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Online Money Games: Game Over?

Harshvardhan Melanta

September 4, 2025

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With the continuous advancement of technology and the widespread adoption of the Internet, online games have become an indispensable entrant not only as a means of entertainment but also a means to earn money¹. In August, in just 3 days, the Indian Parliament introduced, debated (with Lok Sabha discussing only for 7 minutes)², and passed in both Houses of Parliament the Promotion and Regulation of Online Gaming Bill, 2025 before receiving Presidential assent on 22nd August, 2025.³

The legislation seeks to nurture certain parts of the online gaming industry while banning others completely.⁴

The government has framed the law as a step to protect the country’s youth and vulnerable populations from the harms of online money games while promoting innovation and opportunities in safer segments such as e-sports and social gaming⁵. Supporters see it as a means for sustainable growth of a rapidly expanding sector which is susceptible with addictive practices and financial risks. Critics, however, view it as a regressive step that endangers jobs, undermines constitutional freedoms, and sends a negative signal to investors about India’s regulatory stability.⁶

Why the Bill Was Introduced

The Statement of Objects and Reasons appended to the Bill records that while online gaming in general has emerged as an important component of the creative economy, fostering innovation, employment, and exports, the proliferation of money games has, however, become a matter of grave concern⁷. These platforms, often operated from offshore jurisdictions, are accused of using manipulative design features, opaque algorithms, and even bots to trap players in compulsive behaviour.⁸

According to the government, such games are not merely entertainment. They are linked to financial ruin, family distress, mental health disorders, money laundering, tax evasion, and in some cases, even financing of terrorism⁹. Promotional campaigns, often fronted by celebrities and social media influencers, have further amplified their reach among young and economically vulnerable groups¹⁰. Against this background, the Bill seeks to draw a clear boundary: while e-sports and social games will be promoted, online money games will be prohibited outright.

The Three-Tier Classification

The heart of the new law is its three-tier classification of games, each with a different regulatory approach.

E-sports are the biggest beneficiaries. Recognised as legitimate competitive sports under the National Sports Governance Act, 2025, they will now enjoy full government support. The law directs the Centre to establish training academies, research centres, and technology platforms, as well as to run awareness campaigns and incentive schemes. For Indian players and teams, this recognition could open up new opportunities to participate in international competitions and develop e-sports as a sustainable career.¹¹

Online social games form the second category. These are recreational or educational games that do not involve betting or monetary stakes. They may charge access or subscription fees but cannot offer financial rewards. The government is tasked with promoting such games through registration mechanisms, awareness campaigns, safe content initiatives, and integration into educational programs. The hope is that social games can be harnessed for positive purposes such as skill development and digital literacy.¹²

The third category is online money games, defined broadly to include any game, whether based on skill, chance, or a mix, where players deposit money in the expectation of monetary returns. This category includes popular platforms offering fantasy sports, rummy, and poker. All such games are banned under Sections 5 to 7 of the Act. The prohibition is total, covering not only offering and playing such games but also advertising them or facilitating payments for them.¹³

Penalties and Enforcement Powers

The Bill introduces strict punishments to ensure compliance. Offering an online money game can result in imprisonment of up to three years, a fine of up to 1 crore rupees, or both. Advertising such games attracts up to two years in jail and a fine of 50 lakh rupees. Payment facilitators face similar penalties, and repeat offenders are subject to harsher punishments, including mandatory minimum sentences and fines of up to Rs. 2 crore.¹⁴

Perhaps the most controversial aspect is the enforcement powers given to authorities. Section 16 allows designated officers to conduct searches and make arrests without warrants, not only in physical spaces but also in digital environments. Officers can access computers, virtual spaces, and even override security codes. Offenses under Sections 5 and 7 have been declared cognizable and non-bailable, meaning arrests can be made without warrants and bail is not a right but a matter of discretion. Critics argue that such provisions undermine the procedural safeguards normally guaranteed under criminal law and open the door to misuse.

