The Promotion and Regulation of Online Gaming Act, 2025 – A Constitutional and Economic Crossroad
I. INTRODUCTION
The President on 22nd day of August, 2025, gave her assent to the Promotion and Regulation of Online Gaming Bill, 2025 making it an Act just a day after it was cleared by the Rajya Sabha sending shockwaves to the entire fantasy gaming industry. Promotion and Regulation of Online Gaming Act, 2025 (“PROGA”) derives its competence from Entry 52 of the Union List, which authorises Parliament to regulate industries where Union control is deemed expedient in the public interest.1The Constitution of India, Art. 246. Entry 52, List I Its preamble underscores the need for central regulation of online gaming, citing concerns of user and financial harm, public health risks, pervasive advertising, inconsistent state laws, and offshore operators circumventing domestic regulations.
Looking at the brighter side first this Act brings much needed relief, by introducing unified statutory law, as for years the country has been functioning under disintegrated state laws and relying only on judicial distinction between “games of skill” and “game of chance”. The legislation has been curated in such a manner which has jettisoned on the distinction altogether, prohibiting all forms of online money games. The reason stated by the Union were to put a pause to these gaming platforms that thrive on misleading promises of quick wealth which in turn promotes addiction, financial ruin and social distress.2Press Information Bureau, GOI, “Promotion and Regulation of Online Gaming Bill”, 2025, https://www.pib.gov.in/PressNoteDetails To let people understand the gravity of the problem, union government did also state a WHO International Classification of Diseases Report that classifies gaming disorder as a health condition where a person loses self-control, neglects their day to day chores and persists to play despite its harmful consequences.3WHO, “Addictive Behaviour: Gaming Disorder”, 2020, https://www.who.int/news-room/questions-and- answers/item/addictive-behaviours-gaming-disorder The Minister In-charge for Electronics and Information Technology, Mr. Ashwini Vaishnaw, in his speech said that “45 crore people are negatively affected by online games and face a loss of more than Rs.20,000 crore because of it”. Further setting up of a national-level regulatory authority would bring all the issues of registering online games and addressing public grievances under one roof. Coming to the other side of the story which gives a dimmer picture is that this ban itself would affect USD 3.8 billion dollar gaming market.4Eeshan Sonak, Saranya Ravindran “Goods and Service Tax on Online Skill Gaming: A Constitutional Perspective” The industry groups warned that this unprecedented ban would affect 200,000 jobs and the closure of over 400 companies.5“Techcrunch”, available at: https://techcrunch.com/2025/08/20/india-bans-real-money-gaming-threatening-a-23- billion-industry/ (last visited on September 10, 2025)
They further anticipate that the ban directly interferes with the 28% compound annual growth rate that would have doubled the country’s size by 2028.6Id. Even the Press note released by the Information Bureau acknowledges the developing capabilities in areas of innovation, employment, global competitiveness etc., and how lack of coherent and enabling legal framework has put a standstill on growth of the structure.
At times when the tech sector is already coping with the decline of foreign investors in lieu of Trump’s sanctions, this move would further push them away from India’s market due to increase in volatility which is already one of the biggest hindrances in attracting investors. The Act worsens the situation as rather than regulating the gaming environment, it puts the money of investors in jeopardy.
The other major concerns of the government were to put a stop on siphoning of fund7“Money Laundering in Online Gaming” available at: https://www.drishtiias.com/daily-updates/daily-news- analysis/money-laundering-in-online-gaming (last visited September 11, 2025) from the domestic market, financial fraud and cybercrime. However, in today’s globalised world where there are thousands of other options, it would only drive crore of players into the hands of illegal matka networks, offshore gambling websites and fly-by-night operators who operate without any safeguards or consumer protection.8Supra note 6 The situation after the ban is such that the government would not just fail objectively but the move would also hamper the tax collection of the country.
II. KEY ASPECTS OF THE PROGA
1. Complete prohibition on the game and advertisement
The move bans the game itself which is not limited to the operator but also includes intermediaries provided under Section 2(1)(w) of Information and Technology Act, 2000.
