The Promotion and Regulation of Online Gaming Act 2025: Dawn of a new era - Historical Background

In recent years, India’s online gaming sector experienced significant growth bolstered by increased investments, technological advancements, and a burgeoning workforce. This growth was catalysed by recognition via state-level laws, intermediary regulations, taxation regimes, and judicial developments. The massive rise of India’s online gaming industry—spanning casual games, e-sports, fantasy sports, rummy, poker, and more—has transformed digital leisure, innovation, and entrepreneurial opportunity.

However, such hypergrowth also triggered social and legal challenges such as player protection, gambling addiction, underage gaming, skill-vs-chance gaming and enforcement shortcomings. This was mostly because of the lack of a uniform and consistent framework of gaming laws at the Central level.

Recently, the Parliament cleared India’s new gaming law called “The Promotion and Regulation of Online Gaming Act, 2025” (“PROGA”), which received presidential assent on August 22, 2025. PROGA has an overriding effect [Section 18, PROGA] and aims to bring a long-awaited clarity, uniformity, and modernity to this sector.

In Part I of this article, we will trace the evolution of gaming laws in India, including brief highlights of the new statute. In Part II, we will critically analyse legal, constitutional, and stakeholder implications of PROGA.

1. The Public Gambling Act, 1867 (“PGA”)

A relic of colonial administration that criminalized the keeping of “common gaming houses” and public gambling. Notably, it carved out an exemption for “games of mere skill,” leaving the boundaries of this category to intuition and, eventually, judicial interpretation.

2. State-Level Statutes and Federal Structure

Post-independence, the power to legislate betting and gambling shifted to the States [Entry 34, State List, Constitution of India]. The result:

• Most States continued with variants of the PGA (e.g., Delhi, Madhya Pradesh, Punjab).

• Others, like Goa, legislated liberal regimes permitting regulated gambling, casinos, and lotteries. For example, the Goa, Daman and Diu Public Gambling Act, 1976, authorizes casinos in five-star hotels.

• States such as Nagaland and Sikkim developed frameworks for online and skill-based gaming.

3. The Dilemma of “Skill versus Chance”

The evolution of the Indian gaming sector was coupled with the development of jurisprudence marked by a persistent struggle to disentangle “games of skill” from “games of chance” due to the exemption from ban or penalty that was mostly provided only to “games of mere skill”. For most States-

• Skill games were considered protected activities, not amounting to gambling, and thus permitted.

• Chance games were deemed as gambling, attracting legal prohibitions.

This multiplicity of statutes led to regulatory inconsistency. For instance:

• While most States allowed skill-based games for stakes, States like Odisha banned all forms of gaming for stakes, including games typically seen as skill-based.

• Some States even allowed games of chance in a regulated environment, other States provided licenses to host skill-based games.

• States like Tamil Nadu introduced their new gaming framework and was immediately challenged adding to the uncertainty.

4. Judicial Trajectory

To further add to the inconsistency as highlighted above, conflicting judgments of High Courts with respect to the determination of certain games (e.g., poker) as a game of skill versus chance complicated the overall jurisprudence of gaming laws. While the Chamarbaugwala case provided the “preponderance of skill” doctrine and was reinforced by the Satyanarayana case, different High Courts pronounced conflicting ruling on games like poker on skill versus chance distinction adding to the legal uncertainty.

Further, litigation multiplied as fantasy sports and rummy apps were outrightly banned by several States. Courts typically intervened to question the arbitrary characterization of certain games as “gambling” which demonstrably were skill oriented. Therefore, gaming companies faced a constant threat of their games being classified as “betting” or “gambling” owing to regulatory change or court precedents.

5. The Information Technology Act, 2000

The Information Technology Act, 2000 (“IT Act”) and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 (“Intermediaries Code”), further impacted the online gaming sector. It:

• Included within its ambit, online games and online real money games, providing for due diligence obligations for these platforms.

