Proposed Amendments to India’s Online Gaming Bill: Balancing Regulation, Innovation, and Protection

Introduction

India’s online gaming industry has emerged as one of the fastest-growing sectors in the digital economy, valued at approximately 4.38 billion United States Dollar (“USD”)  in 2025 and projected to reach USD 8.74 billion by 2030, growing at a compound annual growth rate (CAGR) of 14.80%. With an estimated 488 million online gamers in 2024, expected to rise to 517 million by the end of 2025, the sector employs over 130,000 professionals and contributes significantly to innovation, employment, and entertainment. However, the rapid expansion has raised concerns about addiction, financial risks, and unregulated practices, leading to the introduction of the Promotion and Regulation of Online Gaming Bill, 2025 (the “Original Bill”).

Passed by both houses of the Parliament in August 2025 without prior industry consultation, the Original Bill imposes a blanket ban on all real-money online games, regardless of whether they are based on skill or chance. This move has sparked debate, with supporters praising it for protecting vulnerable populations and critics arguing it stifles legitimate business and innovation. In response to these gaps, few amendments seek to refine the framework by distinguishing between games of skill and chance, introducing licensing, and enhancing consumer protections. This article explores the Original Bill, incorporates insights from key analyses, and examines the proposed amendments, drawing on credible sources to assess their potential impact.

The Original Bill: A Protective Framework Amid Controversy

The Original Bill, as detailed in the government’s backgrounder released on August 21, 2025, aims to shield citizens, particularly the middle class and youth, from the harms of online money games while promoting e-sports and social games. It classifies online games into three categories: e-sports, online social games, and online money games. E-sports are defined as competitive multiplayer events recognized under the National Sports Governance Act, 2025, allowing performance-based prizes but prohibiting wagers.  Online social games are non-staking entertainment or skill-development activities, potentially operating on subscription models. In contrast, online money games—involving stakes with expectations of winnings—are outright banned, encompassing both skill- and chance-based formats.

The government's rationale emphasizes social and economic harms. According to Union Minister for Electronics and Information Technology Shri Ashwini Vaishnaw, an estimated 45 crore people have been negatively affected by online money games, resulting in losses exceeding Rs. 20,000 crores. The backgrounder highlights addiction, financial ruin, mental health issues, and even suicides linked to these platforms, aligning with the World Health Organization’s classification of gaming disorder as a health condition. It also addresses fraud, money laundering, and national security risks from offshore operators.

To enforce the ban, the Bill prohibits advertising, financial transactions, and operations related to online money games, with penalties including up to three years' imprisonment and fines up to one crore rupees for first offenses, escalating for repeats. A national Gaming Authority has been established to register e-sports and social games, handle complaints, and block non-compliant platforms under the Information Technology Act, 2000.

The backgrounder positions the Bill as a balanced approach, promoting constructive gaming. It empowers the government to develop guidelines for e-sports tournaments, establish training academies, and launch awareness campaigns. For social games, it encourages registration and initiatives to integrate them into education and recreation.

Criticisms and Industry Impact: Insights from Legal Analysis

While the government views the Original Bill as essential for public welfare, legal experts have raised alarms about its implications. Industry experts describe the legislation as a “surprising and unforeseen push” that could hamper India’s emergence as a global digital hub.  The blanket ban fails to distinguish between low-risk skill games and high-risk chance games, contradicting judicial precedents that protect skill-based activities under Article 19(1)(g) of the Constitution , which guarantees the right to practice any profession or business.

The analysis highlights ambiguities in classifications. For e-sports, the requirement for outcomes to be “solely” determined by skill (e.g., dexterity or strategy) differs from the “predominant skill” test in earlier rulings, potentially excluding genres like card games. For social games, in-app purchases could blur lines if perceived as stakes, requiring case-by-case evaluation. The ban on online money games is seen as overbroad, ignoring monetization complexities like virtual currencies.

Economically, the Bill threatens a market projected to reach USD 9.2 billion by 2029, with potential job losses in an industry employing over 130,000. Offshore operators face blocking on broad grounds, but the hotline warns this could drive users to unregulated platforms, exacerbating risks. Constitutionally, it may violate Articles 14 (equality), 19(1)(a) (speech), and 19(1)(g), as less restrictive measures like age limits or deposit caps could address concerns.

The Proposed Amendments: Refining the Framework

In other countries, the regulation of online gaming and money based games follows models that seek balance between permitting the industry to grow and protecting consumers. For example, in the United Kingdom, there are strict licensing rules, advertising constrains rather than outright bans. Similarly, in the European Union, online gambling is permitted under private licenses while enforcing strong rules for age checks, anti-money laundering and responsible gaming.

In contrast, the Original Bill takes a more prohibition focused approach for all real money online games, essentially negating the previously established difference between games of skill and games of chance. Further, it bans advertisements and financial transactions related to such games and imposes heavy penalties for non-compliance. For a more balanced approach inspired by other jurisdictions, recommendations are suggested.