Further Section 69A of the IT Act enables the government to block access to illegal sites or links.9The Information Technology Act, 2000 (Act 21 of 2000)
Further it puts a ban on its advertisement across all media sectors including print, broadcast and digital, with a punishment of two years and fine up to Rs. 50 lakhs.
2. Deals with addiction, mental health and suicides
The rapid growth of online money games, though facilitated by advances in digital technology, has also generated serious risks for individuals, families, and society at large. These platforms have often exploited gaps in the legal framework, leading to significant social harm and raising concerns that outweigh their potential benefits.
The Minister In-charge for Electronics and Information Technology, Mr. Ashwini Vaishnaw stated that the legislation was introduced in response to incidents of harm, including reports of people dying by suicide after financial losses in gaming.10TOI Business Desk, “Online Gaming Bill Tabled in Lok Sabha: Government cracks down on digital betting, gambling; sees total ban” Times of India, August 21, 2025, available at https://timesofindia.indiatimes.com/business/india-business/online-gaming-bill-tabled-in-lok-sabha-government- cracks-down-on-digital-betting-gambling-seeks-total-ban/articleshow/123404347.cms> (last visited on 11 September, 2025) Industry representatives, however, argue that such cases mainly stem from offshore betting and gambling platforms, which they believe the new law fails to tackle.
3. Promotion and regulation of E- Sports
The Bill authorises the central government to promote and regulate e-sports and online social games. It defines e-sports as online games that form part of multi-sport events, are recognised under the National Sports Governance Act, 2025, and whose outcomes depend entirely on elements such as physical dexterity, mental agility, or strategic decision-making. These are organised multiplayer competitions conducted under established rules, where participation may require a registration fee and winners may receive prize money. Crucially, such games are distinguished from gambling, as they cannot involve betting or wagering of any kind.
Further the authority would have powers to (i) determine whether an online game qualifies as an online money game, and (ii) recognise, categorise, and register online games. Composition and terms and conditions of this authority would reside with Central government itself.
4. Cutting financial aid and Penalty provisions11Sahil Narang, “The Promotion and Regulation of Online Gaming Act 2025”, Mondaq, 9 September 2025, available at < https://www.mondaq.com/india/gaming/1675384/the-promotion-and-regulation-of-online-gaming-act-2025-regulating-indias- online-gaming-future#:~:text=At%20its%20core%2C%20the%20Act,games%20in%20all%20their%20forms>
Banks, UPI’s and other financial institutions are prohibited from processing transactions related to these online money games. If these provisions are breached, then it would trigger penalty provisions including imprisonment upto three years, a fine of upto one crore rupees or both.
The Act further authorises designated officers to conduct searches without a warrant in locations such as buildings, vehicles, electronic records, and virtual digital platforms (including emails and social media). They may also arrest suspects discovered during such searches without a warrant, with procedures governed by the Bharatiya Nagarik Suraksha Sanhita, 2023.12Bharatiya Nagarik Surakhsha Sanhita, 2023 (Act 46 of 2023)
III. DISTINCTION BETWEEN E–SPORTS, SOCIAL GAMING AND ONLINE GAMES INVOLVING WAGER.
PROGA, recognises the rapid growth of the gaming sector as a significant part of the digital economy and seeks to regulate it through a three-fold classification. Each category carries distinct legal treatment, reflecting both its social implications and economic potential13Supra note at 2.
1. E-Sports: It is a legalised format of competitive sport in India, defined as organised multiplayer competitions conducted in accordance with pre-set rules, they require skills such as physical dexterity, mental agility, and strategic thinking. The new National Sports Governance Act, 2025 recognise it under the form of multi-sport tournaments. To promote the industry, Ministry of Youth Affairs and Sports prepares rules, guidelines, training academies, supporting research centres and creating digital platforms. These incentive and other awareness programmes would integrate these into broader sports policies, which would ultimately ensure recognition as mainstream sporting activity.
2. Social and Educational Games: Social games are recognised and allowed under PROGA and are games that are safe, casual and mostly skill-based activities where the main objective is entertainment, recreation or learning. And since it does not involve monetary stakes or wagering, they are not considered to be harmful. The act empowers Union Government to register and recognise such games which focuses more on social utility. Dedicated platforms will distribute educational and cultural games, while awareness campaigns will highlight their role in promoting digital literacy and healthy recreation.
