The Promotion and Regulation of Online Gaming Act, 2025 (act) governs the fast-growing online gaming industry. It classifies online games as e-sports, online social games or online money games. Although the act promises to protect and regulate the first two, it prohibits online money games and online money gaming services.
The definition of online money games means all forms of real-money online games are banned, whether based on skill or chance. The act outlaws the games as well as their advertising, sponsorship and financial transactions. Enforcement is aggressive, empowering authorities to search and seize without warrant and prosecute. Offenders face heavy penalties.
Aman Avinav
Partner
Phoenix Legal
This approach is said to be necessary to curb addiction and prevent fraud and money laundering. However, these assumptions in the act’s objects and reasons seem to be based on perception rather than scientific methodology or data. The act seems to breach the constitution by its classification and arbitrariness.
Courts have long distinguished games of skill and of chance. The Supreme Court in State of Bombay v RMD Chamarbaugwala held that skill-based contests are legitimate business activities, protected under the constitution’s article 19(1)(g). KR Lakshmanan v State of Tamil Nadu upheld horse-racing betting as a game of skill. More recently, courts have recognised fantasy sports platforms as skill-driven, not gambling.
The act ignores such jurisprudence and vilifies winnings by terming them “enrichment”. By treating rummy, chess and fantasy cricket the same as roulette or slot machines, the law imposes a blanket prohibition on activities already deemed lawful. This is because they may result in “monetary or other enrichment”. Such an approach conflicts with the constitutional right of entities offering such services to carry on a trade or profession. The stated objectives the act sets out to achieve could have been achieved by effective and reasonable regulation. Its preamble offers no reason why such drastic measures were considered the only means possible.
If alternatives preventing the mischief are available, a complete ban is excessive and opens the act to challenge. The act ends the entire online money gaming ecosystem and targets every aspect of its business. It not only prohibits offering, operating and facilitating games but also makes intermediaries liable. It criminalises the advertising and promotion of games on all media platforms, prescribing penalties of up to two years’ imprisonment and a fine of INR50 million (USD566,375). It restricts financial institutions, banks and payment systems from processing transactions, with the same penalties as those for operating the games. These measures silence publicity, choke financial support and kill participation.
The act’s most intrusive aspect is its enforcement powers. Officials may conduct searches and seizures without a warrant and block websites and financial transactions. This allows the state to monitor digital behaviour and invade personal devices. Such untrammelled powers are inconsistent with the landmark judgment in KS Puttaswamy v Union of India, affirming the right to privacy.
The act also treats equal players unequally. Although real-life games involving money remain untouched, their online counterparts are penalised. If the underlying activity, say a game of rummy, is the same, the only difference is the medium, physical as against digital. This is no rational basis for such contrasting treatment. Such classification fails the reasonableness test of article 14 of the constitution, which guarantees equality before the law and strikes down arbitrariness.
India’s prohibitionist approach is at odds with international practice. The UK regulates online gambling through a licensing regime, capping deposits and enforcing strict age checks. Germany allows licensed online poker and betting with strict consumer safeguards. In the USA, states such as New Jersey and Nevada have adopted a regulated model.
Global experience teaches that bans fuel black-market activity, driving users to offshore platforms or worse, the dark web. The ban may encourage the very evil the act sets out to eradicate. Regulation could have brought transparency, safeguarded users and generated tax revenue. The act may be the rare exception to the adage, “the house always wins”!
Aman Avinav is a partner at Phoenix Legal
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