The Promotion and Regulation of Online Gaming Act, 2025 (“Online Gaming Act”) received Presidential assent on 22 August 2025. It will come into force once the Central Government issues a notification to this effect. The corresponding rules have also not yet been published.

The Online Gaming Act marks a significant milestone in the regulation of India’s online gaming sector, which has been operating without a dedicated legal framework until now. The online gaming sector comprises diverse segments such as e-sports, casual and social games, educational games, and online money games. The Online Gaming Act seeks to delineate and categorise the various segments of online games and provide a tailored regulatory framework for each subcategory.

This note provides an overview of the key provisions of the Online Gaming Act and highlights the potential legal and constitutional issues that could emerge from its implementation.

1.Background and Objectives 

1.1 The Statement of Objects and Reasons of the Online Gaming Act notes that while the online gaming sector has evolved into one of the fastest-growing segments of the digital economy and offers significant opportunities for innovation, employment generation, and technological advancement, the unchecked proliferation of online games has also led to grave psychological, social, and economic consequences. It highlights that online gaming services offering monetary returns for deposits have been linked to unlawful activities such as financial fraud, money laundering, tax evasion, terrorism financing, and unlawful data transfers.

1.2 Against this backdrop, the Online Gaming Act has three primary objectives, namely: (i) to promote the online gaming industry by recognising legitimate segments such as e-sports and online social games; (ii) to prohibit all online money games, and related services such as advertisements and financial facilitation; and (iii) to establish a national legal framework to ensure uniformity in regulation and enforcement across States.

2. Applicability 

The Online Gaming Act extends to the whole of India and applies to any online money gaming services offered within India or operated from outside India.^[1] This implies that even offshore platforms hosting online money games that are accessible to users in India would be subject to the prohibitions and penalties set out under the Online Gaming Act.

3. Classification of Online Games 

3.1 The Online Gaming Act classifies “online games”^[2] into the following categories:

3.1.1 Online money game^[3]: This is defined as any online game (other than e-sports), whether based on skill or chance, where users pay fees, deposit money, or other stakes in expectation of monetary or equivalent enrichment. There is a blanket prohibition on online money games and related services (see paragraph 4 below) under the Online Gaming Act.

3.1.2 E-sports^[4]: This is defined as a multiplayer, competitive event governed by predefined rules as part of multi-sport events, recognised under the National Sports Governance Act, 2025, and registered with the Online Gaming Authority^[5]. It may include participation fees and performance-based prize money, but the outcome of an e-sport must be determined solely by factors such as physical dexterity, mental agility, strategic thinking, or similar skills. Placing bets, wagers, and other stakes^[6] is not permitted.

3.1.3 Online social game^[7]: This includes any online game (other than e-sports or online money games) that is offered solely for entertainment, recreation, or skill development and does not involve staking of money or other stakes with the expectation of winning by way of monetary gain. Online social games may involve access through payment of a subscription or one-time fee, provided that such payments are not a stake or wager.

E-sports and online social games are regulated under the Online Gaming Act (see paragraph 5 below).

4.Prohibition of online money games

4.1  The Online Gaming Act contains a blanket prohibition on the following:

4.1.1 Online money games: No person is allowed to offer, aid, abet, induce, or otherwise engage in an online money game or online money gaming service.^[8] 

4.1.2 Advertisement for online money games: No person is allowed to make, aid, abet, induce, or otherwise be involved in any advertisement that directly or indirectly promotes any online money games or any activity pertaining to online money gaming.^[9]

4.1.3 Financial transactions for online money games: No bank, financial institution, or any other person facilitating financial transactions is allowed to engage in, permit, aid, abet, induce, or otherwise facilitate any transaction or authorisation of funds towards payment for any online money gaming service.^[10]

5.Regulation of online games 

5.1 The Online Gaming Act establishes a regulatory framework for online games and empowers the Central Government to constitute an Online Gaming and E-sports Authority (“Online Gaming Authority”) to perform any or all of the following key functions:

5.1.1 Classification and registration: Determine whether a game is to be classified as an online money game, recognise and register e-sports and social games, either on the receipt of an application or on a suo moto basis.^[11]

5.1.2 Promotion: Establish platforms, research centres, incentive schemes, awareness programmes to promote safe e-sports and social games, and coordinate with State Governments, educational and recreational institutions.^[12]

5.1.3 Oversight and complaints: Inquire into complaints relating to online games which are prejudicial to user interests, monitor compliance, issue codes of practice and directions for operators, and prescribe rules on governance, composition, and functioning of the Online Gaming Authority itself.^[13]

6.Penalties 

6.1 The Online Gaming Act prescribes penalties for violations, with liability imposed on operators, advertisers, and financiers while exempting individual players:

6.1.1 Offering or facilitating online money games: Punishable with imprisonment of up to three years and/or fine of up to ₹1 crore, which may be increased to five years and ₹2 crore for repeated violations.^[14]

6.1.2 Advertising: Punishable with imprisonment of up to two years and/or fine of up to ₹50 lakh, which may be increased to three years and ₹1 crore for repeated violations.^[15] 

6.1.3 Financial facilitation: Punishable with imprisonment of up to three years and/or a fine of up to ₹1 crore, which may be increased to five years and ₹2 crore for repeated violations.^[16]

Certain offences are cognisable and non-bailable, empowering authorities to search, seize, and arrest without a warrant on reasonable suspicion.^[17]

6.2 The Online Gaming Act also empowers the Government to block unlawful gaming content and services for non-compliance. The substantive grounds for such blocking are provided under the Online Gaming Act itself, but the procedure and safeguards will follow the framework under the Information Technology Act, 2000.^[18]

7. Potential enforceability concerns 

7.1 The Online Gaming Act raises several potential enforceability concerns that may impact its implementation and effectiveness. Some of the issues that merit consideration include:

7.1.1 Freedom of profession and trade: The Constitution guarantees every citizen the right to practice any business or profession, subject to reasonable restrictions imposed by the State. A blanket prohibition on all online money games could be construed as an attempt to equate games of skill with gambling activities, which goes against settled judicial pronouncements that games of skill constitute a legitimate business activity.^[19] Hence, the Online Gaming Act may be challenged as an unreasonable restriction on the fundamental right to carry on business.