3. Online Money Games Involving Wager: This category encompasses games that require players to pay fees, deposit money, or otherwise stake resources with the expectation of winning monetary or material rewards. It applies regardless of whether such games are based on chance, skill, or a mix of both. The Act imposes an absolute prohibition on offering such games, their advertisement, and their promotion.14Kirti, “Parliament passes Promotion and Regulation of Online Gaming Bill, 2025 without debate: What Experts are saying, SCC TIMES, August 22, 2025, available at https://www.scconline.com/blog/post/2025/08/22/promotion- and-regulation-of-online-gaming-bill-2025/ Banks and financial institutions are barred from processing payments linked to these platforms, while authorities are empowered to block access under the Information Technology Act, 2000. The blanket ban reflects concerns over addiction, financial losses, money laundering, and the tragic consequences of excessive gambling-related debt.
IV. ONLINE GAMING IN INDIA: LEGISLATIVE FRAMEWOR
Over centuries “rules regarding gambling and games involving money” has remained in the grey zone with legislation dating back to “Public Gaming Act, 1867”16, which is still enacted in some states of India like Haryana, Punjab, Manipur, Himachal Pradesh, Madhya Pradesh etc. although game related to skill remained out of the prohibited list.15ICLG, Gaming laws and Regulations India, 2025, available at <https://iclg.com/practice-areas/gambling-laws-and- regulations/india>
Over the years state laws started regulating the sector more profoundly as “Betting and Gambling” falls under Entry 34 of State List under Schedule 7 of the Constitution.16The Constitution of India, art. 246. Entry 34, List II. Hence, the regulation of online gaming in India remains a patchwork of central and state laws, with different categories of games attracting different treatment depending on whether they are deemed to be games of chance or skill.
The following overview traces how specific formats are dealt with under the present framework.17Supra note at 16
1. Casino Gaming: Casino gaming, which includes slot machines and table games such as roulette and blackjack, are largely treated as gambling given its predominant element of chance. Most states prohibit casinos, including their online versions, under their respective gambling legislations.
Sikkim: Under the Sikkim Online Gaming (Regulation) Act, 2008,18The Sikkim Online Regulation Act, 2008 (Act 7 of 2008) licensed operators may offer games like roulette and blackjack, but strictly within the state’s territorial boundaries.
Goa, Daman & Diu: Casinos operate under licences granted pursuant to the Goa, Daman and Diu Public Gambling Act, 1976.19The Goa, Daman and Diu Public Gambling Act, 1976 (act 14 of 1976)
2. Poker: Poker occupies a more nuanced space, as several of its formats involve a significant degree of skill.
Licensing States: Sikkim and Nagaland regulate online poker through a licensing framework. The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 (“Nagaland Act”) expressly identifies poker as a skill game.20The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 (Nagaland Act 3 of 2016)
Other States: While poker is not expressly banned, operators must navigate state-specific requirements. Only certain variants, such as Texas Hold’em and Omaha Hold’em, are generally recognised as skill-based.
3. Fantasy Gaming: Fantasy sports have emerged as a legally distinct category and enjoy constitutional protection as a legitimate business. Their recognition as “games of skill” exempts them from the prohibitions under most state gambling laws. However, following the enactment of PROGA, one of the sector’s leading player, Dream11, has suspended all paid contests on its platform. The company has since reintroduced itself in a “free-to-play” format, aiming to generate revenue through advertisements.
Judicial interpretation: High Courts in Punjab & Haryana, Bombay, and Rajasthan have upheld the legality of fantasy formats offered by platforms such as Dream11.
Under the Federation of Indian Fantasy Sports charter, as a game of skill, thereby exempting it from state gaming prohibitions and protecting it as a legitimate business under constitutional rights The Supreme Court in Avinash Mehrotra v. State of Rajasthan21Avinash Mehrotra v. Union of India, (2009) 6 SCC 398
4. Betting and Lotteries: Traditional betting, when based on games of chance, squarely attracts state prohibitions under public gambling laws. Lotteries, however, fall under a distinct regulatory regime at the central and state levels.
