The Promotion and Regulation of Online Gaming Act, 2025: A Structural Reset for India’s E-Gaming Sector

Introduction

The Promotion and Regulation of Online Gaming Act, 2025, (hereinafter “Act”) cleared by the Rajya Sabha on 21 August 2025, and received presidential assent on 22 August 2025, marks a watershed moment for India’s digital entertainment and sports ecosystem. The legislation decisively prohibits all forms of “online money games” involving stakes, while simultaneously constructing a central regulatory framework to encourage the growth of E-Sports and non-staked social or educational games. It abandons the longstanding and contentious “skill versus chance” debate, drawing the line simply at the presence of monetary or equivalent stakes.

The Act further extends its reach across the value chain banning not only the games themselves but also their promotion and payment facilitation thereby addressing fragmented state-level regimes, inconsistent court outcomes, aggressive advertising, and the rise of financial crime risks. Penalties are stringent, including imprisonment, substantial fines, and corporate liability for officers and promoters. In substance, the Act rewires the online gaming sector in India from a permissive, litigation-heavy field into one marked by prohibition on money games and promotion of non-stake formats.

Background Jurisprudence

India’s legal framework for gaming has historically revolved around the distinction between games of skill (permissible) and games of chance (prohibited as gambling). This distinction was drawn and reiterated through landmark judgments of the Supreme Court and High Courts, which provided the foundation for the rise of fantasy sports, rummy, and poker platforms in India. The Act disrupts this settled jurisprudence by imposing a blanket prohibition on all online money games, regardless of whether they are based on skill or chance.

Key Judicial Precedents:

Case	Year	Court	Key Holding / Principle
K.R. Lakshmanan v. State of Tamil Nadu	1996	Supreme Court of India	Held that horse-racing is a game of skill, not chance, thereby recognising games of skill as permissible.
M.J. Sivani v. State of Karnataka	1995	Supreme Court of India	Upheld regulation of gaming parlours, recognising the State’s power to regulate in the interest of public order.
Varun Gumber v. Union Territory of Chandigarh	2017	Punjab & Haryana High Court	Recognised fantasy sports as games of skill, ruling that they were not gambling and could be legally offered.

The Drivers of Central Legislation

The move towards central regulation was prompted by a combination of legal, social, fiscal, and enforcement imperatives. A patchwork of state bans produced inconsistent enforcement, while courts struck down attempts at outright prohibition, as seen in Karnataka. Tamil Nadu’s regulatory experiment further highlighted the constitutional difficulties of state-led control. The Centre’s earlier attempt through the IT Rules, 2023, to allow self-regulatory bodies verifying permissible “real money games” proved unworkable in practice, leaving enforcement gaps unaddressed.

At the same time, public health concerns gained prominence, with suicides and debt traps linked to stake-based gaming. The Government explicitly recognised manipulative design and addictive loops targeting vulnerable users. Advertising exacerbated the issue: despite repeated advisories, celebrity endorsements and surrogate promotions of offshore betting brands continued unabated.

The risks were not merely social. Enforcement agencies traced stake-based gaming to money laundering and terror-financing concerns. Tax arbitrage ended with the GST Council’s imposition of a uniform 28% rate in 2023, aligning fiscal policy with regulatory strictness. Finally, with e-sports already receiving recognition as a legitimate sport, the legislative intent crystallised into a dual agenda to promote e-sports and social gaming, but prohibit money games nationwide.

Core Architecture of the Act

The Act divides the online gaming ecosystem into three distinct categories: e-sports, online social games, and online money games.

(i)      E-sports are treated as a recognised sport, tied to the National Sports Governance Act, 2025 and subject to registration with the designated authority. While entry fees are permitted, stakes or wagers are expressly prohibited.

(ii)     Online social games include subscription-based or one-time fee formats designed for recreation or skill development, provided there is no stake or winnings component.

(iii)    Online money games, by contrast, are defined broadly to include any online game, whether of skill, chance, or both played with stakes or deposits in the expectation of winnings or enrichment. This wide net removes ambiguity and sidesteps decades of litigation.