• Providing safe harbour protection for compliant intermediaries, while excluding those knowingly hosting illegal gambling content and consequential blocking. (Section 69A, IT Act)

• Did not directly regulate “betting and gambling” considering it is a State subject.

The flood of internet adoption and smart devices led to a surge in online gaming, growing the industry’s valuation to as much as $3.7 billion. With this came convergence with fintech and e-commerce laws increasing complexity and risks especially addiction, financial losses, and negative psychological effects, particularly among vulnerable users like children. Attempts at regulation often resulted in further legal uncertainty, with frequent litigations and stays, leaving a vacuum.

Some laws tried to keep up with the dynamic change in the industry, but most of them led to -

• Litigations and stays on government bans leading to regulatory vacuum on several issues.

• Uncertainty for operators, investors, and players, especially due to volatile regulatory framework.

• Central government attempts to partially regulate aspects like KYC, age-gating, and content monitoring, which had its own issues in implementation.

• Foreign entities bypassing domestic laws especially on issues relating to money laundering and extra-territorial implementation of State laws.

Background

PROGA was introduced in response to rapid growth of online gaming, and concerns about user safety, addiction, financial fraud and the need for industry standards as highlighted above.

While online gaming as such, does not find a direct mention in Schedule VII of the Constitution, both Centre and the State have ancillary reach on gaming regulation. While the subjects “betting and gambling” [Entry 34, State List] and “sports and entertainment” [Entry 33 State List] fall in the State List, the Central government is empowered to regulate an industry in “public interest” [Entry 52, Union List].

Key Highlights

a. Classification of online games: PROGA classifies online games in three categories - e-sports, online social games and online money games.

• E-sports are solely skill based online games that are part of a multi-sport event, governed by predefined rules and registered under the National Sports Governance Act, 2025. Registration and participation fees are allowed, and performance-based prizes may be given. Such sports must not amount to betting or wagering.

• Online social games are games that are played solely for entertainment, recreation or skill-development purposes. Such games do not require staking of money or other stakes or participation with the expectation of winning by way of monetary gain in return for money or other stakes. Such games can be offered on a subscription or one time access fee model which is not in the form of stakes or wager.

• Online money games are defined as online games played by a user by paying fees, depositing money or other stakes in expectation of winning, which entail monetary and other enrichment in return of money or other stakes, irrespective of the games being chance or skill based.

While online money games are prohibited, online social games and e-sports are allowed and will be regulated. 

b. Prohibition on online money games: PROGA prohibits offering, aiding, abetting, inducing or otherwise indulging or engaging in the offering of online money games and online money gaming service [Section 2(1)(h) and Section 5, PROGA]. Advertisements of such online money games are also prohibited [Section 6, PROGA]. Further, financial institutions and entities facilitating such transactions are also prohibited from engaging in, permitting, aiding, abetting, inducing or otherwise facilitating any transactions towards payment for such services [Section 7, PROGA].

c. Central Regulator: PROGA establishes a National Online Gaming Authority to register, monitor, and regulate online gaming operators.

d. Register System: Mandatory registration for e-sports and online social games has been laid down in PROGA.

e. Penalties: Non-compliance, such as unlawful operations, advertisements, or facilitation of online money games, can attract penalties of up to ₹2 crores and imprisonment for up to five years [Chapter V, PROGA].

Next Steps

• The rules and operative details under PROGA are expected to be notified soon, specifying technical standards and enforcement protocols.

• All existing operators may have a limited window to transition to the new registration framework or risk suspension.

• PROGA’s effectiveness and impact will be closely monitored, with scope for periodic review and amendments based on evolving technology, court intervention and public feedback.

In Part II of this article, we will do a critical analysis of PROGA and analyse its legal, constitutional, and stakeholder implications.

About the authors: Vikash Kukreti is a Partner and Gaurav Tiwari is a Senior Associate at Luthra and Luthra Law Offices India.

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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