Introduction
The online gaming industry in India has witnessed explosive growth in the last decade. The sector contributes more than INR 20,000 crore annually in direct and indirect taxes and is projected to grow at a Compound Annual Growth Rate (CAGR) of nearly 20%, potentially doubling by 2028.[1]
This growth, however, has been accompanied by mounting concern ranging from social, economic, psychological, consumer protection, and privacy related matters. Accordingly, the Indian legislature has sought to introduce a uniform national framework governing the online gaming sector through the Promotion and Regulation of Online Gaming Act, 2025 (‘Act’). The Act received presidential assent and was published in the official gazette on August 22, 2025, though it is yet to come into effect.[2] The Act centralises oversight of online gaming, imposes a ban on real money online games, sets up a national regulator to license and supervise the sector, and prescribes graded penalties for offences.
Yet, enforcing a nationwide blanket ban on ‘online money games’ is not straightforward. Implementation will depend not only on the Act itself but also on its effective integration with the Information Technology Act, 2000 (‘IT Act’), financial laws such as the Prevention of Money Laundering Act, 2002 (‘PMLA’), and the extant criminal procedure. Practical enforcement will face technical, jurisdictional, and regulatory headwinds. Importantly, the Act does not directly criminalise ultimate end-users, which means that the compliance burden will fall primarily on promoters, advertisers, and financial intermediaries.
Key provisions of the Act
- Classification and Prohibition
The Act classifies online games into distinct categories:
i. Online Money Games (‘Money Game’):[3] Games involving any form of stake, deposit, or monetary reward. This includes both – games of skill and chance, where real or virtual assets[4] are convertible into money. Making the definition of a Money Game agnostic to the existence of skill is a significant departure from the existing jurisprudence. The Act explicitly prohibits offering, facilitating, or advertising such games.[5]
ii. E-Sports:[6] Competitive digital sports where teams or individuals participate in organised tournaments are specifically excluded from the definition of a Money Game and recognized as legitimate sporting activity. Payment of registration fees solely for the purpose of entering the competition, and receipt of performance-based prize money is permitted for e-sports.
iii. Social and Educational Games:[7] Games meant for recreation, learning, or social engagement without monetary wagering. These are also recognised as legitimate and payment of a subscription fee or one-time access fee is permitted.
2. Enforcement toolkit
i. Penalties
The Act prescribes strict penalties[8] for:
a. Offering of a Money Game service, with imprisonment of up to 3 years and/ or a fine upto INR 1 crore;
b. Advertising a Money Game, with imprisonment of up to 2 years and/ or a fine up to INR 50 lakh; and
c. Facilitating any fiscal transaction or authorisation of funds in relation to a Money Game, with imprisonment of up to 3 years and/or a fine up to INR 1 crore.
ii. Search, seizure, and arrest
The offences under (a) and (c) above have been made cognizable and non-bailable[9], with authorities empowered to conduct search, seizure, and arrest without warrant.[10] Corporate liability extends to officers responsible for conduct of business of the company, even in cases of negligence.[11]
iii. Blocking of access
In case of occurrence of any of the above offences in (a) and (b) above, the central government can block access to any ‘computer resource’[12] which is offering such Money Game or facilitating flow of funds related to a Money Game. The Act relies on the substantive provisions of the IT Act for blocking of access. These powers are: (a) notwithstanding the limited grounds for blocking under Section 69A of IT Act; and (b) to be exercised in the manner as set out in the IT Act.[13]
3. Establishing an authority for regulation of online gaming
The Act stipulates the creation of an authority to regulate online gaming, register and recognise legitimate e-sports and social/educational games, handle grievances, and monitor compliance with the Act (‘Gaming Authority’).[14]
Potential issues in enforcement
- Multi-regulator coordination
The reach of the Act is not in isolation, but through integration with India’s financial and technological regulatory ecosystem. The Act empowers the central government to designate any existing authority or agency to assist it in performing any of the functions under the Act.[15] Hence, the practical enforcement of the Act will be a team involving several regulators and agencies spread across various industries:
i. Ministry of Electronics and Information Technology for issuance of prohibitive directions or orders and intermediary due diligence.
ii. The Gaming Authority (once constituted) for registration requirements, continuous sectoral supervision, and grievance redressal under the Act.
iii. Local state police for on ground enforcement in the form of search, seizure and arrest.
iv. Reserve Bank of India (‘RBI’) ecosystem for payment interdictions.
v. Directorate of Enforcement (ED) in case of anti-money laundering concerns under PMLA.
vi. Advertising Standards Council of India (ASCI) for regulation of advertisements.
vii. Central Consumer Protection Authority (CCPA) for protection of end-users.