Importantly, “other stakes” are defined expansively to cover anything equivalent or convertible to money, including virtual tokens, credits, or tradable in-game objects. This closes loopholes around “virtual” or off-platform currencies.

The prohibition operates through a three-fold mechanism: banning the game itself, barring advertisements and promotions, and criminalising payment facilitation. Together, these measures make it practically impossible to sustain money-in, money-out formats in India.

Key Definitions in the Act

Term	Sections	Definition (as per Act)
Online Money Game	Sec. 2(g)	Any online game (skill, chance, or both) played by a user upon payment of a fee/stake with the expectation of monetary winnings or material enrichment.
Online Social Game	Sec. 2(h)	Online games without monetary stakes or winnings, offered purely for entertainment, recreation, or skill development. Subscription or one-time access fees are allowed as long as they are not wagers.
E-sport	Sec. 2(i)	Competitive online games/events where outcomes depend on skill (dexterity, strategy, mental agility). Must be recognised as a sport under the National Sports Governance Act, 2025 and registered with the Authority.
Authority	Sec. 8–9	The central regulatory body to be constituted/designated under the Act, empowered to categorise, register, and oversee online games, issue directions, and enforce compliance.
Advertisement	Sec. 6	Any form of promotion, sponsorship, endorsement, or surrogate communication (direct or indirect) that encourages participation in online money games.

Institutional and Regulatory Framework

The statute establishes a central Authority on Online Gaming, or alternatively allows the Government to designate an existing body. The Authority’s functions include classifying titles, recognising and registering games, issuing binding codes of practice, and addressing user complaints. The details of its composition, procedures, staffing, and grievance redressal are left to subordinate legislation.

The regulatory posture is strengthened through enforcement powers such as blocking of online resources under the IT Act, warrantless search and seizure in both physical and digital spaces, and cognizable, non-bailable offences for core prohibitions. This represents a decisive shift from prior advisory regimes into one with strong criminal law backing.

Offences and Penalties

The penalties under the Act are severe, escalating for repeat offences. Operating an online money game may attract up to three years’ imprisonment and fines up to ₹1 crore, with higher penalties for repeat offences. Advertising attracts two years’ imprisonment or fines up to ₹50 lakh, while payment facilitation carries liability equivalent to operators themselves. Corporate officer liability attaches to persons “in charge,” subject to a due diligence defence, though independent directors uninvolved in decision-making are shielded.

The framework further enables blocking orders against non-compliant services, search and arrest without warrant, and civil penalties for breach of directions issued by the Authority. 

Offences	First Offence	Repeat Offence/ Escalation
Operating an Online Money Game	Imprisonment up to 3 years and/or fine up to ₹1 crore	3–5 years imprisonment; fine ₹1–2 crore
Advertising/ Promotion of Money Games	Imprisonment up to 2 years and/or fine up to ₹50 lakh	2–3 years imprisonment; fine ₹50 lakh–₹1 crore
Payment Facilitation	Imprisonment up to 3 years and/or fine up to ₹1 crore	Escalates in line with operator offences
Non-Compliance with Authority Directions	Civil penalty up to ₹10 lakh; suspension/cancellation of registration	Continued breach may invite prohibition orders
Company Officer Liability	Persons “in charge” liable alongside the company	Due diligence defence available

Promotion and Positive Obligations

Unlike earlier prohibition-centric approaches, the Act also establishes a positive agenda for e-sports and social games. E-sports are to be recognised and promoted as legitimate competitive sports, supported through guidelines for tournaments, academies, incentive schemes, and integration with national sporting policy. Social games, similarly, are encouraged for recreation and education, with scope for government-backed awareness programmes and age-appropriate content measures.

This “promotion-prohibition” model embodies the legislative intent to channel the gaming industry’s energy into non-stake-based sectors while decisively excluding real-money formats.

Interaction with Existing Regulatory Frameworks

The statute expressly overrides inconsistent state laws, thereby harmonising India’s fragmented regulatory landscape. It replaces the IT Rules’ self-regulatory model for money games, although residual due diligence obligations may remain for e-sports and social games under delegated codes. Advertising standards, formerly shaped by ASCI guidelines and Ministry advisories, are supplanted by a statutory ban. Payment obligations under RBI frameworks continue, but the Act overlays a criminal prohibition on processing transactions for money games.

