Promotion and Regulation of Online Gaming Act 2025

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Promotion and Regulation of Online Gaming Act 2025

Promotion and Regulation of Online Gaming Act, 2025

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Table of Contents

Context

The Promotion and Regulation of Online Gaming Bill, 2025, has been passed by the Parliament & received Presidential assent

Introduction

It marks a landmark move to shield citizens from the menace of online money games while promoting and regulating other kinds of online games.

This legislation is designed to curb addiction, financial ruin and social distress caused by predatory gaming platforms that thrive on misleading promises of quick wealth.

Understanding the Online Gaming Sector

It is broadly divided into three distinct segments, each with its own features and implications for society.

Esports: This refers to competitive digital sports where teams or individuals participate in organised tournaments. Success in esports requires strategy, coordination, and advanced decision-making skills.
Online Social Games: These are casual games that form part of everyday recreation. They are primarily skill-based and designed for entertainment, learning, or social interaction. Such games are generally considered safe and do not cause negative social consequences.
Online Money Games: This segment involves games where financial stakes are involved, whether based on chance, skill, or a combination of both. These platforms have raised serious concerns due to reports of addiction, financial losses, money laundering, and even cases of suicide linked to heavy monetary losses.

Key Provisions

Applicability
- The legislation will apply to the whole of India and also to online money gaming services offered within the territory of India or operated from outside the territory of India.
Promotion and Recognition of E-Sports
- E-sports have been recognised as a legitimate competitive sport in India.
- The Ministry of Youth Affairs and Sports will prepare guidelines and standards for tournaments.
- Training academies, research centres and technology platforms will be set up to advance the sector. Incentive schemes and awareness programmes will also be launched to integrate e-sports into broader sports policies.
Promotion of Social and Educational Games
- The Central Government has been given powers to recognise and register social games that are safe and age-appropriate. These games may focus on education, culture, or skills.
- Dedicated platforms will be developed to distribute such content.
- Awareness campaigns will highlight the positive role of these games in building digital literacy and encouraging healthy recreation.

Additional Information

The Act has proposed three categories for online games — e-sports, social gaming and RMGs. While the Act aims to promote e-sports and social gaming segments, it seeks to ban all forms of RMGs and its advertisements.

The Act defines an online money game as an online game played regardless of whether it is based on skill, chance or both, and is played after a fee-payment or with an expectation of winning money or other stakes (can include credits, coins, tokens, virtual money, etc. which can be converted to money). Under such a definition, variants of popular games like Poker, Rummy, Fantasy Cricket, and Ludo would be classified as RMGs.

With respect to e-sports, the Act defines them as games which are recognised under the National Sports Governance Act, 2025 and are registered with the proposed regulatory authority. It may include the payment of a registration or participation fee alongside performance-based prize money. Examples include games like Grand Theft Auto and Call of Duty.

While there is no legal definition of social gaming, it is included in the broader category of online games defined as games played on an electronic or digital device and operated as a software through the Internet.

The new Act makes no provisions to constrain minors from playing online social games or e-sports.

It also provides for a budget allocation from the Consolidated Fund of India to promote online social gaming in the country.

Prohibition of Harmful Online Money Games
- The Act imposes a complete ban on online money games. This applies to games of chance, games of skill, and those that combine both.
- Advertising and promotion of such games is strictly prohibited.
- Financial transactions related to these platforms cannot be processed by banks or payment systems.
- Authorities will also be empowered to block access to unlawful platforms under the Information Technology Act, 2000.

The central government stated that the Indian Computer Emergency Response Team (CERT-IN) will be tasked with blocking or disabling apps that continue to provide banned money gaming services in India, and if needed, it may rope in Interpol to bring in offshore operators of money gaming platforms

Establishment of an Online Gaming Authority
- A national-level regulatory authority will be established, or an existing one may be designated for oversight.
  - Its functions will include categorising and registering online games, deciding whether a game qualifies as a money game, and addressing public grievances.
  - The Authority will issue guidelines, codes of practice and directions to ensure compliance.

