Aishwarya S. Nair is a fourth-year student at Rajiv Gandhi National University of Law, Punjab
INTRODUCTION
The recently passed Promotion and Regulation of Online Gaming Act, 2025 (“PROGA”), has banned money-based online-gaming nationwide, which has had a severe economic impact on the gaming industry. This is evidenced by the devaluation of various gaming unicorns such as Dream11 and Games24*7, and loss of thousands of jobs. This has also had resulted into major losses for venture capital firms, such as Tiger Global and Peak XV Partners, who had invested $2-3 billion in real-money online-gaming industry before the imposition of ban.
The government, through this move, has imposed an absolute ban on gaming apps involving any monetary consideration, irrespective of whether they are based on skill or chance, while simultaneously promoting e-sports and casual gaming where no financial stakes are involved. This is evidenced by the wording of Section 2(g) of PROGA, which verbatim states: “‘online money game’ means an online game, irrespective of whether such game is based on skill, chance, or both.”
However, this move runs contrary to the jurisprudence of Indian courts, which have consistently distinguished between games of chance and games of skill. According to the test of preponderance, if a game’s outcome relies on a player’s experience, memory, acumen, and training, despite the presence of an inevitable element of chance, it is still categorized as a game of skill. Nevertheless, the government has justified this decision by citing reasons such as psychological harm, addiction, and financial distress, including a rise in suicide cases, tax evasion, and reported instances of fraud originating from such platforms.
As highlighted by the Madras High Court in All India Gaming Federation and Others v State of Tamil Nadu, it is necessary to carve out pragmatic regulatory measures rather than impose a blanket ban. Therefore, the author argues against the absolute prohibition by analysing the implications of a complete ban on online gaming in South-Asian countries. Subsequently, the author relies on foreign jurisdictions such as the UK, Singapore, and the US to examine how remote real-money gaming is regulated abroad. Lastly, two-fold recommendations have been made- firstly, how India could potentially regulate online-gaming instead of an abject ban. Secondly, the author in arguendo examines how a complete ban can be imposed effectively until the enforcement of the Draft Promotion and Regulation of Online Gaming Rules, 2025 (Draft Rules), published on October 2, 2025, to possibly mitigate users’ access to offshore-illegal online-gaming sites.
IMPLICATIONS OF A COMPLETE BAN
In South Asia, countries such as Pakistan and Bangladesh have imposed complete bans on online-gambling websites and gaming applications, which have inadvertently fueled the exposure of individuals to offshore illegal markets. Despite a complete ban, there remain hundreds of platforms that facilitate offshore gambling, illegal matka networks, and unregulated forex trading platforms, which remain largely outside the purview of Pakistani authorities. This is evidenced by recent crackdowns conducted by the Pakistan Telecommunication Authority and the National Cyber Crime Investigation Agency, which jointly reported and blocked over 184 illegal sites.
In Bangladesh, under Section 20 of the Cyber Security Ordinance, 2025 (“CSO”), a complete ban on online-gambling and real-money platforms has been imposed. Since, the enactment of this law, nearly 1,000 financial service agents have been penalized for their involvement in illegal gambling operations.
A report by the All India Gaming Federation underscores that unlicensed betting platforms received over 1.6 billion visits in the last three months, highlighting the concern that, following the ban on legal online gaming in India, users may increasingly turn to black-market platforms, as observed in the above-mentioned jurisdictions. Moreover, this demonstrates the ineffectiveness of website blocking in the gaming industry and the broader economic detriment to India, which has now lost the opportunity to tax such activities at 28% GST through a regulated domestic gaming framework. This shift is projected to deprive India of nearly ₹200 billion annually in direct and indirect taxes from users who will likely continue gaming, albeit on illegal, unregulated and untaxed platforms.
Therefore, it is evident that both jurisdictions with a complete ban on online-gaming activities have users whose dependence on illegal offshore-platforms, unregulated financial intermediaries, and fly-by-night operators has significantly increased. Resultantly, the reliance of users on such unregulated and illegal entities leaves them without any safeguards, consumer protection, or taxation mechanisms. It also makes money laundering and related crimes to become significantly harder to track and investigate. Thus, the authors contend that regulation of online and real-money gaming, instead of an abject ban, is more pertinent. In furtherance of this, the adoption of Draft Rules at the earliest gains importance.
RECOMMENDATIONS
- Regulation instead of Outright Ban
1. Strengthening Age Verification Mechanisms
In India, one of the prominent concerns that persisted was the exposure of teenagers and young adolescents to online money-gaming applications, leading to financial problems and even suicides. Notably, in India, most of these gaming platforms lacked strong age-verification mechanisms, which allowed underage users to bypass systems. While the government attempted to address this by issuing advisories to the Ministry of Education regarding safe gaming practices and restricting advertisements targeting children, these measures were ineffective. Instead, a more effective approach would have been introducing strict age-verification tests and raising the minimum age, similar to the UK’s model under its White Paper, “High Stakes: Gambling Reform for the Digital Age”. The UK mandates electronic ID checks using government-issued identification to ensure strict age verification in remote or unsupervised online environments. Further, Singapore, as per Section 13 of the Gambling Control Act 2022, has a strict licensing regime that mandates a minimum age of 21 for creating an account for remote real-money gaming.
