Rules Of Play - Rewritten
- Tanisha
- Aug 23
- 13 min read
Updated: Aug 29
On August 22, the Promotion and Regulation of Online Gaming Act, 2025 (“Act”) was officially introduced following its passage in Parliament and Presidential assent. The Act is yet to come into force and will take effect once it is notified as such.
The Act was introduced without any public or industry consultation. It was introduced by the Ministry of Electronics and Information Technology (“MeitY”), the Central Ministry which has been in charge of “matters relating to online gaming” under the Government of India (Allocation of Business) Rules, 1961.
Following its introduction, several real money gaming operators ceased offering their real money games in India, whilst allowing users to withdraw deposits. The Act dismantles a multi-billion dollar real money gaming industry in India, popularized by games like Rummy, Poker and daily fantasy sports.
Background:
The Act seeks to (1) prohibit all online real money games, irrespective of whether it is of skill or chance, and (2) recognize and regulate e-sports and social games. The Act is a significant departure from the amendments introduced in 2023 to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”) by MeitY, which sought to introduce a co-regulatory mechanism between the MeitY and designated self-regulatory gaming bodies (“SRB”), to regulate, amongst others, permissible online real money games. The Act now seeks to prohibit all real money games.
The preamble to the Act cites the following as rationales for prohibiting real money games:
public health harms, particularly among the youth and economically disadvantaged groups due to:
the use of manipulative design features,
addictive algorithms,
bots and undisclosed agents, resulting in financial and other ruin.
Linkage of online money gaming with financial fraud, money-laundering, tax evasion, and terror financing as grounds to prohibit it.
Aggressive marketing of online real money gaming platforms, including through celebrity and influencer endorsements, amplifying reach and impact of such platforms.
While each Indian State has its own anti-gambling laws, such laws extend to the territory of the State. The Act states that since offshore gambling services operate from offshore jurisdictions, such services:
undermine State-level regulations;
present enforcement challenges in terms of extra-territorial jurisdiction; and
suffer from inter-State inconsistencies.
Accordingly, it was felt necessary in the public interest for the Union Government to assume legislative competence over the online gaming sector and introduce the Act.
The press release accompanying the Act also relied upon the World Health Organization’s classification of ‘gaming disorder’ as a health condition in its International Classification of Diseases, as justification for why the Act was necessary in India[1].
In relation to e-sports and online social games, the Act seeks to provide an enabling legal framework to further the sectors’ development and growth. However, there are significant ambiguities in relation to which games qualify as online social games, and / or e-sports.
Key Provisions:
Some of the key provisions under the Actare as follows:
Applicability: The Act applies to ‘online games,’ and does not cover physical / brick and mortar gaming activity. It applies to (1) online gaming services offered from within India, as well as (2) from outside the territory of India[2] and offered in India.
Prohibitions on offering, etc. online money gaming service: The Act prohibits any person from offering any ‘online money game’ and ‘online money gaming service’[3].
An online money game is defined to mean online game, irrespective of whether it is based on skill or chance or both, played by a user by paying fees, depositing money or other stakes in the expectation of winning which entails monetary and other enrichment in return of money or other stakes, but not including e-sports[4].
An online money gaming service is defined to mean a service offered by a person for entering or playing online money games[5].
“Other stakes” have been defined broadly under the Bill to include anything recognized or equivalent or convertible to money, including credits, coins, tokens or objects or any other similar thing, whether real or virtual, that is purchased by playing money directly or indirectly as part of, or in relation to an online game.
Contravention of this prohibition on offering online money games / online money gaming services, is punishable with imprisonment for a term which may extend to three years, or with a fine which may extend to INR 1 crore, or both[6]. There are enhanced penalties for second or subsequent offences, being imprisonment which may extend to 3-5 years, or fines which may range from 1-2 crores[7].
Real money gaming operators revisiting their formats and monetization strategies must evaluate whether any new model contravenes these prohibitions. In particular, operators offering purchasable non-monetary in-game items—such as credits, coins, or tokens—should ensure that these elements do not qualify as ‘other stakes’ within the meaning of the Act.
