Online Gaming Act 2025: No longer a skill issue

On Wednesday, August 20, the Lok Sabha rushed through and passed ‘The Promotion and Regulation of Online Gaming Bill, 2025’ in seven minutes. On Thursday, the Rajya Sabha cleared the Bill in a brisk twenty-six minutes. By Friday, the Bill received Presidential assent and became the Online Gaming Act, 2025 (“Gaming Act” or “Act”).

In brief, the Gaming Act prohibits ‘online money games’ [Section 2(1)(g)], which it defines as any online game involving monetary (or similar) stakes, irrespective of whether the game is based on skill or chance. Instead, the Act promotes ‘e-sport’ [Section 2(1)(c)], which it differentiates from an ‘online money game’ on the basis that an ‘e-sport’: (i) has an outcome solely determined by skill; and (ii) does not involve the wagering of any monetary (or similar) stakes.

The Gaming Act punishes a person:

(i) offering and/ or engaging in an ‘online money gaming service’, in contravention of Section 5, with imprisonment of up to three years and/ or a fine upto INR 1 Crore;

(ii) advertising an ‘online money gaming service’ in contravention of Section 6, with imprisonment of up to two years and/ or a fine up to INR 50 Lakh; and

(iii) engaging in any transaction in relation to an ‘online money gaming service’ in contravention of Section 7, with imprisonment of up to three years and/or a fine upto INR 1 Crore.

The offences under Sections 5 and 7 of the Gaming Act have been made cognizable and non-bailable. [Section 10]

Constitutional challenges to the vires of the Gaming Act are likely to be raised on the following grounds:

(a) The Gaming Act lacks legislative competence, inasmuch as, in pith and substance, the Act ventures into matters within the exclusive legislative  domain of the State Legislatures [Entry 34, List II, 7th Schedule]; and 

(b) The Gaming Act overrules a consistent body of judicial decisions of the Supreme Court and various High Courts, which have drawn a constitutionally significant distinction between games of skill and games of chance, protecting the former under Article 19(1)(g) of the Constitution as legitimate trade and business.

A. The Union Parliament lacks the legislative competence to enact the Gaming Act 

Article 246 of the Constitution, read with the Seventh Schedule thereto, divides legislative fields between the Union and the States. The Union has sought to justify the Act by reference to various Union List entries (telecommunications, currency, inter-State trade, etc.) and even by invoking Article 47 of the Constitution, the Directive Principle mandating the State to improve public health.  

The Centre’s stance is that ‘online money games’ are a social evil, causing addiction,  suicides and financial ruin. Accordingly, the preamble to the Act, and its statement of objects and reasons, posits that the prohibition of ‘online money games’ is in public interest owing to the “adverse social, economic, psychological and privacy-related  impacts of such games." However, the issue of whether public interest alone can cure  fundamental defects relating legislative competence is no longer res integra.

In Koluthara Exports Ltd. v. State of Kerala, a Constitution Bench of the Hon’ble  Supreme Court held that laudable objectives cannot confer competence where none exists, and Part IV of the Constitution cannot be used as a shield against challenges on competence. Similarly, in EV Chinnaiah v. State of Andhra Pradesh, another Constitution Bench held that to determine the validity of an enactment, what must be  examined is not merely its stated objectives but its true scope and effect.

Although the Act purports to promote ‘e-sports’ and is based on the objective of preserving public order and protecting public health, in substance, whether these objectives have been accomplished would eventually be determined pursuant to judicial  scrutiny. On the face of it the Gaming Act is a blanket prohibition on, and criminalisation of, online games involving wagers. 

The operative core of the Gaming Act is penal. Chapter III of the Act criminalises the entire class of ‘online money games.'

Chapter V makes the key offences under Sections 5 and 7 cognizable and non-bailable [Section 10], prescribes three-year sentences and exorbitant fines [Sections 9(1) to 9 (3)], enhances punishments for repeat-offenders [Sections 9(4) to 9 (5)] and imposes vicarious criminal liability [Section 11].

Chapter VI permits: (i) blocking of access to online content [Section 14]; (ii) searches by  law enforcement of physical and ‘virtual digital spaces’ without warrant [Section 16(2) and Explanation] (iii) device access without warrant [Section 16 and Explanation]; and (iv) a go-by to the procedural safeguards under the  Bharatiya Nagarik Suraksha Sanhita, 2023 through a non-obstante clause [Section 16 read with Section 18].