Lotteries: Governed primarily by the Lotteries (Regulation) Act, 199822The Lotteries (Regulation) Act, 1998 (Act 17 of 1998), state governments may authorise or ban lotteries altogether. Around 13 states currently operate lotteries, while others like Madhya Pradesh and Bihar prohibit them outright. Some states permit only charitable or not-for-profit lotteries under strict licensing.
Betting: States generally prohibit betting on games of chance. Horse-race betting and certain other forms have historically been treated differently due to judicial recognition of the skill involved, but online betting markets remain largely outside the lawful sphere.
5. Social Gaming (No Stakes): Free-to-play or “social” games without monetary stakes fall outside the ambit of state gambling laws. However, platforms must comply with due diligence obligations under the Online Gaming Rules, 2023. Depending on the game’s content, other statutes may also be triggered, including the IT Act, 2000, the Bharatiya Nyaya Sanhita, 2023 (for obscenity and fraud), the Indecent Representation of Women (Prohibition) Act, 1986,23The Indecent Representation of Women (Prohibition) Act, 1986 (Act 60 of 1986) as well as consumer protection and intellectual property laws.
The most concerning issue in the PROGA remains the broad definition of the term “other stakes” which has a broad definition under Section 2(j) when read with the definition of “online money game” to include the games which involve “credits”, “virtual items” and “tokens” etc. which may bring even casual games under observations.
Although Prohibited category is clear and includes fantasy sports, poker, rummy and other money based formats which beforehand enjoyed protection from judiciary under the ambit “substantial game of skill” test laid down by the Supreme Court of India in State of Bombay v. R.M.D. Chamarbaugwal.24State of Bombay v R.M.D. Chamarbaugwal, (AIR 1957 SC 699) Further, in Andhra Pradesh v. K. Satyanarayan the position was reiterated stating that while gambling could be prohibited as res extra commercium, rummy and other games of skill falls under legal business activity.25Andhra Pradesh v. K. Satyanarayana, (AIR 1968 SC 825)
In line with this approach, the Allahabad High Court in DM Gaming Private Limited v. State of UP26DM Gaming (P) Ltd. v. State of U.P., 2024 SCC OnLine All 5009 and the Madras High Court in Junglee Games India Private Limited v. State of Tamil Nadu27Junglee Games India Private Limited v. State of T.N., 2021 SCC OnLine Mad 2762 have recognised games like poker and rummy as involving substantial skill rather than constituting gambling. The ruling in Junglee Games is presently under consideration before the Hon’ble Supreme Court. Against the backdrop of the new legislation, it will be significant to observe how the Supreme Court and various High Courts address pending matters concerning different formats of fantasy sports as well as games such as Ludo, Rummy and Poker.
V. WAY FORWARD
Moving forward we can anticipate numerous litigations being initiated before the judicial forums including the High Courts and Apex Court challenging the constitutionality of PROGA under 19(1)(g).28The Constitution of India, art. 19(1)(g) The Jabalpur court recently became the third, after Delhi and Karnataka, to dismiss the industry’s plea seeking an injunction against the Centre’s move to notify the Act.
Meanwhile, the Union of India has approached the Hon’ble Supreme Court with a transfer petition to consolidate all such challenges pending before the High Courts of Delhi, Karnataka and Madhya Pradesh. On September 8, 2025, the Supreme Court allowed the petition, transferring all pending matters to itself. In a significant direction, the Apex Court also made it clear that any future challenge to the PROGA will not be entertained by any High Court and must instead be brought directly before the Supreme Court.29Transfer Petition (Civil) Nos. 2484-2486 of 2025; Union of India Vs Head Digital Works Pvt. Ltd. & Anr. Etc. The matter is now listed for final hearing in the first week of November.
Counsel appearing for the industry stakeholders also drew attention to the 2023 amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, under which the Central Government had itself stepped in to regulate the online gaming space as a legal framework.
Looking ahead, India could take cues from established global frameworks, particularly from Europe and the United States, by adapting their best practices to suit domestic needs. The iGaming industry (a term that broadly encompasses online betting and gambling) is highly evolved in these regions, although the legal landscape varies considerably across the 27 European nations.
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