The above prohibition prohibits any online real money games, including games of skill. The question of (1) whether games of skill involving stakes can be banned or not and (2) whether the Centre or the State has legislative competence in relation to skill gaming is pending before the Supreme Court of India[8].
It has been consistently recognized by the Indian Supreme Court and High Courts (“HC”) that offering and playing games of skill for stakes are protected under Constitutional guarantees[9]. Hence, one of the likely grounds of challenge to this Act is that it seeks to entirely prohibit real money games of skill, and such complete prohibition is a disproportionate restriction. It may be argued that there are less restrictive means to addressing the harms outlined in the preamble to the Act.
Interestingly, there does not appear to be any prohibition on participating in an online money gaming service.
Additionally, the Act applies to online gaming services, whilst the exemption for games of skill should still apply for physical / brick and mortar gaming activity under the State-wise laws continues. Accordingly, games of skill for stakes remain permitted offline, but are prohibited online under the Act. This may be argued to be discriminatory treatment, and therefore unconstitutional.
The concerns outlined in the Act’s preamble also don’t apply uniformly to all operators or platforms engaged in real money games of skill. For instance, the concerns that it affects youth do not apply to most real money platforms, since they only accept players above the age of 18. Most platforms also have obtained ‘No-Bot’ certificates from certifying agencies.
Prohibition on aiding, abetting or inducing: The Act prohibits any person from aiding, abetting, inducing or otherwise indulging or engaging in the offering of online money game and online money gaming service.[10]
The penalty is the same as for offering the online money games / online money gaming services, i.e. imprisonment for a term which may extend to three years, or with a fine which may extend to INR 1 crore, or both, in the first instance, with enhanced penalties for secondary / subsequent offences, as stated above.
The prohibition on abetment is a novel feature, absent in most State anti-gambling statutes, and appears to have been introduced in acknowledgment of the broader ecosystem of service providers within which real money gaming operate.
The language of the above prohibition is wide, and contemplated criminal penalties. It will need to be evaluated whether service providers to online money games, such as app stores, endorsers, etc., and investors in online gaming services fall afoul of this prohibition.
Prohibition of advertisements; The Act prohibits[11] any person from making, causing to be made, aiding, abetting, inducing, or otherwise being involved in the making or causing to be made any advertisement in any media, including electronic modes of communication, which directly or indirectly promotes/ induces any person to play any online game, or indulging in any activity promoting online money gaming.
This offence is punishable with imprisonment for a term which may extend to two ears, or with a fine which may extend to INR 50 lakhs, or both[12], in the first instance. For secondary or subsequent offences, the penalty may be imprisonment for a term of 2-3 years, and fines which may range from 50 lakhs – 1 crore[13].
The wording of this prohibition is extremely wide, covering entities which are ‘otherwise being involved in the making or causing to be made any advertisement,’ and who are engaged in ‘any activity promoting online money gaming.’ This may potentially include intermediary platforms simply hosting advertisements of real money games as well, depending upon their role in relation to the advertisement.
Prohibition on transfer of funds: The Act prohibits banks, financial institutions or any other person facilitating financial transactions or authorisation of funds from engaging in, permitting, aiding, abetting, inducing or otherwise facilitating any transaction / authorisation of funds towards payment for any online money gaming service[14].
This offence is punishable with imprisonment for a term which may extend to three years, or with a fine which may extend to INR 1 crore, or both. The Act prescribes enhanced penalties for second / subsequent offences in terms of imprisonment which may extend to 3-5 years, or fines which may extend to 1-2 crores[15].
Payment providers, banks and other financial institutions involved in processing real money gaming transactions would likely fall afoul of this prohibition.
Blocking in case of offences: The Act prescribes that in case of failure to comply with the above prohibitions, any information generated, transmitted, received or hosted, in relation to online real money gaming may be blocked for access under the provisions of the Act.[16] This Act provides that this blocking prohibition exists notwithstanding the blocking provisions under Section 69-A of the Information Technology Act, 2000 (“IT Act”). Accordingly, this is an independent provision enabling blocking of such content. Any platform hosting such content may receive blocking orders under these provisions under the Act.