Tax and anti-money laundering frameworks remain in parallel: GST at 28% and TDS on winnings apply to legacy operations and offshore platforms, while DPDP continues to govern data use in permissible games.

Gaps, Ambiguities, and Unresolved Questions

While the Act creates a strong spine, much of the operational detail is deferred to subordinate legislation. Key uncertainties include the classification criteria for games, recognition protocols for e-sports, the scope of “other stakes,” and the precise obligations for intermediaries like app stores and hosting providers. The absence of a statutory appeal mechanism against Authority decisions is a notable omission, leaving judicial review as the sole remedy.

Further, there is no transitional protocol for winding down existing operators, no age-gating or responsible-play standards, and no tailored consumer redress framework. The broad powers of search, seizure, and blocking raise proportionality concerns, particularly given the lack of procedural guardrails in the text. Finally, the interdependence of e-sports recognition on a separate statute introduces implementation risk.

Possible Challenges: Federalism & constitutional questions

Legislative competence: “Betting & gambling” is a State List (Entry 34) subject. The Centre argues competence under Union List Entry 31 (telecom/“other like forms of communication”) and Entry 97 (residuary) due to cross-border digital character and national security/financial risks. Litigation is likely focusing on over-breadth/proportionality, conflict with state powers, and the pivot from skill-based jurisprudence.

Interplay with state laws/authorities: Tamil Nadu’s framework (TNOGA) may be rendered redundant for online money games once the central law is notified, though States retain latitude on offline gambling and potentially complementary consumer protection. Expect centre–state coordination issues and forum battles.

Rights & proportionality: Bans impacting Article 19(1)(g) (trade/occupation) and 19(1)(a) (commercial speech/advertising) will be tested under proportionality, especially the shift from a regulatory to a prohibitionist model. (Courts earlier shielded skill games, but public-health harm evidence has grown and some High Courts have upheld state curbs.)

Compliance Roadmap for Stakeholders

Compliance is not limited to shutting down money-game offerings, it demands a whole-of-ecosystem response. Platforms, advertisers, payment intermediaries, and e-sports organisers must proactively align their operations with the Act’s requirements. The roadmap below sets out the key compliance steps each stakeholder group should prioritise to avoid penalties and ensure smooth transition under the new regime.

Stakeholder	Compliance Actions Required
Platforms (Game Publishers & Operators)	(i)      Cease all money-game modes; disable deposits and payouts. (ii)     Prepare registration dossiers for social and e-sport titles. (iii)    Purge ads, influencer campaigns, and app store content promoting money games. (iv)    Strengthen anti-fraud, anti-addiction, and parental control features.
Advertisers, Influencers, Sports Bodies	(i)       Stop direct or indirect promotion of money games, including surrogate branding. (ii)     Re-evaluate and terminate sponsorship contracts linked to fantasy platforms.
Banks, Payment Intermediaries, App Stores	(i)       Block transactions connected to real-money gaming (RMG). (ii)     Enhance monitoring systems to detect disguised or proxy transactions.
E-sports Organisers	(i)       Align tournament/game formats to skill-only criteria. (ii)     Register games and events with the Authority. (iii)    Build strong integrity systems: anti-cheating protocols, age-verification, and minor-safeguard mechanisms.

Conclusion

The Promotion and Regulation of Online Gaming Act, 2025, represents not merely a regulatory update but a wholesale restructuring of India’s e-gaming ecosystem. By outlawing stake-based formats and simultaneously supporting e-sports and social gaming, Parliament has resolved longstanding uncertainties in a decisive manner. The law centralises regulatory oversight, arms authorities with sweeping enforcement powers, and introduces strict penalties to deter non-compliance.

However, its success will depend on the clarity, timeliness, and proportionality of the subordinate rules that now need to be framed. Until those arrive, operators, investors, and compliance officers must proceed cautiously, recognising that the stakes-versus-skill debate is no longer relevant, and that the prohibition on money games is both bright-line and absolute.