Offences and Penalties
Strict punishments have been introduced.
- Offering or facilitating online money games can lead to imprisonment of up to three years and a fine of up to one crore rupees.
- Financial transactions linked to these games are also punishable with similar penalties.
- Advertising such games can attract a jail term of up to two years and a fine of up to fifty lakh rupees.
- Repeat offenders face harsher punishments, including imprisonment of up to five years and fines of up to two crore rupees.
- Offences under key provisions will be cognisable and non-bailable, which means police can arrest without a warrant and bail is not a right.
Corporate and Institutional Liability
- Companies and their officers will be held accountable for offences. However, independent directors and non-executive directors, who are not involved in day-to-day decisions, will not be punished if they can show that they acted with due diligence.
Powers of Investigation and Enforcement
- The Central Government may authorise officers to investigate, search and seize both digital and physical property linked to offences.
  - In certain cases, officers will have the power to enter premises and make arrests without a warrant.
  - Investigations will follow the provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023, which governs criminal procedure in India.
Rule-Making Powers
- The Central Government to have the authority to frame rules for the promotion of e-sports and social games, the recognition and registration of online games, and the functioning of the Online Gaming Authority. It may also make rules on any other matter required under this law.

Need for the Act

Addiction and Financial Ruin: Online money games encourage compulsive playing. Many players lose their entire savings chasing the illusion of quick profits. Families have been pushed into debt and distress.

Speaking in the Rajya Sabha, Union Minister for Electronics and Information Technology, Shri Ashwini Vaishnaw said that according to an estimate, 45 crore people are negatively affected by online money games and faced a loss of more than Rs. 20,000 crores because of it.

Mental Health and Suicides
- The stress of heavy financial loss has led to cases of depression and even suicide. The Act seeks to prevent such tragedies by banning these exploitative platforms.

The World Health Organization classifies gaming disorder as a health condition in its International Classification of Diseases, describing it as a pattern of play marked by loss of control, neglect of other daily activities, and persistence despite harmful consequences.

32 cases of suicide attributed to online gaming addiction have been reported in Karnataka in the past 31 months

Fraud and Money Laundering
- Several platforms have been misused for illegal activities. Money laundering, which means moving illegal earnings through legal channels to hide their source, has been a major concern.
Threat to National Security
- Investigations have shown that some gaming platforms were being used for terror financing and illegal messaging, which compromise the country’s security.

A Parliamentary Panel Report (2023) stated that gaming portals have become agents for funding terror activities.
A 2022 Financial Intelligence Report reported that online gaming firms had evaded tax of ₹2,000 crore.
The Defence Ministry’s think tank found that the Chinese App, FIEWIN, has defrauded Indian users of ₹400 crore, with an ED investigation finding evidence of use of mule accounts and cryptocurrency wallets.
In another report, the government said that gaming companies were involved in GST tax evasion of ₹30,000 crore.

Closing Legal Loopholes
- Gambling and betting are already restricted under Indian laws such as the Bharatiya Nyaya Sanhita, 2023, and by various state legislations. But the online domain remained largely unregulated. The Act ensures that the same standards apply in both physical and digital spaces.
Encouraging Healthy Alternatives:
- The Act makes space for positive digital engagement. E-sports will be promoted as a legitimate sport, while social and educational games that build skills and cultural values will receive government support.
Establishment of an enabling framework
- The online gaming sector is one of the most dynamic and fast-growing segments of the digital and creative economy. India is emerging as a major game making hub with rapidly developing capabilities. The sector offers immense opportunities for innovation, employment generation and global competitiveness.
  - However, there is a lack of a coherent and enabling legal framework that can promote structured growth of the sector and allow responsible gaming practices to evolve. Urgent policy intervention was therefore required for the sector.
Issues of Jurisdiction
- Many gaming firms operate from offshore jurisdictions bypassing domestic laws, undermining state level regulations and presenting significant enforcement challenges in terms of extra-territorial jurisdiction and interstate inconsistences.
Opaque Algorithms and Manipulative Practices
- Gaming firms rely on opaque algorithms designed to manipulate user engagement, and that games can also be operated by bots or undisclosed agents undermining fairness and transparency.