This appears to be an independent blocking provision from Section 69 A of the IT Act. Section 69A of the IT Act and the Information Technology (Procedure and Safeguards for Blocking for Access of Information by the Public) Rules, 2009, (“Blocking Rules”) prescribe certain procedural safeguards before blocking of information is carried out, in terms of providing an opportunity of being heard, etc. These procedural safeguards are noticeably absent from the Act. Accordingly, the Act enables broad blocking without enabling affected parties the opportunity to contest such blocking orders. This may amount to a violation of principles of natural justice.
Establishment of Online Gaming Authority: The Act enables the Central Government to (via notification) constitute an authority consisting of a chairperson / other members, or designation of an existing authority or agency, to assist with performance of any of its functions under the Act[17].
The Central Government will prescribe the composition, qualifications, manner of proceedings, procedure for handling complaints, etc., by the authority.
The Central Government may vest the authority / agency with the following powers:
Determine whether an online game is an online money game or otherwise after making an inquiry, on receipt of an application from any person offering such online games, or suo moto by itself;
Recognize, categorize and register online games in the prescribed manner.
Respond to complaints relating to online games which are prejudicial to the interests of users.
The authority is also empowered to introduce directions, orders, guidelines, or codes of practice issued by the Central Government or authority, which must be followed by all persons offering, organising or facilitating any online game.
Non-compliance with any direction or order by the Central Govt. or the authority may attract penalties which may extend to INR 10 lakhs, or suspension / cancellation of a license, and/or prohibition from offering, facilitating, etc., such game for a specified period. However, no action will be taken under this prohibition without providing the affected party an opportunity of being heard[18].
At present, there is no prohibition on offering unregistered e-sports, or unregistered online social games. However, prohibitions may be introduced subsequently by way of such directions, orders, guidelines introduced by the authority / agency under the Act.
Recognition and Promotion of E-Sports[19]:
The Act empowers the Central Government to tale steps as it may consider necessary to recognize and register e-sports with the Authority / agency as the case may be, as a legitimate competitive sport in India, and promote and develop e-sports through, amongst others:
Formulation of guidelines and standards for organisation and conduct of e-sports events;
Establishment of training academies, research centres, etc.
Coordination with State Governments and sporting federations to integrate e-sports within sporting policy initiatives.
Online games must meet specific criteria to qualify as ‘esports’ under the Act, such as (1) must be played as part of multi-sport events; (2) must involve organised competitive events between individuals or teams, conducted in multiplayer formats with predefined rules; , (3) must have due recognition from the National Sports Governance Act, 2025, and registration with the authority constituted under the Act(iii) has outcomes determined by factors such as physical dexterity, mental agility, strategic thinking, amongst others, and (iv) must not involve placing of bets, wagers or other stakes, including any winning out of such bets, wagers or other stakes.
However, it may involve payment of registration / participation fees for the purpose of entering the competition and may include performance – based prize money by the player.
The National Sports Governance Act, 2025 recently received presidential assent, and provides for sports to be ‘designated’ by the Central Government, and for federations to be established as governing bodies in relation to designated sports. This could pave the way for institutionalisation of e-sports.
It appears that dual recognition under the National Sports Governance Act, as well as registration under the Act, will be a prerequisite for an online game to qualify as ‘esports.’
It also appears that an online gaming must be registered with the authority constituted under the Act to qualify as an ‘e-sport.’ While there is no specific prohibition on offering unregistered online games (which are not in the nature of online real money games), the authority constituted may introduce a framework for registration of such online games as e-sports through certain directions, orders or codes of practice. Violation of such directions, orders or codes of practice may attract penalties, as stated above.
Recognition and Development of Online Social Games: The Act empowers the Central Government to take steps to (1) recognize, categorize and register online social games with an authority / agency constituted under the Act, and (2) facilitate the development and availability of online social games for recreational / educational purposes[20]. These steps may include:
Creating a mechanism for registration of online social games;
Creation of platforms/programmes to support development of social games;
Undertake awareness programmes to highlight positive use of social games.