Each regulator has different diligence/review standards, notice requirements, timelines, and appeal paths. This can produce a ‘gap risk’ in case of anything less than perfect coordination between such regulators/agencies. Enforcement is only possible when synchronised playbooks and information is shared across all regulators. Until highly specific rules are prescribed which ease the coordination and data sharing protocols amongst various regulators, there is expected to be long coordination lags.
2. Blocking of Content: Technological challenges
The Act’s blocking framework relies heavily on the existing architecture of the IT Act (particularly Section 69A), the Information Technology (Procedure and Safeguards for Blocking for Access of Information by Public) Rules, 2009 (‘Blocking Rules’), as well as the Intermediary Guidelines & Digital Media Ethics Code Rules, 2021 (as amended in 2023). Together, these legislations provide the central government with the legal infrastructure to order blocking of access to unlawful content. The Act stipulates that blocking must be carried out ‘in such manner’ as under the IT Act, which means that the substantive authority still flows from Section 69A.
Section 69A of the IT Act permits blocking of public access to information on limited grounds: sovereignty and integrity of India, security of the state, public order, defence, friendly relations with foreign states, or preventing incitement to cognizable offences. The Supreme Court in Shreya Singhal v. Union of India[16] upheld Section 69A because of these narrow grounds and procedural safeguards.
Blocking orders create visible enforcement activity in the form of domains taken down and apps removed from stores, however their actual impact depends on whether users migrate to riskier substitutes. End users may simply shift to offshore operators with weaker safeguards or even informal cash games, where propensity for harm is greater and legal recourse is non-existent. Without reliance on tech specific preventative measures which cannot be easily circumvented, blocking becomes a mere cosmetic measure. Blocking may not be effective due to existence of several circumvention pathways:
i. Leakage through app stores and ‘sideloading’: Even if the government blocks access to certain apps available on the Apple App Store or Google Play Store, it does not prevent people from getting it in other ways. Developers can still:
- Distribute apps directly using ‘enterprise certificates’ (meant for companies to share apps internally);
- Upload them to third-party app stores; and
- Let users ‘sideload’ APK/IPA files, which essentially allows users to install them manually from a website instead of the Apple App store or Google Play store.
For example, even after the central government ordered app stores to take down the Chinese app ‘TikTok’, dozens of cloned apps and reskinned APKs with new names appeared almost immediately.
ii. Dynamic re-emergence: New versions of apps and websites keep popping up faster than regulators can react. Companies offering Money Games frequently cycle through new domains, sub-paths, file versions (APKs), and technical markers faster than the mechanism of blocking can work. For example, banned websites for pirated streaming of movies automatically re-direct to the current functional domain and such websites easily switch to new domains as soon as one is blocked by the government.
iii. Internet privacy tools create opacity: Newer standards like DNS over HTTPS (DoH) or DNS over TLS and SNI encryption hide what websites users are trying to reach. Since the Internet Service Providers (ISP) cannot easily see or filter traffic, they fall back on blunt tools such as blocking of IP addresses, which often blocks unrelated sites too, especially when multiple websites share the same server.
iv. Easy access: VPNs, mirror sites, and Telegram/WhatsApp links which are encrypted provide even non-technical users with easy access to blocked content with just a few clicks, thus eroding deterrence.
The Act’s blocking provisions will face the same weaknesses that have long plagued India’s digital enforcement regime. Further, it remains unclear whether the Gaming Authority created under the Act, or the central government, will ultimately issue blocking orders, creating potential overlap and confusion unless clarified through Rules. Without dynamic blocking mechanisms, inter-agency clarity, and tech-focused policy to prevent circumvention along with regular monitoring, blocking becomes more symbolic than substantive.
3. Jurisdictional challenge: Cross border application
The Act extends to all persons and entities who offer, advertise, or enable Money Games to end-users located in India, irrespective of whether the operator is incorporated or hosted abroad, covering any platform accessible in India. In principle, this extraterritorial reach ensures that global platforms do not avoid compliance merely by operating offshore. In practice, however, cross-border enforcement is fraught with challenges:
i. Indian regulators cannot easily compel compliance by offshore operators who have no physical presence, assets, or employees in India. Blocking will become the default enforcement tools, but such mechanism is porous and prone to circumvention (see Paragraph 2 above).
ii. Several countries, such as the UK and Malta, actively license and regulate online gambling. Indian prohibitions may clash with permissive foreign regimes, raising diplomatic and private international law issues if India attempts to penalise licensed foreign operators.
iii. India currently lacks robust mutual legal assistance treaties (‘MLAT’) (in particular, lack of membership to the Budapest Convention on Cybercrime) or information-sharing protocols with several key online gaming jurisdictions. This limits the ability to obtain evidence, prosecute offenders, carry out arrests or seizures or repatriate illicit proceeds.
iv. Several Money Game operators function through layered corporate structure and may have various arms of a company located/incorporated in different jurisdictions. For example, a company offering a Money Game may have a Delaware holding company, a Dubai marketing hub, and a Singapore payments integrator. Extracting corporate entity data, server logs, and financial records of such structured companies requires MLATs (which India doesn’t have) or voluntary data-sharing (which is slow and does not compel enforcement).
