In August, parliament passed the Promotion and Regulation of Online Gaming Act, 2025 (act) within three days. It was introduced on 20 August, passed by the Rajya Sabha, or upper chamber, on 21 August and signed by the president on 22 August. This is the fastest passage of a sector-defining bill into law. The act awaits its publication in the Gazette to come into force. Once this is done, it will immediately prohibit real-money gaming and its dependent network of advertising, payments and promotions. Criminal liability and heavy penalties await those who breach its provisions.
Ashima Obhan
Senior Partner
Obhan & Associates
The online gaming industry in India is not a marginal player. Its estimated market of USD3.7 billion contributes more than INR200 billion (USD2.27 million) in taxes. It drives employment and investment. The ban on real-money games not only has regulatory implications, but also significant economic and fiscal costs. Although the act rightly addresses matters of public concern, it should be enforced in a measured way to protect those connected to this digital economy. Because real money games became unlawful overnight, valuations of market-dominant players such as Dream11 and MPL plummeted.
Forced by their untimely exit from high-value sponsorship deals with the Board of Control for Cricket in India, these companies are laying off large numbers of staff and face significant financial strain amid this period of regulatory uncertainty. Investors are adjusting their risk models for India, questioning whether regulatory unpredictability justifies their continued exposure.
An immediate casualty is the advertising sector. Section 6 of the act expressly prohibits the promotion of real-money gaming in any form. This is not merely a regulatory penalty but a criminal prohibition with maximum fines of INR5 million and up to two years’ imprisonment. With the immediate passing of the act, advertisers have taken urgent action to cancel scheduled campaigns, withdraw sponsored content and exit signed contracts. This has created serious compliance hurdles, as shown by the wave of litigation that the act has already caused. The lack of clear classification and interpretation of online money games instils fear of prosecution in and confusion among stakeholders.
Urvi Singh
Associate
Obhan & Associates
The banking and payments sector is another disrupted by the act. Section 7 criminalises the facilitation of financial transactions relating to real-money gaming. Banks, non-banking financial companies and payment gateways must put in place mechanisms to promptly detect and block such transactions. Reconfiguring payment infrastructures to detect transactions from abroad poses a compliance dilemma. This is because both domestic and offshore hosts of such games are subject to the act.
The prohibitions contrast sharply with the 2023 framework introduced by the Ministry of Electronics and Information Technology (MeitY). MeitY had proposed that Self-Regulatory Organisations (SRO) certify games of skill. They would regulate the industry by classifying those real money games deemed addictive by collaborating with gaming organisations and others such as educationists and psychologists. However, no SRO was ever established. Although the initiative never materialised, it did indicate a willingness to support the industry and uphold public interest objectives. The act, by comparison, is an abrupt shift to heavy regulation by imposing a blanket ban on real-money gaming. Such a regulatory whiplash undermines investor confidence.
Despite these challenges, the act does promote esports as legitimate activities. Internationally, esports have matured into a highly profitable industry. India has the demographic advantages of a young population and a vast consumer base. The promotion of esports demonstrates legislative foresight, seeing them as monetary sources making up the loss of real-money gaming revenues.
However, the challenge lies in finding a balance. Overregulation risks suffocating innovation in its infancy. Esports in India are in their formative years. If stakeholders perceive that regulatory frameworks may change overnight, capital may dry up. The act’s theme is governance. It illustrates how the pendulum of regulation can swing from benign neglect to overreach. In the absence of careful transition, even well-intentioned laws may have disruptive and counterproductive effects.
Ashima Obhan is a senior partner and Urvi Singh is an associate at Obhan & Associates.
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