The online gaming sector in India has long existed in a regulatory grey zone, oscillating between judicial pronouncements distinguishing games of skill from games of chance, piecemeal state legislation, and policy reports calling for harmonisation. Against this backdrop, the enactment of the Promotion and Regulation of Online Gaming Act, 2025 (“the Act”) marks the first central legislation seeking to bring clarity to an industry projected to cross USD 8.6 billion by 2027.
This article offers a first look at the structure of the Act, its interaction with existing laws, judicial precedents on gaming, and possible implications for stakeholders.
Indian jurisprudence has historically distinguished between games of skill and games of chance. In State of Bombay v. R.M.D. Chamarbaugwala, the Supreme Court upheld competitions where success depended substantially on skill, holding that such activities were protected under the constitutional right to trade. Conversely, games of pure chance fell within the ambit of “gambling”, a subject reserved to states under Entry 34 of List II, Seventh Schedule of the Constitution.
Later, in KR Lakshmanan v. State of Tamil Nadu, horse racing was held to be a game of skill, reinforcing that predominance of skill renders the activity legitimate. Online fantasy sports platforms relied heavily on these precedents, and several High Courts, including the Punjab and Haryana High Court in Varun Gumber v. Union Territory of Chandigarh, upheld fantasy sports as games of skill.
Despite this, divergent state laws banning online gaming, such as those enacted in Tamil Nadu and Karnataka, led to litigation and uncertainty. The 2025 Act is positioned as a harmonising measure.
The Statement of Objects and Reasons highlights three primary goals:
1. Promotion of responsible online gaming as a legitimate industry contributing to innovation, employment, and taxation.
2. Regulation of operators to ensure consumer protection, fair play, and safeguards against problem gaming.
3. Prevention of misuse of gaming platforms for money laundering, betting, or other unlawful activities.
1. Definition of “Online Gaming”
The Act defines “online gaming” broadly to include any game offered on the internet where users deposit money or money’s worth in expectation of winnings. The definition includes fantasy sports, casual real-money games, and esports involving monetary stakes. Games played solely for recreation without monetary involvement are excluded.
2. Central Licensing Authority
A National Online Gaming Commission is established to regulate and license operators. No entity may offer online games involving real money without obtaining a licence. Conditions include:
Incorporation in India or compliance for foreign operators targeting Indian users.
Adherence to know-your-customer (KYC) and age-verification requirements.
Maintenance of secure payment and grievance redressal systems.
3. Consumer Protection
The Act introduces mandatory safeguards:
Advertising Restrictions: Operators must avoid misleading claims about guaranteed returns.
Self-Exclusion Mechanisms: Players may voluntarily exclude themselves.
Limits on Play and Spending: Operators must provide tools to limit gameplay duration and financial exposure.
Dispute Resolution: Internal grievance officers and recourse to an Online Gaming Dispute Resolution Board.
4. Regulation of Content and Fairness
The Commission is empowered to mandate use of certified random number generators (RNGs) and independent audits to ensure fair play. Content deemed obscene or promoting addiction is prohibited.
5. Interaction with Other Laws
PMLA, 2002: Online gaming intermediaries are categorised as reporting entities, requiring compliance with anti-money laundering obligations, including reporting suspicious transactions to FIU-IND.
IT Act, 2000: Online gaming platforms qualify as intermediaries, necessitating compliance with due diligence and safe harbour obligations.
GST: The Act does not alter taxation; online games remain subject to the 28% GST on full face value of bets, following the Supreme Court’s interpretation in Skill Lotto Solutions Pvt. Ltd. v. Union of India.
6. Penalties
Operating without a licence, offering prohibited games, or violating consumer safeguards attract significant penalties, including imprisonment up to three years and fines up to ₹50 lakh.
1. Centre vs State Powers
One constitutional question is whether Parliament may legislate comprehensively in a field traditionally reserved for states. While gambling falls under the State List, the Union has justified the Act under Entry 31 (communications) and Entry 97 (residuary powers), given the online and cross-border character of gaming. Potential federal challenges cannot be ruled out.
2. Freedom of Trade and Expression
Operators may challenge restrictions on grounds of Article 19(1)(g) (right to trade) and Article 19(1)(a) (commercial speech). Courts will likely apply the test of reasonableness under Article 19(6), balancing regulation with legitimate state interests.
3. Enforcement Challenges
Practical enforcement—particularly against offshore platforms targeting Indian players remains uncertain. Lessons may be drawn from cases involving foreign betting sites, where Indian regulators resorted to blocking orders under Section 69A of the IT Act.
Globally, regulation of online gaming varies. The UK’s Gambling Commission regulates all gaming with strict safeguards; Singapore legalises limited forms under the Remote Gambling Act, 2014; while the United States leaves regulation largely to states, resulting in a patchwork approach. The Indian Act aligns closer with the UK model, emphasising licensing, consumer protection, and AML compliance.
Opportunities:
Legal certainty for investors and operators.
Consumer safeguards against addiction and fraud.
Revenue generation through licensing and taxation.
Concerns:
Regulatory overlap with state laws could trigger litigation.
High compliance costs may deter startups.
Ambiguity in definitions, particularly around “games of skill”, could persist.
The Promotion and Regulation of Online Gaming Act, 2025 is a watershed moment in India’s legal treatment of online gaming. By moving beyond the binary of skill and chance, and by embedding consumer protection and AML safeguards, it seeks to legitimise an industry long trapped in uncertainty. Yet, its constitutional validity and practical enforceability will likely be tested in the courts. For now, stakeholders must carefully evaluate compliance frameworks and monitor judicial developments.
About the author: Ashish Deep Verma is the Founder and Managing Partner of Vidhiśāstras – Advocates & Solicitors.
Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.
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