Online games must meet specific criteria to qualify as ‘online social games’ under the Act, such as[21]:
Must not involve stakes or nor participation with the expectation of earning winnings in money or other stakes; however it may involve games with access through subscription fee or one time access fee (and not a stake)
Solely offered for entertainment, recreation or skill-development
Must not be an online money game, i.e., an online game played by a user by paying fees, depositing money, or other stakes* in expectation of winning money or other stakes*.
Not be an e-sport.
“Other stakes”, as mentioned above, has been defined broadly under the Act to include anything recognized or equivalent to money, including credits, coins, tokens or objects or any other similar thing, whether real or virtual, that is purchased by playing money directly or indirectly within, or as part of, or in relation to an online game.
Currently, most real money online games of skill are offered through participation in terms of stakes. Online providers of real money games of skill will need to re-evaluate their monetization models to fall within the above definition and qualify as online social games. Service providers to operators would also need to be comfortable that such games qualify as ‘online social games,’ so as to mitigate liability under the abetment-related prohibitions.
It is unclear whether games which are free/subscription based, and which have real-money prizes, may qualify as online social games. In contrast with the definition of ‘esports,’ which expressly contemplates online games which have ‘performance-based prize money,’ such wording is absent from the definition of online social games. The authority / agency may take the view that the ingredients of the definition are exhaustive, and since ‘prizes’ are not contemplated, games involving distribution of prizes do not qualify as online social games.
Further, the definition requires such games to only be offered for entertainment, recreation or skill-development. It is unclear whether games having real-money prizes will be viewed as purely for entertainment, recreation or skill-development.
The Act also contains enabling provisions for such games to be recognized and registered, however the mechanism for such registration have not been prescribed as yet. Unlike e-sports, which must be registered with the Authority/agency to fall within the Act’s definition of ‘e-sports,’ no such qualification appears to exist for online games.
There is also no express prohibition on offering unregistered online games which are not in the nature of online real money games. However, as stated above, the authority constituted may introduce a framework for registration of such online games as online social games through certain directions, orders or codes of practice. Violation of such directions, orders or codes of practice may attract penalties, as stated above.
Vicarious liability:
The Act provides for vicarious liability for every person who was in charge of and responsible to the company for the conduct of that part of the business of the company to which the offence relates, as well as the company itself, in case of offences under the Act. Directors, managers, secretary, etc., are liable if it can be demonstrated that the offence was committed with their consent / connivance or is attributable to their negligence.
Non-executive directors or independent directors not involved in the actual decision making are not liable.
Persons may be exempted if they can demonstrate that an offence was committed without their knowledge or they had exercised due diligence to prevent the commission of such offence.
Rules: The Act enables the Central Government to make rules to carry out its provisions. Rules are required to be laid before each House of Parliament for their approval
Sources:
[2] Section 1(2)
[3] Section 5
[4] Section 2(1)(g)
[5] Section 2(1)(h)
[6] Section 9(1)
[7] Section 9(4)
[8] State of Karnataka & Anr. v All India Gaming Federation & Ors., CIVIL APPEALS NO. 6132 – 6143 OF 2023, State of Tamil Nadu & Ors. V Junglee Games India Pvt. Ltd. & Ors., CIVIL APPEALS NO. 6124 – 6131 OF 2023, State of Tamil Nadu & Ors. V All India Gaming Federation & Ors., SPECIAL LEAVE PETITION NO. 1588 – 1592 OF 2024.
[9] It has been held that offering such games are protected under Article 19(1)(g) of the Indian Constitution i.e. freedom to practice any profession, or to carry on any occupation, trade or business, and playing games of skill is a facet of the right to freedom of speech and expression, as well as the right to life and personal liberty under Articles 19 (1) (a) and 21 of the Constitution, respectively.
[10] Section 5
[11] Section 6
[12] Section 9(2)
[13] Section 9(5)
[14] Section 7
[15] Section 9(4)
[16] Section 14
[17] Section 8(1)
[18] Section 12(2)
[19] Section 3(1)
[20] Section 4(1)
[21] Section 2(1)(g)