In contrast, the Gaming Act’s promotion of ‘e-sports’ and social gaming also appears ambiguous. No enforceable rights are created in favour of players of ‘e-sports’, no institutional framework for sports promotion or public health is built and no mandatory duties are imposed on the Centre, or any authority. Instead, the Centre is left with the discretion to “take steps as it considers necessary” [Sections 3 and 4]. In fact, the most concrete function of the ‘Authority’ sought to be created under Section 8 of the Gaming Act is to classify games, and to respond to complaints relating to online games which may be prejudicial to users.

Read as a whole, the true character of the Gaming Act, its scheme, scope and ambit point towards the Act’s pith and substance lying squarely within Entry 34 of the State List: ‘Betting and gambling’.  

On the Centre’s competence to enact the Gaming Act, reference may be made to Dr BR Ambedkar’s insightful approach on the issue at hand. Several members of the Constituent Assembly contended that the inclusion of ‘Betting and gambling’ in the State List was a legitimisation of gambling. Dr Ambedkar clarified that placing ‘Betting and gambling’ in the State List simply ensured that States, rather than the Centre, retained the authority to regulate or even prohibit gambling, since omitting the entry would automatically vest that power in the Union government. This field stands more than occupied by the State Legislatures - most having adopted the Public Gambling Act, 1867 with State-specific amendments; several imposing licensing regimes for online games of skill; and others have gone further, prohibiting fantasy sports when played for stakes or winnings.

B. Legislative Overruling: What Parliament may (and may not) do

Courts have held that the legislature may validly enact laws that removes “the  substratum or foundation” of a judgment to make the decision ineffective. However, what a legislature cannot do is simply set aside a judgment or the interpretation of law contained therein by legislative fiat. It appears that the Gaming Act merely sets aside the judicial line that creates a clear, unambiguous distinction between games of skill and  games of chance, protecting the former under Article 19(1)(g) of the Constitution. 

A Constitution Bench of the Supreme Court in RMD Chamarbaugwala v. Union of India held that competitions involving skill and those of chance form two  distinct categories, akin to the difference between commercial and wagering contracts. In Dr. KR Lakshmanan v. State of Tamil Nadu, the Supreme Court not only  recognised this distinction, but went on to protect games of skill as “business activities” under Article 19(1)(g) of the Constitution.  

Re-affirming the decisions of the Supreme Court from RMD  Chamarbaugwala (supra) through Lakshmanan (supra), various High Courts have held  that games of skill enjoy the protection under Article 19(1)(g) of the Constitution, and  thus blanket prohibitions on online games of skill are unconstitutional. [Varun Gumber v. UT, Chandigarh, 2017 SCC OnLine P&H 5372; Chandresh Sankhla v. State of  Rajasthan & Ors., 2020 SCC OnLine Raj 264; Head Digital Works Private Limited v. State of Kerala,  2021 SCC OnLine Ker 3592; Junglee Games India Private Limited vs. The State Of Tamil Nadu, 2021  SCC OnLine Mad. 2767; All India Gaming Federation v. State of Karnataka, 2022 SCC OnLine Kar 435; All India Gaming Federation v. State of T.N, 2023 SCC OnLine Mad 6973]

The Gaming Act does not, in substance, remove the basis of these rulings. The very  substratum of these judgments, that games of skill are not gambling and are thus  protected under Article 19(1)(g) of the Constitution, remains intact. The Gaming Act  merely insists otherwise if the game involves monetary stakes.  

The Gaming Act is already being subjected to constitutional challenges on several counts, including the ones discussed in this article. Whether the Act will sail through the initial hurdle and avoid a stay on its effect and operation remains to be seen. The  Centre will point to instances of large losses, debt and addiction from rummy or fantasy sports. It will also be contended that the Centre is losing out on thousands of crores of tax revenue, and that the Gaming Act has been enacted in purely public interest. 

The Centre perhaps could have considered less-restrictive regulatory measures such as licensing requirements, age limits, caps on bet size, usage limits and a variety of other measures. By jumping straight to a blanket prohibition on all ‘online money games’, the Act may be deemed disproportionate, excessive and not the “least restrictive” way to  achieve the Act’s aims and objects.

About the authors: Angad Varma is a Partner and Agastya Sen is a Senior Associate at Dua Associates.

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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