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India’s Cabinet has signed off on stunning draft legislation that reverses government gaming policy and bans online real-money gaming nationwide, including constitutionally protected skill-based gaming.
The Promotion and Regulation of Online Gaming Bill 2025, which promotes online social gaming and esports but criminalises online gaming with stakes, was introduced on Wednesday (August 20) in the Lok Sabha, the lower house of the Indian parliament.
The 13-page bill marks a sudden, radical and highly destabilising shift that has taken the industry by complete surprise after years of cooperation and consultation with central government ministries.
While regulating and promoting esports and non-wagering social gaming, the bill bans real-money online gaming services, advertising, celebrity endorsements and payment transactions.
It imposes maximum three-year prison terms for first offenders and heavy fines while enhancing website blocking measures and investigative powers for law enforcement agencies, including warrantless searches of “physical or digital” premises.
Real-money gamers themselves are not targeted by the bill, with criminal offences limited to those who "offer, aid, abet [or] induce" others to take part in online gaming with stakes. But gamers would remain vulnerable to prosecution and custodial penalties in gaming-hostile state jurisdictions.
The bill would be scrutinised by a parliamentary committee before proceeding to a chamber debate, and it was not immediately clear if lawmakers will support the bill, or whether lawmakers representing information technology (IT) hub Karnataka state, for example, might mount a resistance over job and investment losses.
It was also not immediately clear how progressive, pro-regulation states such as Karnataka will respond to the central government attack on the industry, amid a groundswell of state legislation gentrifying online skill games with stakes.
Even so, Karnataka’s IT minister Priyank Kharge on Wednesday hinted at how the government might respond in tactical terms when he called the draft legislation a “knee-jerk blanket ban” and “another masterstroke … in bad policymaking” by the Modi government.
Speaking on his X (formerly Twitter) social media account, Kharge said the bill, if passed, will not stop addiction or suicide, but will migrate users and national security risk to offshore platforms beyond government control.
The move would precipitate an “ecosystem collapse”, he wrote. Millions of dollars “spent annually on ads, data centres, sponsorships, cybersecurity will all be gone overnight.
“Regulation is the only way to safeguard our citizens; without it, they’ll be pushed to playing on offshore servers in China or other countries, which is beyond our reach of protection.”
Prime Minister Narendra Modi’s “masterstroke will not only have disastrous effects on the industry and jobs, but will also ensure that more people are pushed into the black hole of real money gaming with no accountability”, Kharge said.
The draft legislation also appears to thumb its nose at the Supreme Court of India, which has repeatedly declared skill games such as rummy and poker to be constitutional activity, and which is preparing to rule on the legality of a goods and services tax (GST) on gaming and online skill games in general.
Full Criminalisation
Still, passage of the bill would fully criminalise a rapidly growing market worth billions of dollars and shut down operations of listed and other companies that the government previously allowed to self-regulate.
The government’s withdrawal of the self-regulation model in late 2023 amid industry indifference to its requirements and the advent of a retroactive 28 percent goods and services tax (GST) on real-money gaming volume strained government-industry relations.
This relationship appeared to be recovering in recent months after the online gaming industry’s trade groups united to develop de facto self-regulation and work with government and law enforcement agencies in disrupting India-facing operations by foreign companies and cracking down on illegal advertising.
So the change in direction and shift in tone of the government, which now cites national security as a leading factor in the bill, has come as shocking to industry leaders and lawyers.
An explanatory statement attached to the bill, which was submitted by the Ministry of Electronics and Information Technology (MeitY), declares that online gaming with stakes, whether skill-based or chance-based, is a national security matter because it is linked to “financial fraud, the financing of terrorism and use as a messaging platform for [terrorism] and terrorist organisations, thereby affecting the security and sovereignty of the State”.
But real-money online games are also inherently responsible for addiction, financial hardship, mental health crises and suicide to the extent that it should be prohibited in a national scheme, it says.
"The algorithms used in online money games are often opaque and may be designed to manipulate user engagement surreptitiously. These games can also be operated by bots or undisclosed agents, undermining fairness and transparency,” it says.
The online gaming industry’s three leading trade groups – the All India Gaming Federation, the Federation of Indian Fantasy Sports and the E-Gaming Federation – wrote to Home Minister Amit Shah on Tuesday to protest the bill and plead for a meeting to hear their case, warning of job losses in the hundreds of thousands and the loss of billions of dollars in investment, including foreign direct investment.
“This Bill, if passed, will cause serious harm to Indian users and citizens,” the letter reads.
“By shutting down regulated and responsible Indian platforms, it will drive [tens of millions] of players into the hands of illegal matka networks, offshore gambling websites and fly-by-night operators who operate without any safeguards, consumer protections or taxation.”
Sweeping Decisions
Ranjana Adhikari, a Mumbai-based partner and gaming specialist with law firm Shardul Amarchand Mangaldas & Co, said on Wednesday that the government “seems increasingly comfortable making sweeping, overnight decisions” and questioned the lack of a “rehabilitation plan” for mass retrenchments.
Adhikari said the gaming industry has been singled out by a government that seeks to “play parent to consenting adults”, and whose proposed ban “is like parents enforcing a curfew”.
“And adults, by nature, resist such controls – they’ll simply move to unregulated, illegal platforms. Are we not back to square one?” she wrote on LinkedIn.
“If the issue is illegal gambling, target that. Why conflate business models? Why penalise legitimate operators and disregard their fundamental right to run lawful enterprises?
“Investor confidence is built on policy consistency – this move undermines it.
“And let’s not forget: litigation is inevitable, which means public money spent on damage control.”
Gaming lawyer and media commentator Jay Sayta said in an X social media post that the bill is “extremely problematic, prima facie unconstitutional and not sustainable in law”.
He said the central government is mandated to work with state governments on matters that are “squarely state subjects” under the Constitution and has “no legislative competence” to act unilaterally.
“The central government should wait until the Supreme Court pronounces its verdict in the [gaming GST] matter before proceeding with this bill further,” he said.
While news of the bill has stunned observers inside and outside the industry, there is strong evidence of pressure on the Cabinet in recent weeks to take a radical stance.
Right-wing forces in Uttar Pradesh, India’s most populous state, succeeded in prompting the state government, through its ally and deputy chief minister Brajesh Pathak, to petition the central government to ban real-money online gaming.
Such a request by two or more states would trigger, under constitutional procedure, a central government entitlement to legislate nationally. Reports from the states of Goa and Chhattisgarh have indicated that they would also be willing to join any request.
