August 25, 2025
The Promotion and Regulation of Online Gaming Bill, 2025 has secured legislative approval across both houses of Parliament, the Lok Sabha on August 20, 2025, and the Rajya Sabha on August 21, 2025 and received the presidential assent on August 22,2025 ("2025 Gaming Act"). The 2025 Gaming Act (available here) reflects a major shift in India’s regulatory framework that governs its booming gaming industry.
This blog explores the key provisions of the 2025 Gaming Act and the potential implications for relevant stakeholders.
Key Provisions of the 2025 Gaming Act
Classification: The 2025Gaming Act establishes a framework which categorises online games into four distinctcategories:
1. ‘E-sport’-
An ‘e-sport’ is defined as an online game which is played as part of multi-sport events and features organised competitive play between individuals or teams in multiplayer formats governed by predefined rules. To qualify under the defined criteria, the game must be officially recognised under the National Sports Governance Act, 2025 and registered with the Designated Authority. Crucially, the outcome of such game must depend entirely on the skill of the players, whether physical dexterity, mental agility, or strategic thinking. The definition categorically forbids any form of betting, wagering, or staking by participants, although participants may pay registration or entry fees to cover administrative costs and may receive performance-based prize money.
The 2025 Gaming Act empowers the Central Government to encourage e-sports by taking steps such as setting up training academies and research centres, implementation of incentive schemes, and coordination with state governments and sporting federations.
2. ‘Online Social Game’-
An ‘online social game’, as defined in the 2025 Gaming Act, refers to an online game that does not involve players staking money or other assets or participating with the expectation of monetary winnings. Such games may be accessed by paying a subscription fee or a one-time access fee as long as that payment is not treated as a stake or wager. Moreover,these games are ones that are intended purely for entertainment, recreation, or skill development and are expressly distinguished from ‘online money games’ and ‘e-sports’.
The 2025 Gaming Act encourages these games as tools for learning and digital literacy.
3. ‘Online Money Game’-
An ‘online money game’, as described in the 2025 Gaming Act, refers to an online game, whether based on skill, chance, or a combination of both, that is played by a user through the payment of fees, the deposit of money, or other stakes, with the expectation of winning monetary or similar benefits in return. However, the definition specifically excludes e-sports from its scope.
The 2025 Gaming Act adopts a zero-tolerance approach toward online money games by implementing a complete prohibition rather than attempting to regulate the subject matter.
4. Online Game-
An “online game” is defined under the2025 Act to mean any game, which is played on an electronic or a digital device and is managed and operated as a software through the internet or any other kind of technology facilitating electronic communication.
The 2025 Gaming Act empowers the Designated Authority under the said Act to respond to the complaints relating to online games which are prejudicial to the interests of users, forwarded either in writing or in electronic mode. Under the framework of the 2025 Gaming Act, e-sports, online social games and online money games are subsets of online games.
How does the ban work: A Multi-Layered Enforcement Strategy
(a) Primary Prohibition and Penalties:
Section 5 of the 2025 Gaming Act provides for a blanket ban on offering, aiding,abetting, inducing, indulging in or engaging in offering online money gaming services. the penalties are steep, with first-time offenders facing up to three years of imprisonment and/or fines up to INR 1 (one) crore. Repeat offenders are subject to enhanced penalties of up to five years imprisonment and fines upto INR 2 (two) crore. Such offences are also categorised as cognizable and non-bailable.
(b) Advertising Restrictions: Cutting Off theOxygen Supply:
Pursuant to Section 6 of the 2025 Gaming Act, the Government has imposed a ban on online money game advertising. This is a tactical acknowledgement that promotion is the fuel for the concerned industry. By penalising promotion with up to 2 (two)years of imprisonment and fine of up to INR 50 (fifty) lakh, the 2025 Gaming Act aims to strike at the business model at its very roots.
(c) Financial Infrastructure Blockade:
Section7 of the 2025 Gaming Act obliges banks, financial institutions or other persons engaging in the facilitation of financial transactions or authorisations of funds to decline transactions involving online money gaming services. This section is subject to the same penalties as applicable to offenses under Section 5,imposing a financial infrastructure blockade that renders operation effectively impossible in the formal financial system.
(d) Digital Enforcement Powers:
Section 14of the 2025 Gaming Act empowers the Central Government to block public access to any information relating to online money gaming that is generated,transmitted, received, or hosted on a computer resource. This authority is exercised notwithstanding anything in the 2025 Gaming Act itself or in Section69A of the Information Technology Act, 2000, effectively integrating the established framework for content blocking into the enforcement regime under the 2025 Gaming Act.
Designated Authority under the 2025 Gaming Act
The 2025 Gaming Act provides for the establishment of a specialised authority or designating an existing authority or agency (“Designated Authority”) with extensive powers, including game classification, registration, investigation, and complaint resolution. The 2025 Gaming Act adopts a principles-based approach,not dealing with operational specifics but enabling them to be crafted in subsequent rules.
However, the powers of the Designated Authority are kept in check by certain reasonable limitations on interfering with normal day-to-day activities during investigations, reflecting pro-business sentiment of the legislators towards legitimate operators.
Meeting the Offshore Challenge
A distinctive feature of the 2025 Gaming Act is its extraterritorial scope. By expressly extending its application to services “operated from outside the territory of India” the 2025 Gaming Act makes a considered assertion of regulatory authority. This provision is directed at a recurring challenge in the sector:offshore operators who target Indian users while seeking to circumvent domestic regulatory frameworks.