7.1.2 Legislative Competence: Gambling and betting fall under the State List (Entry 34, List II) of the Seventh Schedule of the Indian Constitution. Some Indian States, such as Tamil Nadu and Nagaland, have enacted State-specific legislation to regulate gaming and gambling activities. The power of State Governments to govern online skill-based games has also been recognised by courts, and blanket bans have been held to be unconstitutional.^[20] The prohibition on online money games (irrespective of whether they are based on skills or chance) under the Online Gaming Act could be challenged as conflicting with existing State enactments.

7.1.3 Equality before law: The Online Gaming Act imposes a prohibition on even skill-based online money games on the basis that they involve payment of money on the expectation of winning, which includes monetary or other enrichment. This could be construed as creating an unreasonable and arbitrary classification on the basis that: (i) offline skill-based games, which include a similar expectation of winning monetary rewards, continue to be allowed; and (ii) the legislation permits other categories of online games, such as e-sports, to include a performance-based prize money.

7.1.4 Proportionality: Indian jurisprudence requires state action to adopt the least intrusive means to achieve a legitimate aim.^[21] There could be arguments to challenge the prohibitions imposed under the Online Gaming Act as being disproportionate, on the basis that alternative regulatory measures such as age-gating, affordability checks, KYC, algorithmic audits, grievance mechanisms, etc., could have been implemented to serve the same objective without resorting to an outright ban.

8.Conclusion

8.1 While the objectives of the Online Gaming Act are commendable, its move towards prohibition, rather than a proportionate regulatory framework, represents a significant policy shift with uncertain consequences for India’s digital governance landscape. International experience, including frameworks from the US and UK, suggests that effective user protection is achievable through regulatory tools like self-exclusion, parental controls, and stringent AML compliance, complemented by taxation and supervision of operators. By conflating compliant domestic operators with offshore illegal platforms, the Online Gaming Act disregards the significant compliance investments Indian firms have already made in KYC, AML protocols, and grievance redressal. This approach not only risks undermining investor confidence in a sector that has attracted substantial foreign direct investments but could also jeopardize India’s position in the global gaming value chain.

8.2 Press reports suggest that a Petition has already been filed in the Karnataka High Court questioning the legislative competence of the Parliament to pass such a law and challenging the constitutional validity of the Online Gaming Act on the grounds of unreasonableness, arbitrariness, and violation of Article 19(1)(g) of the Constitution, since games of skill have been judicially recognized as legitimate business activities. The Online Gaming Act is likely to face similar challenges from industry stakeholders, and hence, its future effectiveness will hinge on whether the courts will reshape the law into a more balanced regulatory framework. In response to this uncertainty, industry players are exploring alternative business models, such as free-to-play formats supported by advertising revenues, expanding into new jurisdictions globally, and setting up offshore platforms without access to Indian users. However, these strategic shifts are complex and will require considerable time to scale, and their long-term commercial feasibility is not guaranteed. Given these challenges, a pressing priority for existing businesses is immediate compliance. They must strategically transition towards legally permitted online gaming models to mitigate the risk of legal complications.

Authors: Sachin Mehta & Pratika Shankar – Partners and Atik Saiyed – Associate 

^[1]  Section 1(2) of the Online Gaming Act.

² As per Section 2(1)(f) of the Online Gaming Act, “online game” means any game on a digital device operated as software over the internet or any other technology facilitating electronic communication.

³  Section 2(1)(g) of the Online Gaming Act.

⁴ Section 2(1)(c) of the Online Gaming Act.

⁵  Section 8 of the Online Gaming Act.

⁶ As per Section 2(1)(j) of the Online Gaming Act, “other stakes” is defined broadly to mean anything recognised as equivalent or convertible to money and includes credits, coins, and tokens, whether real or virtual, purchased by paying money directly or indirectly in relation to an online game.

⁷  Section 2(1)(i) of the Online Gaming Act.

⁸  Section 5 of the Online Gaming Act.

⁹  Section 6 of the Online Gaming Act.

¹⁰  Section 7 of the Online Gaming Act.

¹¹  Section 8(2) of the Online Gaming Act.

¹²  Section 3 of the Online Gaming Act.

¹³  Section 8 of the Online Gaming Act.

¹⁴  Section 9(1) & (4) of the Online Gaming Act.

¹⁵  Section 9(2) & (5) of the Online Gaming Act.

¹⁶  Section 9(3) of the Online Gaming Act.

¹⁷  Section 10 & 16 of the Online Gaming Act.

¹⁸ Section 14 of the Online Gaming Act.

¹⁹  State of Bombay v. R.M.D. Chamarbaugwala, 1957 SCC OnLine SC 12.

²⁰  Avinash Mehrotra v. The State of Rajasthan & Ors., SLP (C) No. 18478 of 2020 and All India Gaming Federation v. State of Karnataka and Anr., WP (C) No. 18703 of 2021.

²¹  Anuradha Bhasin v. Union of India, (2020) 3 SCC 637 and Internet & Mobile Assn. of India v. RBI, (2020) 10 SCC 274.

Disclaimer: This alert only highlights key issues and is not intended to be comprehensive. The contents of this alert do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (TT&A). No part of this alert should be considered an advertisement or solicitation of TT&A’s professional services. This communication is confidential and may be privileged or otherwise protected by work product immunity.