nurture e-sports and educational gaming while aggressively tackling predatory money games is undeniably a step towards responsible digital governance. It signals that India views gaming not just as a leisure activity but as a sector with national security, public health, and cultural dimensions.

Conclusion

The Promotion and Regulation of Online Gaming Act, 2025 is a watershed moment in India’s digital lawmaking. For the first time, Parliament is drawing a sharp line between legitimate, innovation-driven gaming and exploitative, money-driven gambling disguised as skill. By doing so, it both affirms the potential of India’s youth-driven gaming ecosystem and recognises the urgent need to curb its darker manifestations.

Much will depend on how the proposed Authority interprets its mandate, how courts respond to constitutional challenges, and whether prohibition translates into effective enforcement. Yet, regardless of these outcomes, the Act underscores a vital point: in the digital era, law cannot remain a bystander. It must adapt, intervene, and sometimes draw hard boundaries to protect society while enabling innovation.

[1] https://www.ey.com/content/dam/ey-unified-site/ey-com/en-in/insights/media-entertainment/documents/ey-in-india-s-media-entertainment-sector-is-innovating-for-the-future-03-2024-v3.pdf

[2] Statement of Objects and Reasons, Promotion and Regulation of Online Gaming Act, 2025.

[3] (1996) 2 SCC 226

[4] Varun Gumber v. Union Territory of Chandigarh, 2017 SCC OnLine P&H 5372; Rajasthan High Court, Ravindra Singh Chaudhary v. Union of India, 2020 SCC OnLine Raj 2558.

[5] Lok Sabha Bill No. 110 of 2025, Preamble and SoR.

[6] (2012) 1 SCC 782

[7] (1957 SCR 874)

[8] (2017) 10 SCC 1

[9] (2015) 4 SCC 609.

Post Views: 71