Distinction Between Skill and Chance Games: The amendments would refine definitions to recognize “online games of skill” where skill predominates (using the “dominant factor test” from judicial precedents like rummy and fantasy sports), while banning only pure games of chance like roulette. This was included to counter criticisms of the original bill’s blanket ban on all real-money games, which overlooked established court rulings (e.g., State of Andhra Pradesh v. K. Satyanarayana) treating skill-based activities as legitimate business. The purpose is to protect legitimate operators and innovators from undue restrictions, encouraging structured industry growth without enabling exploitative chance-based gambling.

Strengthened National Online Gaming Authority: The authority would be updated to become more robust, led by a chairperson and including experts in law, technology, and psychology, with powers to classify games, grant licenses, monitor compliance, and levy penalties up to one crore rupees—while requiring public, reasoned decisions for transparency. This addresses the original bill’s limitations in oversight and enforcement, which have led to gaps in monitoring responsible practices. The purpose is to provide regulatory certainty, enhance accountability, and empower the authority to adapt to the sector's complexities, including cross-border challenges.

Licensing and Registration Regime: A new regime would mandate licenses for operators of skill-based games involving stakes or e-sports with prizes, and simpler registration for social games, with requirements like anti-money laundering compliance (under the Prevention of Money Laundering Act, 2002), data protection (per the Digital Personal Data Protection Act, 2023), fair play audits, and Indian subsidiaries for foreign entities. Included to fill the void of a comprehensive compliance system in the original bill, which has caused uncertainty and hindered enforcement against offshore operators. The purpose is to promote financial transparency, curb money laundering and national security risks, and support innovation by creating clear entry barriers for legitimate players.

Enhanced Consumer Protection Measures: New provisions would require mandatory age and identity verification (via e-Know Your Customer) (“KYC”), tools like deposit limits and self-exclusion, grievance mechanisms, independent audits, and visible risk advisories. This targets the original bill's insufficient focus on user safeguards, such as weak age checks and lack of support for problem gaming. The purpose is to shield vulnerable groups—especially youth—from addiction and financial harm, while building trust through responsible gaming programs like counselling access.

Stricter Advertising Regulations: The amendments aim to curb deceptive advertising by banning misleading ads for skill games by requiring clear disclaimers on financial risks and addiction which will be aligned with Advertising Standards Council of India advertising codes. These provisions are added to rectify the Original Bill’s oversight in allowing unregulated promotions that could mislead or harm consumers.

 The purpose is to protect public interest by curbing predatory marketing, particularly toward youth, and ensuring ads promote safe participation.

Improved Coordination and Funding Mechanisms: Provisions would require consultations between the Centre and States for uniform enforcement, respecting federal structures, while establishing an Online Gaming Regulatory Fund (from fees and penalties) for awareness and rehabilitation efforts. This also promotes joint coordination through mechanisms like inter-state task forces, shared data platforms for enforcement, and collaborative international agreements to tackle offshore operators. It responds to the original bill's gaps in intergovernmental and international cooperation amid the sector’s cross-border nature. The purpose is to enable effective enforcement, fund public education on risks, and support recovery programs, balancing national oversight with state autonomy and fostering global partnerships for seamless regulation.

Refined Offenses, Appeals, and Schedules: Penalties for violations would be strengthened with compounding options and good-faith protections, plus illustrative schedules listing skill games (e.g., chess, fantasy sports) and chance games. Included to address due process shortcomings in the original bill, ensuring proportionality in enforcement. The purpose is to create an appellate mechanism for accountability, reduce arbitrary decisions, and guide operators with clear examples for compliance.

Way Forward:

The Promotion and Regulation of Online Gaming Bill, 2025 marks a critical juncture in overseeing India’s rapidly expanding online gaming landscape. Although its preamble highlights the sector's capacity for job creation and technological innovation, supporting digital startups and creative tech ventures, the bill’s broad prohibition on real-money gaming—covering both skill-oriented and chance-driven formats—appears at odds with these goals, even as the government points to legal, societal, economic, and security risks from unchecked online wagering. Paradoxically, this protective intent risks herding a substantial portion of India’s roughly 600 million gamers—comprising about one-fifth of the worldwide player base—toward unregulated foreign sites. Such a shift could erode tax revenues for the Indian government and expose players to offshore entities with minimal safeguards, ironically amplifying the addiction, fraud, and financial pitfalls the bill seeks to eliminate.

Moving forward, the Government should prioritize building an open framework that requires clear reporting on probabilities, costs, and caps for loot boxes and in-game buys. It should also roll out age-suited safety features, including robust verification and parental controls for younger users. Embracing a self-governance approach, overseen by a neutral regulatory body, would help build a clear, player-centric, and responsible environment. Recent developments, including the bill’s presidential assent and ongoing Supreme Court consolidation of challenges to it, highlight the urgency for refinements to avert a $23 billion industry wipeout and underground proliferation. In this vein, proposed amendments—such as clarifying the line between skill and chance games, bolstering the national authority with expert oversight, and mandating licensing with anti-money laundering checks—would greatly benefit the gaming community by safeguarding legitimate skill-based platforms from overreach, spurring ethical innovation and job growth, and embedding strong consumer tools like self-exclusion and transparent ads to curb harms without stifling the sector's vibrant ecosystem. These tweaks could preserve economic contributions while truly shielding vulnerable players, turning potential crisis into sustainable progress.

Authored By: Dev Shroff & Anushree Saxena

Edited By: Ojasi G