Benefits for the Society

Boost to the Creative Economy: The Act supports India’s position as a hub for digital creativity. By encouraging e-sports and safe online games, it will expand opportunities for exports, create new jobs and promote innovation in the gaming sector. This will strengthen India’s role in the global digital economy.
Empowering Youth: Young people will gain new opportunities to participate in safe and constructive activities. E-sports and skill-based digital games will help them build confidence, discipline and teamwork. These avenues will also open career pathways for talented players.
A Safer Digital Environment: Families will be protected from predatory money gaming practices. These platforms often lure users with false promises of easy financial gains, which lead to addiction and distress. By removing such threats, the Act creates a healthier and safer digital space.
Strengthening Global Leadership: India will emerge as a global leader in responsible gaming and digital policy. The Act demonstrates how a nation can balance innovation with social protection. This positions India as a model for other countries that are facing similar challenges from online money games.

Issues/Concerns

Implementation Gaps and Evasion Risks
- While the Act proposes to establish a robust legal framework, its provisions fall short of effectively addressing ground realities. Gaming companies may still circumvent restrictions by using VPNs, surrogate models such as “informational cash play,” or other innovative mechanisms, thereby diluting the intended regulatory impact.
Lack of Safeguards for Minors
- The new Act fails to incorporate provisions to restrict minors from accessing online social games or e-sports. This regulatory gap raises concerns of exposure to addictive gameplay, financial risks, and adverse psychological impacts on children.
Constitutional Concerns: Games of Skill vs Games of Chance
- The SC had earlier said that games like Rummy and Fantasy Sports involved a substantial degree of skill and cannot be equated with gambling. This Act does not distinguish between games of skills and games of chance, thereby erasing an established legal distinction
  - Critics argue that this blanket treatment is violative of Article 19(1)(g) of the Constitution, which guarantees the right to trade and occupation.So, can be legally challenged
Killing a Sunrise Industry: India’s online gaming industry is a global success story, attracting significant foreign investment and creating high-skilled jobs.
- The Real Money Games industry says this ban may threaten more than two lakh jobs across 400+ companies.
  - Shutdown of over 400 startups

The real-money gaming sector contributes 20,000 crore annually in direct and indirect taxes. The industry has attracted foreign direct investment exceeding 25,000 crore and supports over 200,000 jobs across 400+ companies.

Stifling Innovation due to Compliance Burden:
- The requirement for all “permissible online games” to be registered and vetted by a self-regulatory body (SRB) could create a bureaucratic bottleneck. For small and indie game developers, the cost and time of compliance could be prohibitive.
Jurisdictional Conflicts with States
- Gambling and betting are state subjects under the Indian Constitution. Critics argue that the central government may be overstepping its authority by introducing a central law for online gaming.

Entries 34 and 62 of the State List in the Seventh Schedule of the Constitution places the regulation and taxation of betting and gambling within the jurisdiction of State governments.

And various State governments have taken regulatory actions before. In 2017, Telangana became the first State to ban all forms of online gaming including skill-based games. In 2020, Andhra Pradesh banned online gambling, and in 2022, Tamil Nadu banned games such as Rummy and Poker.

Revenue Loss:
- Revenue loss of ₹15,000-20,000 crore to the government
The Industry “Going Black” or “Grey”
- The mass migration of users from regulated, transparent, and safe platforms to unregulated, risky, and illegal ones.
Global Experience
- China’s model of banning online gaming has demonstrated the limitations of prohibition-based policies. Despite restrictions including facial recognition and time limits, a black market for gaming accounts has emerged, exposing users to new forms of exploitation.
- On the other hand, the US employs a state-by-state approach, often centered on the skill versus chance distinction. This regulatory approach of the US provides for an alternative approach towards regulating the online gaming sector.

The All-India Gaming Federation, E-Gaming Federation, and the Federation of India Fantasy Sports stated that the ban on real money games will not eliminate the problems but will push millions of users toward offshore platforms. These operators often lack consumer protections, age verification systems, and anti-money laundering measures, creating national security risks.

Industry stakeholders like the All-India Gaming Federation, have raised serious concerns over the blanket ban on online money gaming and warned that such a law, once brought into force, could cause considerable damage to what they claim is a legitimate, job-creating industry.