Probable Constitutional Challenges

The Bill has already attracted constitutional challenges across several High Courts. One major line of attack is that the blanket prohibition violates the fundamental right to practice any profession or carry on any trade under Article 19(1)(g). Courts have long recognized that games of skill are legitimate business activities. The Supreme Court in R.M.D. Chamarbaugwala v. Union of India¹⁵ held that competitions involving substantial skill are protected. Punjab and Haryana High Court’s 2017 decision in Varun Gumber vs. Union Territory of Chandigarh¹⁶ dealing with nature of Dream 11’s fantasy sport observed that its success “arises out of a user’s exercise of superior knowledge, judgment, attention and adroitness”. Similarly the Bombay High Court’s 2019 ruling in Gurdeep Singh Sachar vs. Union of India¹⁷ specifically held that fantasy sports platforms like Dream11 operate games of skill, not gambling. These judgments collectively established that skill-based gaming deserves constitutional protection, making the blanket ban legally vulnerable

Federalism concerns form another basis of challenge. Gambling and betting are subjects reserved for states under Entry 34 of the State List. Some states, such as Nagaland and Sikkim, had developed licensing systems for real-money skill games. The central law overrides these state regimes, raising questions about legislative competence.

The law allows e-sports, which also involve skill and sometimes prize money, while banning other skill-based games. Critics argue that this distinction is arbitrary and violative of Article 14, because both categories involve similar skill requirements and if the concern is addiction or money laundering, then e-sports with prize pools could be equally risky.

Economic Fallout

The economic consequences of the Bill are immense. India’s gaming industry has been valued at over Rs. 31,000 crore, with around 90 percent of revenues coming from real-money formats¹⁸. The sector directly employs more than 1.3 lakhs professionals and supports hundreds of ancillary businesses including advertising agencies, technology providers, and payment services¹⁹. Industry estimates suggest that more than 2 lakhs jobs are now at risk.²⁰

Foreign investors have poured more than Rs. 25,000 crore into India’s gaming sector in recent years, betting on its projected growth from $3.7 billion in 2024 to over $9 billion by 2029²¹. Sponsorships in mainstream sports are also under threat. BCCI also potential could lose crores annually from the withdrawal of sponsorships by real-money gaming companies.²²

International Comparisons

The abrupt policy reversal has also shaken investor confidence. Only two years earlier, the government had amended IT Rules to create a framework for permissible real-money games, a move seen as pro-industry²³. The sudden shift to prohibition has created regulatory uncertainty and may deter future investment not only in gaming but across India’s digital economy.²⁴

Globally, India’s approach looks unusually severe. The United Kingdom, for instance, regulates gambling through a licensing system, earning billions in taxes while ensuring strong consumer protections²⁵. Singapore²⁶ and Malta²⁷ have tiered licensing regimes that distinguish between low-risk and high-risk games. Even countries with strict controls, such as China and South Korea, stop short of outright bans and instead impose restrictions like time limits and identity verification.²⁸

These examples suggest that a more balanced approach such as licensing, age restrictions, deposit caps, and mandatory responsible gaming features could have achieved the government’s objectives without devastating the industry. Domestic examples, such as Kerala’s regulated lottery sector, also show that regulation can coexist with consumer protection.

What the Future Holds

The fate of the Bill will now be shaped by constitutional challenges in the courts, the adaptability of the gaming industry, and the government’s willingness to reconsider its approach. If the courts strike down the blanket ban, the government may have to return with a more nuanced framework. If the law is upheld, enforcement will be the key test, especially given the ease with which users can access offshore platforms through VPNs and cryptocurrencies.

The Bill will stands test as to how India balances innovation and protection in the digital age. Online gaming was one of the fastest-growing segments of the creative economy, with India accounting for nearly 20% of global gamers. By choosing prohibition over regulation, India has signaled its willingness to take bold steps to protect consumers but at the cost of potential revenue benefits and competitive advance in this rapidly growing sector.PTI. “India’s Online Gaming Sector May Cross $9 Billion by 2029: Report.” The Economic Times, March 19, 2025. https://economictimes.indiatimes.com/tech/technology/indias-online-gaming-sector-may-cross-9-billion-by-2029-report/articleshow/119209014.cms

Conclusion

The Promotion and Regulation of Online Gaming Bill, 2025 is both a boon and a bane. It legitimizes e-sports, encourages social and educational games, and seeks to protect vulnerable populations from the risks of gambling-like money games. At the same time, it bans an entire segment of the industry, threatens jobs and investments, and faces serious constitutional and practical challenges.

Whether it succeeds will depend on how effectively it is enforced, how courts rule on its validity, and whether policymakers show flexibility in addressing unintended consequences. For now, it marks a dramatic shift in India’s digital policy landscape and will be remembered as a defining moment in the governance of the country’s online economy.