Indian Parliament Passes Law Banning All Online Money Games

The Indian Parliament has enacted the Promotion and Regulation of Online Gaming Act, 2025 ("Act"), which received Presidential assent on 22 August 2025. This marks India's first sector-specific legislation for the online gaming industry.

The Act recognises that online gaming is one of the fastest-growing segments of the digital and creative economy, but also responds to growing concerns about addiction and financial exploitation, particularly among young people. Its stated objectives include protecting individuals—especially youth and vulnerable groups—from the social, economic, psychological, and privacy-related risks of harmful online games, safeguarding national security, and providing a coherent legal framework for the structured development of the sector. The Act will come into force on a date to be notified by the Government of India ("GoI").

Key Features of the Online Gaming Act

One of the central features of the Act is the establishment of the National Online Gaming Commission, which will serve as the primary regulatory authority. The Commission is tasked with licensing, oversight, and enforcement of online gaming activities across the country.

A defining aspect of the Act is its blanket prohibition on online money games. Such games are defined broadly to include any online game involving monetary stakes or equivalents—such as credits or tokens—played with the expectation of monetary or other rewards. The ban applies regardless of whether a game is based on skill, chance, or a combination of the two.

In addition, the Act bars banks and financial institutions from facilitating payments for online money games. It also prohibits the promotion or advertisement of such games across any form of media, and prescribes penalties for violations, including indirect participation such as aiding or abetting prohibited activities. Penalties are prescribed under the Act for prohibition.

At the same time, the Online Gaming Act mandates the GoI to actively promote e-sports and online social games that do not involve monetary stakes, thereby distinguishing recreational or competitive gaming from gambling-type activities.

The cost of non-compliance has never been higher. Breaches may invite imprisonment of up to five years and fines of up to INR 20 million (USD 226,700), with repeat violations attracting enhanced penalties. More critically, these offences are now classified as serious, cognisable, and non-bailable—meaning enforcement agencies are empowered to make arrests without a warrant.

This represents a fundamental policy shift, as Indian law has until now drawn a sharp distinction between games of skill and games of chance.

Previous Legal Framework

The central legislation on gambling prior to this Act was the Public Gambling Act, 1867. The Gambling Act prohibited games of chance but carved out an important exception for games of skill.¹ Over time, various States adopted this law—sometimes with modifications—and also enacted their own statutes to regulate gambling² and, more recently, online gaming³

The 2025 Act departs significantly from this framework. By eliminating the skill–chance distinction, it imposes a blanket ban on all online money games, whether skill-based or chance-based.

It is also worth recalling that only recently, in 2023, the Union Government had taken a lighter-touch approach through amendments to the Information Technology Act, 2000. By recognising self-regulatory organisations to govern online gaming platforms, the government appeared to favour industry-led accountability. The new Online Gaming Act departs sharply from this trajectory.

Judicial Interpretation: Skill Versus Chance

Indian courts have historically played a pivotal role in defining the boundary between games of skill and games of chance.

The Madras High Court, in ManoranjithamManamyilMandram v. State of Tamil Nadu, has observed that gaming by itself is playing any game, sport, past-time or exercise- lawful or unlawful, for money or any other valuable thing which is tacked on the result of the game. At times gaming can also involve taking of money worth on the result of a game of pure chance of mixed skill and chance. The question whether a particular game is a game of skill or chance is to be decided on the facts and circumstances of each case⁴.

The Court noted that gaming can involve either pure chance or a mixture of skill and chance.

The Supreme Court first addressed the issue in the First Chamarbaugwalla Case⁵ (State of Bombay v. R.M.D. Chamarbaugwalla). The apex court distinguished between games in which winning requires a high level of skill from gambling which depends primarily on lot or chance. It held that competitions substantially dependent on skill are not gambling.Gaming is the act or practice of gambling on a game of chance. It is staking on chance where chance is the controlling factor. In the Second Chamarbaugwalla Case⁶, involving the same gaming house, the Court further clarified that competitions based on skill and those based on chance belong to separate categories, comparable to commercial contracts and wagering contracts.

In State of Andhra Pradesh v. K. Satyanarayana ⁷, the Court examined the game of rummy-further evolving the distinction between skilled games and gambling and held that the skill required to memorise cards, plan discards, and form sequences outweighed the element of chance in card distribution. Conversely, games such as flash, heavily reliant on luck, were classified as gambling as they were predominantly games of chance.

The Court took a stricter view in M.J. Sivani v. State of Karnataka⁸, holding that there was no scope for using one's skill to arrive at a desired result in video games like Royal Casino, Blackjack, Poker Double Up, Pac-Man, and Golden Derby and were therefore games of chance.

In K.R. Lakshmanan v. State of Tamil Nadu⁹, the Court concluded that horse racing is a sport dependent substantially on skill. Winning depends primarily on the training of the horse and the expertise of the jockey, making it a skill-based activity.