Other Notable Initiatives to Counter the Risks of Online Gaming

Information Technology Act, 2000 and Related Rules
- The IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, amended in April 2023, laid down norms for online gaming platforms.
- Online gaming intermediaries must ensure unlawful or illegal content is not shared on their networks.
- Intermediaries offering money games are required to register with self-regulatory bodies (SRBs), which verify whether a game is permissible.
- Section 69A of the IT Act empowers the Government to block access to illegal websites or links.
  - Between 2022 and June 2025, 1,524 betting and gambling websites and mobile apps were blocked.
Bharatiya Nyaya Sanhita, 2023
- Section 111 penalises unlawful economic activities and cybercrimes.
- Section 112 prescribes punishment for unauthorised betting and gambling.Offenders face a minimum of one year imprisonment, extendable up to seven years, along with fines.
Integrated Goods and Services Tax Act, 2017 (IGST Act)
- Illegal and offshore gaming platforms are regulated under the IGST Act.
- Online money gaming suppliers must register under the Simplified Registration Scheme.
- The Directorate General of GST Intelligence is authorised to direct intermediaries to block access to unregistered or non-compliant gaming platforms.
- This ensures digital entities follow the same taxation rules as physical businesses.
Consumer Protection Act, 2019
- Prohibits misleading and surrogate advertisements.
- The Central Consumer Protection Authority (CCPA) has powers to investigate, penalise and take criminal action against offenders.
- CCPA has issued advisories to prevent celebrities and influencers from endorsing betting platforms.
Advisories by Ministries
- The Ministry of Information and Broadcasting (MIB) issued advisories in 2022, 2023 and 2024 to media platforms, advertisers and influencers.
- These advisories warned against publishing or promoting misleading online betting advertisements.
- The Ministry of Education has issued guidelines for parents and teachers on safe gaming habits for children.
Reporting of Cybercrimes
- Citizens can report cybercrime on the National Cyber Crime Reporting Portal (cybercrime.gov.in).
- Complaints are forwarded to state or union territory law enforcement agencies.
- The portal has a separate section for financial frauds.
- A toll-free helpline, 1930, is available for quick reporting of online scams and fraud.

Way Forward

Clear Distinction between Skill and Chance
- Legally differentiate games of skill from games of chance, in line with Supreme Court precedents.
- Prevents arbitrary restrictions and ensures Article 19(1)(g) compliance.
Strengthen Regulatory Mechanisms
- Create an independent regulatory authority for online gaming, similar to SEBI in finance.
- Uniform framework across states to avoid federal inconsistencies.
Age-Gating and Safeguards for Minors
- Mandatory age-verification mechanisms to prevent access by minors.
- Parental controls, spending caps, and awareness campaigns to reduce risks of addiction and exploitation.
Algorithmic Transparency and Fairness
- Mandate algorithmic audits of gaming platforms to ensure transparency.
- Ban use of bots and undisclosed agents to protect consumer trust.
Technological Tools to Curb Evasion
- Collaboration with ISPs to block VPN circumvention and offshore operators.
Balanced Taxation and Economic Incentives
- Avoid excessive compliance costs that may stifle start-ups.
- Provide clarity on tax norms (GST, TDS) to encourage investment and innovation.
International Cooperation
- Align with global best practices on responsible gaming.
- Bilateral/multilateral cooperation to regulate offshore gaming platforms.
Public Awareness and Digital Literacy
- Promote campaigns on responsible gaming and financial risks.
- Encourage a culture of safe and informed participation among users.

The Promotion and Regulation of Online Gaming Act, 2025, marks a decisive step in India’s digital journey. It recognises the dangers of unregulated money gaming and responds with firm safeguards to protect citizens. At the same time, it carves out space for e-sports and educational games that nurture skills and creativity. By balancing innovation with responsibility, the Act sets the tone for a safer and healthier digital future. It also strengthens India’s standing as a nation that can lead in shaping global digital policy. Most importantly, it ensures that technology serves society rather than harms it.

UPSC Spot Check

The Online Gaming Act, while aiming to regulate the sector, has been criticised for its constitutional, regulatory, and implementation flaws. Critically examine

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