India’s Parliament has passed sweeping legislation banning all forms of online real-money games, a move that could cripple a $3.8 billion industry, erase billions in foreign investment and trigger constitutional challenges, even as the government frames it as a social safeguard.
The Promotion and Regulation of Online Gaming Bill, 2025, cleared both Houses this week with little debate or industry consultation. The law—expected to come into effect within three months—prohibits skill-based and chance-based games played for stakes, along with related advertising and financial transactions. Offshore operators targeting Indian users face blocking orders.
The government justified the ban by citing “addiction, financial ruin and social distress” caused by money games. Union IT Minister Ashwini Vaishnaw told Parliament that an estimated 450 million Indians had lost more than ₹20,000 crore ($2.4 bn) due to online gaming platforms.
But critics say the blanket prohibition ignores judicial precedent, risks driving activity underground, and undermines an industry that employs over 130,000 professionals. Courts in the past had upheld that skill-based gaming was protected under Article 19(1)(g) of the Constitution, which guarantees the right to carry on trade.
“By treating skill-based games on par with gambling, the Bill ignores settled judicial precedent and risks crippling a legitimate digital industry,” law firm Nishith Desai Associates said in a note.
Shockwaves Through Industry
India is home to nearly 600 million gamers—one-fifth of the global total—and had been projected to expand its gaming market to $9.2 billion by 2029. Formats such as fantasy sports, poker and online rummy, previously operating in a grey zone, now fall squarely under the ban.
Foreign investors including Tiger Global, Sequoia Capital and Accel, who collectively poured $2.8 billion into Indian start-ups, face major write-offs. Industry executives warn the ban could funnel players to offshore platforms operating outside Indian oversight.
“Rather than regulate responsibly, the government has chosen prohibition. That risks driving users to unregulated overseas platforms and eroding domestic tax collections,” said a Mumbai-based gaming executive, requesting anonymity.
Carve-outs: E-Sports and Social Games
- The Bill creates a three-tier system distinguishing e-sports and casual gaming from money games.
- E-sports—defined as organized competitions—are recognized as legitimate sports, with prize money allowed but no wagering.
- Social games, including casual mobile apps and edtech gamified tools, remain legal so long as no monetary stakes are involved.
- Online money games, whether skill- or chance-based, are banned outright.
- A new Gaming Authority will oversee recognition of e-sports, register social games and issue blocking orders against illegal operators.
Heavy Penalties, Sweeping Powers
Violators face up to three years in prison or fines of ₹1 crore ($115,000) for offering money games, with harsher penalties for repeat offences. Advertising banned services may attract a two-year jail term, while banks and payment firms are barred from processing related transactions.
The Bill also grants officers powers to arrest without a warrant, a provision legal experts warn could be misused.
Constitutional Clash Looms
Gambling falls under state jurisdiction, and several states—Nagaland, Sikkim and Meghalaya—already operate licensing regimes for skill-based games. Courts have repeatedly struck down state-level blanket bans, ruling they violate constitutional protections of trade and occupation.
The Centre’s move to override those frameworks is almost certain to face litigation, with challenges likely under Articles 14 (right to equality) and 19 (freedom of trade).
Revenue at Risk
The government may also lose significant tax income. Online gaming winnings currently attract a 30% income tax, while 28% GST is levied on deposits. Analysts estimate the ban could wipe out at least ₹20 crore ($2.3 million) in annual tax receipts.
Industry players say the abrupt shift undermines India’s credibility as a digital investment destination.
Muted Consultation, Rising Pushback
Despite touting the sector’s innovation potential in the Bill’s preamble, the government sidestepped its own Pre-Legislative Consultation Policy, which requires public consultation on draft laws.
Companies such as WinZO and Probo have pledged compliance but urged the government to adopt a differentiated regulatory approach instead of prohibition. WinZO, which has 250 million users, said it will withdraw real-money offerings starting August 22 but warned the move will “shape how young entrepreneurs dream, and how global investors continue to believe in Indian innovation.”
Probo, which runs an opinion-trading platform, cautioned that the blanket ban risks stifling a “nascent yet thriving” sector and urged the government to explicitly recognize prediction markets as permissible skill-based activity.
Uncertain Future
The law places India among the most restrictive jurisdictions for online gaming. While it promotes e-sports and casual gaming, the immediate fallout could be capital flight, job losses and a surge in unregulated play.
Legal challenges are all but certain. Until the Supreme Court weighs in, the industry and its investors face an uncertain future.
