Ban on Real Money Games: Understanding India's Online Gaming Bill 2025

21 Aug 2025

Table of Contents

The Lok Sabha has passed the Promotion and Regulation of Online Gaming Bill, 2025, imposing a complete ban on real money games across the country.

India’s online gaming sector has seen explosive growth over the past decade, driven by high mobile penetration and affordable data. With 568 million users, India is officially the largest gaming market and accounts for one in five online gamers globally.

At the center of this expansion lies the real-money gaming (RMG) segment. Encompassing popular games such as fantasy sports, rummy, and poker, RMG alone accounted for an astonishing 85.7% of total industry revenue in 2024.

However, the Indian Parliament has now taken a decisive step to reshape this Online Gaming landscape. The Lok Sabha passed the Promotion and Regulation of Online Gaming Bill, 2025, which bans real money games, signaling a clear policy shift. Legislative Framework: What the Online Gambling Bill 2025 Entails

The key objective of this bill is to establish a robust legal framework and regulate, promote and encourage the online gaming sector for innovation and economic growth and ensure a developed, safe and responsible digital environment for all citizens.

Key Provisions of the Bill

The online gambling bill 2025 introduces a prohibition on all real-money gaming platforms, altering how India regulates its digital gaming sector. Unlike previous regulatory attempts that distinguished between skill-based and chance-based games, this legislation makes a clear categorization of Online games as follows

e-Sport: Played as part of multi-sports events, involving organised competitive events between individuals or teams, with outcomes determined solely by factors such as physical dexterity, mental agility.
Online Social Game: Does not involve stakes or participation with the expectation of winning by way of monetary gain and is offered solely for entertainment, recreation or skill-development purposes.
Online Money Game: Irrespective of whether such game is based on skill, chance, or both, it is played by a user by paying fees, depositing money, etc., in expectation of winning which entails monetary and other enrichment in return of money or other stakes; but shall not include any e-sports. This encompasses platforms like Dream11, MPL, and rummy and poker applications.

The bill aims to promote and regulate the online gaming sector including e-sports, educational games and social gaming. It also provides for the appointment of an Authority for coordinated policy support, strategic development and regulatory oversight of the sector. However, it prohibits operation and promotion of all online money games.

Platform operators face up to three years imprisonment and fines reaching ₹1 crore. Celebrity endorsers and influencers promoting such platforms risk two years imprisonment and penalties up to ₹50 lakh. Financial institutions facilitating transactions for these platforms face similar consequences.

The Bill grants authorities powers to conduct searches and seizures without warrants, extending to both physical and digital spaces. This provision has raised concerns about digital privacy and civil liberties.

Government's Rationale: National Security and Public Welfare

The government's justification for the ban on real money games centers on two concerns: national security and public health. Officials cite evidence linking these platforms to money laundering, terror financing, and tax evasion. The IT Ministry has highlighted cases where gaming platforms served as communication channels for terrorist organizations and facilitated fund transfers.

From a public health perspective, the government points to statistics. Tamil Nadu reported 47 suicides linked to online gaming addiction between 2019 and 2024. These platforms use "manipulative design features" and "addictive algorithms" that drive compulsive behavior. This behaviour can lead to impulsive spending which can create financial hurdles for families.

Union Minister Vaishnaw emphasized that certain platforms have been "linked to illegal activities, including money laundering, financial fraud, the financing of terrorism," thereby affecting "the security and sovereignty of the state."

Economic Implications: High-Stakes for the Online Gaming Sector

The online gaming taxes generated by India represent a revenue stream that the government is willing to sacrifice. The real-money gaming sector contributes ₹20,000 crore annually in direct and indirect taxes. The industry has attracted foreign direct investment exceeding ₹25,000 crore and supports over 200,000 jobs across 400+ companies.

The prohibition threatens to create economic disruption. Industry projections suggest the ban on real money games could result in:

Revenue loss of ₹15,000-20,000 crore to the government
Shutdown of over 400 startups
Loss of more than 200,000 jobs
Reduction of foreign investments

However, the government views this as a sacrifice. A government official stated that the administration has "made a calculated decision to take a revenue hit in terms of GST collection from the sector, and the regulation is needed in larger public interest."

The gaming industry has reacted with alarm to the Online Gaming Bill 2025. Three industry associations—the E-Gaming Federation, All India Gaming Federation, and Federation of Indian Fantasy Sports have appealed to the Home Minister of India. They warned that the prohibition would "strike a death knell for this legitimate, job-creating industry."

The federations stated that the ban on real money games will not eliminate the problems but will push millions of users toward offshore platforms. These operators often lack consumer protections, age verification systems, and anti-money laundering measures, creating national security risks.

Constitutional and Legal Challenges Ahead

The legislation faces legal hurdles. The judicial distinction between games of skill and games of chance, upheld by Indian courts, contradicts the Bill's approach. Games like rummy and fantasy sports have been protected under this distinction.

Constitutional challenges may arise under Article 19(1)(g), which guarantees the right to practice any profession or carry on any trade or business. Legal experts question whether a prohibition on skill-based businesses constitutes a restriction.

Global Perspectives: Learning from International Models

China's model of banning online gaming has demonstrated the limitations of prohibition-based policies. Despite restrictions including facial recognition and time limits, a black market for gaming accounts has emerged, exposing users to new forms of exploitation. On the other hand, the US employs a state-by-state approach, often centered on the skill versus chance distinction. This regulatory approach of the US provides for an alternative approach towards regulating the online gaming sector.

Conclusion

The ban on real money games represents more than regulatory policy—it reflects India's approach to governing its digital economy. While protecting citizens from harm is important, the prohibition of an industry may create more problems than it solves.

As the legislation moves through the parliamentary process and faces legal challenges, stakeholders must engage in dialogue to find a solution. A regulatory framework that addresses concerns about addiction and fraud while preserving innovation and economic growth may serve India's interests better than prohibition.

The success or failure of this policy will influence how India regulates other digital sectors. For a nation aspiring to become a technology leader, the approach toward gaming industry penalties in India and digital governance will be watched by investors, innovators, and policymakers worldwide.