4. Financial fraud and money laundering
Online gambling poses significant risks of money laundering and illicit fund flows. Small-value gaming transactions, particularly across borders, could be used to channel funds in a manner difficult for traditional anti-money laundering systems to detect.
The 59th Report of the Parliamentary Standing Committee on Finance (‘Report’) noted that online gaming websites can pose national security risks, such as using opaque payment routes, misusing the Liberalised Remittance Scheme (LRS), and financing criminal activities.[17]
Accordingly, banks, financial institutions, payment gateways, Unified Payment Interface (‘UPI’) apps, Third-Party Application Providers (TPAP), Prepaid Payment Instrument (PPI) issuers are expected to enforce compliance. Regulators may issue directions requiring merchant category blocks, Bank Identification Numbers (BIN) blocking, Virtual Private Addresses (VPA) blacklists, and escrow freezes.
The Act’s blanket prohibition on Money Games will in large part address this risk by closing the gap, however there are some potential challenges:
i. The Report noted that many websites lured users with promises of unrealistic returns, funnelling deposits through complex networks involving non-cooperative jurisdictions such as Curacao, Malta, and Cyprus. Funds were then linked back to Indian UPI ids, but diverted abroad or invested into cryptocurrency, making such fund flow infinitely more difficult to trace.
ii. Mule accounts, crypto off-ramps, offshore wallets, and nested payment service providers, remain entrenched in the ecosystem. Peer-to-peer settlement methods such as QR codes sent via private encrypted WhatsApp/Telegram chats make interdiction difficult. Without RBI backed shared fraud intelligence, payment blocking will remain porous.
iii. Merchant categorisation depends heavily on accurate disclosures. The Report highlighted that bank accounts linked to gaming websites were often misclassified such as being listed as grocery or retail businesses, thereby masking the real purpose. This makes detection harder until after fraud is discovered.
Therefore, payment blocking slows the funnel of fund flow but may not stop the tap completely, unless accompanied by strong transaction monitoring and inter-agency coordination.
5. Advertising: opaque provenance
The Act prohibits promotion/advertisement[18] of Money Games. However, modern advertising ecosystems are decentralised and difficult to police. Content promoting online gaming often spreads via influencers, affiliate networks, and programmatic ad exchanges where provenance is murky. Key enforcement challenges may be:
i. Even if platforms downrank or ban advertisements of Money Games, individual influencers and other advertising agents can push such content in several methods such as affiliate coupon codes, indirect promotions, short lived ‘stories’, etc.
ii. The Act’s ban on advertisements of Money Games automatically creates a proactive obligation on advertising and marketing companies, as well as platforms running ad programs, to ensure such ads are not carried. These entities must exercise due diligence before creating or carrying gaming-related content.
Accordingly, it is important that the central government prescribes clear rules under the Act, ensuring that responsibilities are well-defined and enforcement is effective. Detailed rules will help plug existing gaps and support the Act’s objectives.
6. Constitutional challenges that complicate day-to-day enforcement
The Act is already facing several constitutional and procedural challenges in the courts on several fronts. Adverse or interim judicial orders could pause parts of the law or cause interpretative fragmentation in specific states/cases, and thus complicate uniformity of application.
i. Constitutional challenge:
The constitutional validity of the Act has already been challenged in the Delhi, Karnataka, and Madhya Pradesh High Court, on grounds of legislative incompetence and violation of fundamental rights. Recently, the Supreme Court has transferred all ongoing petitions challenging the Act to its jurisdiction for resolution.[19]
ii. Due-process challenge
A separate line of attack concerns the procedural safeguards under the Blocking Rules, particularly the confidentiality provision contained in Rule 16. The provision imposes strict confidentiality around blocking orders, effectively precluding notice, hearing, or disclosure of reasons to affected users. The Software Freedom Law Centre (SFLC) has filed a PIL before the Supreme Court seeking to strike down Rule 16.
In addition, individuals such as journalist Tanul Thakur (creator of the satirical ‘dowry calculator’ website) and Sanjay Sharma (editor of 4PM News Network) have separately approached the courts, contending that their content was blocked without any prior notice, opportunity to respond, or access to the blocking orders themselves.