In furtherance of this objective, the 2025 Gaming Act confers extensive enforcement powers on authorised officers, including the ability to “enter any place, whether physical or digital” and to override security controls where necessary. These provisions underscore the resolve of the 2025 Gaming Act to strengthen online enforcement and affirm that operation from an offshore jurisdiction will not shield service providers from compliance obligations under Indian law.
Industry Implications: Winners and Losers
(i) For Legitimate Gaming Companies:
E-sports and online social gaming businesses have a new landscape with opportunities and responsibilities. For the good, businesses can anticipate government backing in the form of promotional initiatives and infrastructure creation, coupled with well-defined regulatory avenues that substitute previous uncertainty. E-sports businesses especially gain from official endorsement, having access to traditional sports infrastructure and funding prospects.
But new responsibilities accompany these advantages. Companies will have to register themselves with the Designated Authority and be in constant conformity with operating rules and regulatory scrutiny. Above all, they need to classify their games correctly, for any mistake would lead to stringent penalties or disruption in the course of business.
(ii) For Financial Services:
The 2025Gaming Act places unprecedented requirements on financial institutions to identify and block gaming-related transactions. This will necessitate advanced transaction monitoring systems and increased due diligence procedures, potentially generating high compliance costs in gaming transaction identification.
(iii) For International Operators:
Offshore gaming operators face a stark choice: either leave the Indian market altogether or fundamentally restructure operations to remove monetary stakes. The extraterritorial application of the 2025 Gaming Act ensures geographic arbitrage approaches will not work in the future.
Concerns of Constitutionality
The 2025Gaming Act also faces concerns over constitutionality of the 2025 Gaming Act.Pursuant to the Constitution, "betting and gambling" falls under Entry 34 of the State List, giving states primary legislative authority over gambling activities. The central government's intervention through this comprehensive legislation raises constitutional questions about overreach,especially since this distribution of powers has historically limited Parliament's ability to enact such broad gambling regulation, resulting in the current patchwork of varying state-level approaches. Notably, in June 2025, the Madras High Court ruled in Play Games 24x7 Pvt. Ltd. and Ors. v. State of Tamil Nadu and Ors. MANU/TN/2170/2025 that the State was competent to restrict online real-money gaming, upholding the validity of the provisions of the Tamil Nadu Prohibition of Online Gaming and Regulation of Online Games Act, 2022 and the Tamil Nadu Prohibition of Online Gaming Authority (Real Money Games) Regulations, 2025. Although, the court observed that the State drew its power to frame the Regulation from Entry 6 of the State List which deals with public health,rather than from Entry 34.
Moving Beyond the Skill vs. Chance Dichotomy
The 2025 Gaming Act establishes a parallel regulatory regime for online games that operates alongside the traditional skill vs. chance jurisprudence that governs gambling and betting operations. This distinction has its roots in the Public GamblingAct, 1867 ("PGA"), a colonial-era legislation that created exceptions for games of "mere skill". Most states adopted the PGA or similar legislation following the Indian Constitution coming into effect.
Pursuant to these legislations, courts have developed a comprehensive jurisprudence for distinguishing between games of skill, which the courts have held to be constitutionally protected under Article 19(1)(g), and games of chance. This differentiation,developed in cases like R.M.D. Chamarbaugwala v. Union of India and refined in subsequent judgments, and has created a complex legal landscape dependent on judicial assessment of skill versus chance elements. In Manoranjithan Manamyil Mandram v. State of Tamil Nadu, the Madras High Court held that the determination of whether a game qualifies as one of skill or chance is a ‘question of fact’ to be assessed in light of the specific circumstances of each case. The Court further clarified that where elements of chance are present, the game would nevertheless fall outside the ambit of gambling if skill constitutes the predominant factor influencing the outcome.
This jurisprudence has been relevant for online games as well. In Varun Gumber v.Union Territory of Chandigarh & Ors., the Punjab and Haryana High Court(“PHC”) addressed the question of legality of fantasy sports and determined that the games offered by Dream11 were permissible business activity protected under the Constitution as the games involved considerable skill, judgment and discretion. The Supreme Court had dismissed the review petition against the PHC’s decision.
The 2025 Gaming Act's definition of online money games as prohibited “irrespective of whether such game is based on skill, chance, or both” renders this traditional dichotomy irrelevant for online money gaming. By centering the legislation on the presence of monetary stakes instead of game mechanics, the 2025 Gaming Act sidesteps contentious judicial determinations that have characterised this area of law.
Conclusion
The 2025 Gaming Act sets a new paradigm for digital gaming regulation that strikes a balance between promoting innovation and protecting consumers.
The success of the 2025 Gaming Act will ultimately rely upon the effectiveness of implementation and the judgment of subsequent rule-making. Nonetheless, its principles-based design coupled with stringent enforcement provisions offers a solid basis for fostering India's gaming industry potential while providing a response to respectable public concerns.
As the 2025 Gaming Act makes its way through Parliament, all stakeholders throughout the gaming ecosystem need to prepare for a radically new regulatory environment.Those who move early and embrace the vision of the 2025 Gaming Act of responsible, innovation-led gaming have much to gain in India's new digital entertainment economy.
