Source: The post India passes online gaming law banning real money games has been created, based on the article “What does the new online gaming Act outline?” published in “The Hindu” on 26th August 2025. India passes online gaming law banning real money games.
UPSC Syllabus Topic: GS Paper 2- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Context: In August 2025, Parliament passed the Promotion and Regulation of Online Gaming Act. Lok Sabha cleared it on August 20 after seven minutes. Rajya Sabha passed it on August 21. Presidential Assent came on August 22. The law promotes e-sports and social gaming, and bans real-money games (RMGs).
For detailed information on Promotion and Regulation of Online Gaming Bill 2025 read this article here
Categories and scope
- Three segments and policy stance: Online games are classified as e-sports, social gaming, and RMGs. Promotion applies to the first two; all RMGs and their ads are banned.
- Definition and illustrations of RMGs: RMGs include any game of skill, chance, or both. They involve a fee or an expectation of money or convertible stakes. Poker, Rummy, Fantasy Cricket, and Ludo variants qualify.
- E-sports criteria: E-sports are recognised under the National Sports Governance Act, 2025, and must register with the regulator.
- Social gaming and facilitation: Social gaming lacks a distinct legal definition. Section 4 allows the government to facilitate recreational and educational social games.
Regulation and oversight
- Offences, penalties, and player liability: Offering or funding RMGs is punishable by up to three years’ imprisonment or a ₹1 crore fine. Unlawful advertisements can draw up to two years or ₹50 lakh. Offences are cognisable and non-bailable under BNSS, 2023. Players face no penal action.
- Blocking powers and cross-border reach: CERT-IN will block or disable offending apps. Interpol may be involved against offshore operators. The Centre may constitute a regulator for recognising, categorising, and registering games.
- Continuity with 2023 IT Rules: In 2023, IT Rules treated gaming firms as intermediaries under self-regulatory bodies. KYC, parental controls, and age ratings were required.
- Minors and public funding: The Act does not constrain minors from e-sports or social games. It provides budgetary support from the Consolidated Fund of India to promote social gaming.
Rationale, harms, and practical gaps
- Financial losses and addictive design: Government data shows ₹15,000 crore lost annually on RMGs. The Minister says algorithms do not allow net winners over time. He said it was not knee-jerk.
- Public health and social harms: WHO links RMGs to compulsive behaviour, distress, and financial hardship. Thirty-two suicides in 31 months were reported in Karnataka. Industry warns of two lakh jobs at risk across 400+ firms.
- Crime, tax, and fraud evidence: A 2023 Parliamentary Panel flagged terror-funding risks. A 2022 financial intelligence report found ₹2,000 crore tax evasion. GST evasion is pegged at ₹30,000 crore. The Defence Ministry’s think tank found FIEWIN defrauded ₹400 crore, with ED tracing mule accounts and crypto wallets.
- Opacity, offshore bases, and circumvention: The Act cites opaque algorithms, bots, and offshore locations. These weaken fairness and enforcement. Despite a promised robust framework, gaps remain. Firms may bypass bans using VPNs or “information cash play.”
Federalism, taxation, and courts
- State powers and prior bans: Entries 34 and 62 of the State List cover betting and gambling. Telangana (2017) banned all online gaming, including skill-based games; Andhra Pradesh (2020) banned online gambling; Tamil Nadu (2022) banned Rummy and Poker.
- GST reclassification and dispute: In October 2023, 28% GST was levied on the entry fee or deposit. Firms opposed the change and retrospective effect. The Supreme Court stayed notices.
- Skill versus chance and constitutional concerns: The Supreme Court earlier held that Rummy and Fantasy Sports involve substantial skill. The Act removes the skill-chance distinction. Critics say this threatens Article 19(1)(g) rights.
- Possible judicial relief: If challenged, the Court may grant interim relief or seek the government’s rationale. Key rulings on skill classification and retrospective tax are pending.
Question for practice:
Examine the government’s stated reasons for banning real-money games under the Promotion and Regulation of Online Gaming Act, 2025.