Most recently, in Varun Gumber v. Union Territory of Chandigarh¹⁰(the "Dream11 Case"), the Punjab and Haryana High Court held that online fantasy sports involve considerable skill, judgment, and discretion, and therefore fall within the category of skill-based games.

Constitutional Dimension

The constitutional question has been whether gaming constitutes a protected business or profession under Article 19(1)(g) of the Constitution of India.

In the First Chamarbaugwalla Case, the Supreme Court held that gambling does not qualify as trade or commerce under Article 19(1)(g), nor is it protected under Article 301 as part of free trade.

Similarly, in the Sivani Case, the Court ruled that no one has an inherent right to conduct a business harmful to public interest. The right to trade under Article 19(1)(g) is subject to reasonable restrictions under Article 19(6), which empowers the State to impose prohibitions in the interest of public welfare. The Court also clarified that the right to livelihood under Article 21 does not extend to activities injurious to society.

On the other hand, in the Dream11 Case, the High Court observed that fantasy games do not fall within the definition of gambling. Since they involve substantial skill and operate as legitimate, tax-paying businesses, they are entitled to protection under Article 19(1)(g).

Another potential challenge arises from the constitutional allocation of powers. Gambling, entertainment, and trade fall within the State List, yet the Act asserts Central control.The clash between Union and State powers may well become a defining issue in future litigation.

Constitutional Validity of Business and Profession in Gaming

The courts have examined whether gaming enjoys the protection of a fundamental right under the Constitution of India. In the First Chamarbaugwalla Case, the Supreme Court, while considering the constitutional rights of a gaming house, held that gambling cannot be elevated to the status of trade or commerce. It therefore does not qualify as a fundamental right under Article 19(1)(g)¹¹, nor does it form part of the country's trade, commerce, or intercourse so as to fall within Article 301¹²

A similar position was reiterated in the Sivani Case. The Supreme Court was asked whether the regulation of video games violated the fundamental right to trade or business under Articles 19(1)(g) and 21¹³. The Court held that no individual has an inherent right to pursue a business injurious to public interest. It further clarified that the right to trade under Article 19(1)(g) is subject to Article 19(6)¹⁴, which allows the State to impose reasonable restrictions in the general public interest.

The Court also addressed the scope of Article 21. While the right to life includes the right to livelihood, it cannot be extended to cover businesses or trades detrimental to public welfare. The Court concluded that if a profession is found to be obnoxious or harmful to society, the State may either impose total prohibition or permit it only under conditions justified by public interest.

The position was tested again in the Dream11 Case. The High Court, relying on the above pronouncements, reiterated that gambling is not trade and is therefore not protected by Article 19(1)(g). However, it distinguished fantasy sports. Since these games involve substantial skill, constitute legitimate business activity, and are duly taxed, they fall within the protection of Article 19(1)(g).

Conclusion

Until now, Indian courts consistently upheld a distinction between games of skill and games of chance, granting constitutional legitimacy to the former. The Promotion and Regulation of Online Gaming Act, 2025 represents a decisive departure from this judicially recognised principle. By imposing a blanket ban on all online money games, the Act directly impacts major industry players, including Dream11, and challenges the very basis on which such businesses have previously been considered lawful.

The consequences of this prohibition are particularly stark when viewed against the backdrop of India's real money gaming ecosystem, which had grown into a multibillion-dollar industry. The sector's contribution to jobs, investment, and the digital economy underscores the disruptive impact of a blanket ban.

Critics argue that the Act could have achieved its objectives through calibrated regulation rather than prohibition. Measures such as independent audits, age-based restrictions, expenditure limits, and differentiated treatment of skill-based RMGs would have addressed concerns without dismantling the entire ecosystem.

Finally, the ripple effects of the Online Gaming Act are not confined to gaming operators. Advertisers, sponsors, and banks are equally affected, with prohibitions on marketing and severe restrictions on financial transactions. The stringent penalties further underscore the far-reaching consequences of this law.

It will be interesting to watch if and how the Courts in India will uphold the Constitutional validity of the Act, if challenged.

Footnotes

1 Section 12 of the Gambling Act excludesany game of mere skill from the applicability of the provisions therein.

2 For eg. the West Bengal Gambling and Prize Competitions Act, 1957 and the Andhra Pradesh Gaming Act,

3 For eg. the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, theNagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016, the Sikkim Online Gaming (Regulation) Act, 2008.

4 AIR 2005 Mad 261.

5 1957 SCR 874.

6 (1957) 1 SCR 930

7 (1968) 2 SCR 387

8 (1995) 6 SCC 289

9 (1996) 2 SCC 226

10 2017 CriLJ 3827

11 The Constitution, under Article 19(1)(g) provides that all citizens shall have the right to practise any profession, or to carry on any occupation, trade or business.

12 Article 301 of the Constitution provides that subject to other provisions, trade, commerce and intercourse throughout the territory of India shall be free.

13 The Constitution under Article 21 provides that no person shall be deprived of his life or personal liberty except according to procedure established by law.

14 Article 19(6) of the Constitution allows State to make any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by Article 19(1)(g).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.