(Image source from: PTI)
The Union Cabinet has approved the Promotion and Regulation of Online Gaming Bill, 2025, paving the way for a serious crackdown on India's rapidly growing online gaming industry. If this bill is enacted by Parliament, it will make all games that involve money illegal, regardless of whether they rely on skill or luck. It will also ban ads that promote such platforms and will prevent banks and financial institutions from handling related transactions. Those who provide these games could face prison terms of up to three years and fines, based on the draft's content. Market leaders such as Dream11, Games24x7, Winzo, GamesKraft, 99Games, KheloFantasy, and My11Circle are now facing a critical situation. Currently, India's online gaming market is valued at $3.7 billion, with expectations to increase more than twofold to $9.1 billion by 2029. However, around 86% of the current income comes from real-money games. Eliminating that revenue could instantly end the industry's financial support.
The All India Gaming Federation (AIGF) has reached out to Union Home Minister Amit Shah, asking for immediate action concerning the proposed Online Gaming Bill. They warned that a total ban could harm the industry significantly. In their message, the federation emphasized the importance of “progressive regulation” instead of an outright ban, noting the potential negative impact on millions of players and the industry at large. According to the AIGF, enacting the bill as it is might push millions of honest gamers toward illegal gambling and unlicensed operators. “If the bill is passed, it will cause significant damage and drive players to unreliable operators,” the federation stated, warning that a total ban would lead to the downfall of a legitimate industry that creates jobs. While those in the industry have not made official statements, they indicated that it could result in more harm than benefits, potentially eliminating hundreds of thousands of jobs, pushing users into illegal gambling, and even hindering economic growth.
Government sources have mentioned that the draft legislation is quite clear. It suggests a total ban on all transactions related to real-money gaming, regardless of whether the game is based on skill or luck, marking a significant shift from earlier regulatory views. Banks and payment processors will not be allowed to handle any payments connected to these platforms, essentially cutting off the financial support that keeps the business running. Promoting such games will also become illegal.
Players will still have access to free games or subscription-based games, where users pay a set amount but cannot bet while playing. However, any games that involve money stakes will be banned once the law is put into action.
The Online Gaming Bill creates a detailed set of rules to manage real-money gaming sites, ban online betting, and impose penalties for violations. It prioritizes licenses, protection for players, and responsible gaming practices, according to Ranjeet Mahtani, a Partner at Dhruva Advisors. “Nevertheless, it fails to tackle taxation issues, especially GST, with ongoing disagreements regarding rates and valuations still unresolved in the Supreme Court.”
This recent action is part of a series of government measures taken in the past few years. A 28% Goods and Services Tax on gaming revenue started in October 2023, soon followed by a 30% tax on net winnings beginning in the fiscal year 2024-25. The Bharatiya Nyaya Sanhita, which was revised in December 2023, made unauthorized betting a criminal offense with possible prison sentences of up to seven years. Since 2022, authorities have shut down more than 1,400 illegal betting and gambling websites. However, this bill marks a significant shift from a strategy of taxing and regulating to one of banning and enforcing. For gaming companies that earned their wealth from real-money games, the implications are quite clear.
An industry expert expressed that the government’s strategy is “wrong” and might cause more problems than it solves. “A total ban will not safeguard Indians; it will actually harm them. It will eliminate jobs, push players towards illegal gambling, and infringe on our Constitution,” the expert stated, cautioning that a ban would only fortify illegal operators overseas, which they called “one of the greatest national security risks facing the nation today.” The legal perspective is key to the industry's resistance. For more than 70 years, the Supreme Court and multiple High Courts have consistently stated that games of skill are not considered gambling. “Article 19(1)(g) protects the right to engage in trade and business, and an outright ban would violate this basic right. Courts have ruled that such prohibitions violate Articles 14 and 19(1)(a),” the expert continued. Beyond legality, the social and economic impacts could be significant. With around 45 crore Indians playing online games, many engaging responsibly in skill-based games, the expert cautioned that forcing them towards illegal operators could expose millions to scams, addiction, and a lack of consumer protection.
“The revenue loss from offshore gambling operators due to GST is estimated to be over $4 billion—that’s greater than the total revenue of the legitimate Indian industry,” the source stated. The economic repercussions extend beyond that. The industry, which is currently worth $25 billion, generates $3.5 billion in revenue and contributes over Rs 25,000 crore annually in taxes. It provides at least one lakh direct and indirect jobs in fields like engineering, animation, game design, and content creation. “This sector was growing at nearly 20% per year and was expected to double by 2028. A ban would erase that growth instantly,” the source added. The uncertainty surrounding these changes could also deter investment. From January 2021 to June 2022, this industry attracted over $2 billion in foreign direct investment. “If the unpredictable policies continue, global investors will likely withdraw, putting India's entire digital economy at risk,” the expert highlighted.
An insider mentioned that restricting real-money games would hinder progress and diminish India's position in the worldwide digital arena. “Rather than safeguarding consumers, this will give all the business to illegal online gambling operators. We would forfeit tax income, user protection, and control over our digital space all at once,” they cautioned. The industry appears to convey a strong message: prohibition is not the solution. “What India really requires is proper regulation, not an outright ban. A smart and forward-thinking system that differentiates between skill-based games and chance games, guarantees user safety and the ability to file complaints, and secures tax income—while also encouraging innovative growth. That’s the only viable path ahead,” the insider emphasized.
