C&M E-Alert: The Promotion and Regulation of Online Gaming Act, 2025

Now enacted as the Promotion and Regulation of Online Gaming Act, 2025 (the “Act”), the law was notified on August 22, 2025, following an expedited 96 hour passage through Parliament. The Act establishes a national framework that formally recognises E-Sports and Online Social Games while imposing a blanket ban on Online Money Games (including skill-based online games), alongside restrictions on advertising and payment facilitation for such Online Money Games. The scope of the Act extends to the whole of India and further applies to Online Money gaming services offered within the territory of India or operated from outside the territory of India. This move by the Central Government has disrupted the online gaming industry, which, as per news reports, was projected to reach a valuation of USD 3.6 billion in India by 2029.

The last 3 days witnessed leading Indian gaming companies to immediately begin suspension of their  Online Money Games operations and pull out from various third-party deals and sponsorship in anticipation of the Act coming into effect. Since the passage of the Act, several Online Money Game providers have begun suspending their operations in India. They have also issued statements assuring users that any monetary balance remaining in their digital wallets will be duly refunded. Some platforms are additionally exploring alternative business models in light of these new restrictions.

Unlike the Digital Personal Data Protection Act, 2023 and the Telecommunications Act, 2023, where the Central Government has mentioned adopting a phased approach to operationalizing these legislation, this Act will come into force on such date as will be appointed by notification in the Official Gazette by the Central Government. From that date, the Act will take effect and will likely impose a nationwide ban on Online Money Games.

Notably, the Act does not provide for any registration or licensing process that would allow Online Money Games to operate in India. This stands in contrast to the framework under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which contemplated recognition of “permissible online real money games”.

As per the preamble and statement of objects to the Act, the broad objective of the Act is to address the risks of Online Money Games that have caused tax evasions, possible money laundering, social, financial, and psychological issues like gambling addiction, financial ruin, mental health disorders, fraud and exploitation, particularly among youth and vulnerable groups.

KEY PROVISIONS OF THE ACT

Key Definitions

IMPLEMENTATION CHALLENGES

While the Act represents a landmark step in creating a unified framework for online gaming, its implementation is likely to face significant legal and constitutional hurdles. Key challenges that may arise include:

• Legislative Competence: While betting and gambling are subjects under the State List, Parliament has invoked its Union List powers to enact this law, which raises questions about its constitutional validity. The Act also reflects a marked shift from the Government’s earlier regulatory narrow stance to banning online skill-based games, even as offline equivalents remain permitted in certain states (like Horse Racing in Andhra Pradesh and Casino’s in Goa). Such inconsistency may become disproportionate and invite challenges under Article 14 of the Indian Constitution.

• Fundamental Rights Concerns: By banning all Online Money Games, including those requiring skill, the Act may face stakeholder opposition stating that the Act itself violates the Fundamental rights such as Article 19(1)(g) of the Indian Constitution (right to trade or profession) and Article 19(1)(a) (freedom of expression) of the Indian Constitution. Courts, under various state laws, have recognized skill-based online games as a legitimate business. Recently, the Rajasthan High Court in Chandresh Sankhla v. State of Rajasthan, 2020 SCC OnLine Raj 264, upheld the validity of the Dream11 platform as a skill-based game under the Rajasthan Public Gambling Ordinance, 1949, holding that it did not amount to gambling.

• Broad Powers of Arrest and Procedural Concerns: The Act grants authorized officers’ powers that override the safeguards under the Bharatiya Nyaya Sanhita (BNS), effectively allowing arrests without warrants. While such extraordinary powers exist under laws like the NDPS Act, 1985 and PMLA, 2002, those legislations address slightly more sensitive subject matter. Extending similar powers to Online Money Games can be seen as vague and disproportionate, raising risks of privacy intrusions, circumvention of due process, and arbitrary arrests.

CONCLUSION

The Act marks a major policy shift by creating a unified national framework for the online gaming industry. While it seeks to legitimise E-Sports and Online Social Games through regulatory recognition, it simultaneously imposes an absolute ban on Online Money Games even those based on skill backed by heavy penalties and possible imprisonment. At the same time, operators of E-Sports and Online Social Games now have a defined pathway to operate legally, with registration requirements under the Authority, and potential access to government schemes and initiatives aimed at sectoral growth.

However, uncertainties remain around categorisation, transition timelines, and the treatment of existing user balances, which are left to future rules. In anticipation, some operators may also explore non-monetary reward models such as tokens or in-game items that cannot be directly cashed out as a way to innovate around in-game economies while steering clear of monetary wagering.

Should you have any queries or comments on this alert please visit our LinkedIn page. You may also contact the authors below.