Ban on real money games, penalties for endorsements, warrantless searches: What India’s gaming Bill says

Though the IT Ministry has drafted the legislation, it is understood that the Home Ministry has played a crucial role in offering its inputs to the proposed law. A senior government official also said that the government 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 Bill, in its current version, is a sharp departure from just about two years ago, when in April 2023, the IT Ministry had introduced rules for online gaming, which were largely seen as pro-industry. However, those rules proved difficult to implement due to potential conflict of issues, as the rules envisioned creating a self regulatory structure, which could have been influenced by the industry. As such, they remained stuck in limbo, even as national security and socio-economic concerns due to such platforms gained traction.

What’s at stake: hard numbers

If the Bill is implemented in its current form, it will be a death blow to the online real money gaming industry, which is projected to be a $9 billion market by 2029. The industry also faces a 28 per cent Goods and Services Tax (GST), with proposals to increase the rate to as high as 40 per cent. The online gaming industry is a sunrise sector in the country, with a collective enterprise valuation of over Rs 2 lakh crore.

Official data shows GST revenues jumped sharply after the Council’s decision in July 2023 to impose a uniform 28 per cent levy on online gaming, horse racing and casinos with effect from October 1, 2023. Union Finance Minister Nirmala Sitharaman had said last September that revenue from online gaming “increased by 412 per cent and reached Rs 6,909 crore in just six months… from Rs 1,349 crore before the notification issued on online gaming”. The government has calculated that banning online money games will result in a revenue loss of about Rs 15,000 crore to Rs 20,000 crore.

As per the industry, it pays over Rs 20,000 crore annually in direct and indirect taxes. The sector has attracted foreign direct investment of over 25,000 crore till June 2022, and currently supports over 2 lakh direct and indirect jobs.

According to a report by FICCI and EY from March 2025, online gaming companies in India collectively earned a revenue of close to $2.7 billion in 2024. These companies typically make money by taking a cut from a user’s winnings. As per the report, more than 155 million Indians engaged with real money gaming sub-segments such as fantasy sports, rummy, poker and other transaction-based games in 2024, marking a 10 per cent increase over 2023. On an average, around 110 million people played these games daily.

In a letter to the Home Ministry late Tuesday night, three major gaming industry associations – the E-Gaming Federation (EGF), All India Gaming Federation (AIGF) and Federation of Indian Fantasy Sports (FIFS) – said that the blanket prohibition will “strike a death knell for this legitimate, job creating industry, and would cause serious harm to Indian users and citizens”.

Congress MP Karti Chidambaram said that the law has been introduced without industry consultation, and risks driving financial transactions offshore and pushing users toward the dark web. He has called for the Bill to be referred to a select committee.

Highlights of the Bill

As per the current version of the draft law, the government will prohibit any person from offering online games in India, failing which they could be imprisoned for up to three years, and penalised Rs 1 crore. Those promoting such platforms, such as social media influencers, will also face jail time of two years, and a penalty of Rs 50 lakh. The government will also prohibit banks and financial institutions from facilitating financial transactions on such platforms.

The Bill applies to all online money gaming platforms irrespective of whether they are games of skill or chance, a distinction the industry had lobbied hard for in the past.

An “online money game” has been defined as a service played by a user by paying fees, depositing money or other stakes 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 is an expansive definition, and is likely to cover all major gaming platforms like Dream11, Winzo, MPL etc.

The government, though, is viewing competitive e-sports and game development as crucial drivers of the online gaming industry in the country, and via the proposed law, is keen to promote them. As such, it wants to recognise e-sports as a legitimate form of competitive sport in the country. The government will also help in the creation of platforms or programmes to support game development and distribution.

The Bill has envisioned the creation of a central authority to promote competitive e-sports, while ensuring overall compliance with the law. The Centre will recognise, categorise and register “online social games” with the authority and facilitate the development and availability of such games for recreational and educational purposes. These may have an option to accept payment in the form of a subscription fee or access fee, as long as it is not in the form of a stake or wager.

Similar to the approach the government has taken in its recent Income Tax Bill on digital search and seizures, the online gaming Bill too allows for authorised officials to carry out search operations at physical and virtual places, even without a warrant.

“…any (authorised) officer…may enter any place, whether physical or digital, and search and arrest without warrant any person found therein who is reasonably suspected of having committed or of committing or of being about to commit any offence under this Act,” the Bill said.

“Any place” includes any premises, building, vehicle, computer resource, virtual digital space, electronic records or electronic storage devices and the authorised officer can gain access to such computer resources by overriding any access control or security code.

Key reasons for Central control: national security, socio-economic harm

The Bill said that the unchecked expansion of online money gaming services has been linked to “unlawful activities including financial fraud, money-laundering, tax evasion, and in some cases, the financing of terrorism, thereby posing threats to national security, public order and the integrity of the State”.

The need for such a law arises from the “deleterious and negative impact of online money games on the individuals, families, society and the nation and given the technical aspects including the very nature of the electronic medium used for online money games, the algorithms applied and the national and transnational networks,” it added.

The parallel proliferation of online money games accessible through mobile phones, computers and the internet, and offering monetary returns against user deposits has led to “serious social, financial, psychological and public health harms, particularly among young individuals and economically disadvantaged groups,” it said, adding that such games often use “manipulative design features, addictive algorithms, bots and undisclosed agents, undermining fairness, transparency and user protection, while promoting compulsive behaviour leading to financial ruin”.