Similarly, India may consider implementing a strict licensing regime that mandates government ID-linked verification (Aadhaar/DigiLocker), to allow participation only by individuals above 21 or 25 years of age, based on the level of risk. For heightened scrutiny and licensing purposes, gaming platforms can also be divided into distinct categories with different age thresholds and verification standards based on the level of associated risk. For instance, Category-A may involve online games without monetary involvement but with addictive potential, where a lower minimum age requirement of 21 could apply. Whereas Category-B could include real-money platforms, where participation may be restricted to individuals over 25, subject to mechanisms suggested below.
2. Strengthening Oversight
For adults who remain vulnerable to the vices of online-gaming, the government could potentially introduce uniform qualifying standards under a licensing regime to monitor customer activity and behavior. These standards could include manual and automated monitoring mechanisms, stricter transparency and disclosure standards, and measures highlighted below:-
i) Under the UK Gambling Commission’s Licence Conditions and Codes of Practice, it is mandatory for customers to set a financial limit before making their first deposit when engaging with online operators. Further, online customers have to be mandatorily reminded every 6 months if they wish to review and modify their existing limits based on previous activity and transaction information. Therefore, the Indian government can mandate transparency and disclosure requirements in the form of activity statements, including the time and money spent, odds of return, and patterns of play. Standard deposit limits could also be introduced, along with all operators being required to design their user interface to allow customers to easily review their activity and modify deposit limits. This would promote users to engage in informed participation and self-regulation.
ii) Drawing from Paragraph 5 of Social Responsibility Code (SRC) Provision 3.4.3, operators are required to monitor seven indicators, such as patterns of spend, using both automated and manual processes. Upon identification of an issue, Requirement 8 and 9 of SRC Provision 3.4.3 are enforced, wherein measures proportionate to the risk are employed, such as enforcement of mandatory cool-off periods, mandatory revision of spending limits, or in extreme cases, refusal of service and termination of access entirely. India could also develop its own key indicators through empirical studies, such as those previously undertaken by Ministry of Consumer Affairs to understand behavioral patterns of individuals engaging in online-gaming. These key indicators could be used to mandate specific proportionate regulatory responses to user risk within India’s licensing framework.
iii) India can also consider introducing a mandatory self-exclusion scheme similar to the UK’s “GAMSTOP”, as provided under Provision 3.5.3 and Provision 3.5.5 of SCR. This allows individuals to self-exclude from online-gaming platforms, wherein all licensees have to take measures to prevent the individual from returning to any platform during the self-exclusion agreement. In the Indian context, a GAMSTOP-like mechanism could operate through coordinated compliance obligations issued by the RBI to banks, NBFCs, and payment aggregators, as elaborated by the author later in the blog. Further, these entities, along with major fintech platforms, could implement automated transaction-blocking tools that restrict gambling-related payments linked to a user’s Aadhaar-based verification or registered mobile number for a specified duration, as opted by the user.
Lastly, India may also rely on a model similar to the United States, where online-gaming is regulated through a state-by-state licensing system. States could issue licenses subject to uniform standards prescribed by the Central Government, while retaining the flexibility to introduce stricter regimes based on empirical indicators such as user harm, addiction rates, and financial losses observed within their jurisdiction. This would allow high-risk states to adopt differentiated regulatory mechanisms, as seen previously in Karnataka and Tamil Nadu; while enabling other states to continue generating revenue and taxes from individuals engaging in safe and regulated gaming practices.
- Practices to prevent reliance on illegal/offshore-operators
It has been found that significant redirection to illegal offshore sites in India has been through promotions or advertisements on streaming platforms and social media. Further, Section 7 of PROGA explicitly prohibits banks and financial institutions and persons engaged in facilitating financial transactions from “engaging, permitting, permitting, aiding, or abetting payments” for online money gaming services. However, a regulatory gap persists, have yet been issued by the RBI directing financial institutions to identify illegal operators, block such transactions, or adopt compliance mechanisms aligned with PROGA.
To counter this, India’s blocking orders issued by CERT-In could be published and shared with financial institutions, similar to practices in the US and Australia, to identify and block prohibited transactions while simultaneously creating a separate database of blacklisted gaming operators. Additionally, to restrict advertisements redirecting users to offshore-gaming sites, collaborations with platforms such as Google, Facebook, and Meta could be adopted, similar to approaches in the EU and Denmark. These collaborations can help remove illegal redirections that allow users to play through decentralized currencies when routine payment service providers are bypassed.
CONCLUSION
PROGA’s removal of the distinction between games of skill and games of chance, is a position that departs from long-standing judicial jurisprudence and has had significantly negative implications for innovation within India’s digital economy. Further, the absolute ban on domestic, regulated online real-money gaming entities has pushed users toward illegal and offshore platforms, where little to no legal recourse exists for fund recovery in cases of scams, forex fraud, or cybercrime. This ultimately defeats the primary objective of PROGA, which was to provide a safe and secure gaming environment in India.
In contrast, various foreign jurisdictions rely on robust licensing regimes for domestic online-gaming operators, thereby offering consumers legal and regulated alternatives to offshore platforms. Therefore, India should incorporate strong licensing standards and regulatory practices similar to those abroad, rather than maintaining an absolute ban, to promote a transparent and accountable domestic gaming ecosystem that also contributes to economic revenue.