Any adverse ruling on Rule 16 (or, more broadly on the blocking procedure under Section 69A of the IT Act) would have sweeping implications. It could invalidate existing takedown mechanisms and necessitate a re-look at the takedown pipeline prescribed in the Act.
7. Transitional chaos: Contractual overhang
While the Act has been published in the official gazette, it has not been notified as effective yet. The central government is expected to operationalise it soon. The Act does not specify a transitory phase or a timeline for ceasing ongoing operations of banned Money Games. This creates uncertainty regarding the treatment of existing user balances and deposits and raises both, consumer-protection and contractual fairness concerns. A defined grace period for winding down – whether to refund existing users, settlement of current wallet balances, or pivot to permissible business models, would help avoid sudden disruption.
With the Act’s blanket prohibition on promotion and advertising of Money Games, big-ticket sponsorships such as Dream11, OTT platform integrations, and celebrity endorsements are in flux. While most commercial agreements include frustration/material adverse change/force majeure clauses that allow termination if an activity becomes unlawful, parties still require time to unwind contracts, replace branding, and settle accounts. If enforcement is immediate and absolute, it risks triggering disproportionate financial losses, contractual disputes, and unavoidable litigation.
Conclusion
The Act represents India’s most ambitious attempt to create a unified national framework for the fast-growing online gaming sector. By drawing a hard line against all ‘online money games’, the Act seeks to curb financial fraud, social impact, and national security risks. Yet, its effectiveness will depend less on the prohibitions written in law and more on the state’s ability to enforce them domestically and across borders.
Technological circumvention, jurisdictional conflicts and overlapping regulatory mandates risk turning enforcement into a largely symbolic exercise unless addressed through clear rules, coordinated oversight, and dynamic technical safeguards. At the same time, proportional transition mechanisms are necessary to protect consumers, advertisers, and legitimate e-sports operators from unintended fallout.
Ultimately, the Act sits at the intersection of technology, finance, and criminal law. Its success will depend on whether India can move from a blocking-and-banning paradigm to a holistic regulatory model that combines strong enforcement with due process, inter-agency cooperation, and international coordination. The Supreme Court’s pending rulings may bring interpretative clarity, but operational effectiveness will require constant adaptation to a fast-moving digital ecosystem.
Written By Nidhi Arora (Partner) and Shagun Taparia (Associate)
[1] ‘Gaming bodies urge Amit Shah to intervene against proposed ban on real money games’, The Hindu, available at: https://www.thehindu.com/news/national/online-gaming-bill-introduced-in-lok-sabha-real-money-games-prohibition/article69955148.ece
[2] ‘Promotion and Regulation of Online Gaming Bill, 2025 Protecting middle class and youth; promoting e-sports, online social Games’, Press release, available at https://static.pib.gov.in/WriteReadData/specificdocs/documents/2025/aug/doc2025821618101.pdf
[3] Section 2(g), Promotion and Regulation of Online Gaming Act, 2025
[4] These may refer to anything recognized as equivalent or convertible to money and includes credits, coins, tokens, etc.
[5] Section 5-7, Promotion and Regulation of Online Gaming Act, 2025
[6] Section 2(c), Promotion and Regulation of Online Gaming Act, 2025
[7] Section 2(i), Promotion and Regulation of Online Gaming Act, 2025
[8] Section 9, Promotion and Regulation of Online Gaming Act, 2025
[9] Section 10, Promotion and Regulation of Online Gaming Act, 2025
[10] Section 16, Promotion and Regulation of Online Gaming Act, 2025
[11] Section 11, Promotion and Regulation of Online Gaming Act, 2025
[12] ‘Computer resource’ means computer, computer system, computer network, data, computer data base or software.
[13] Section 14, Promotion and Regulation of Online Gaming Act, 2025
[14] Section 8, Promotion and Regulation of Online Gaming Act, 2025
[15] Id.
[16] Shreya Singhal v. Union of India, AIR 2015 SC(CRI) 834.
[17] ‘Cyber Security and Rising Incidence of Cyber/White Collar Crimes’, Fifty-Ninth Report, Ministry Of Electronics And Information Technology, Seventeenth Lok Sabha (2022-2023), available at: https://sansad.in/getFile/lsscommittee/Finance/17_Finance_59.pdf?source=loksabhadocs.
[18] ‘Advertisement’ means any audio or visual publicity, representation, endorsement or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet or website and includes any notice, circular, label, wrapper, invoice or such other documents.
[19] ‘SC to hear Centre’s plea seeking transfer of online gaming law challenges’, The Mint, available at: https://www.livemint.com/industry/supreme-court-online-gaming-ban-online-money-gaming-law-india-supreme-court-online-gaming-ban-11757321387853.html
