India plans to ban online games involving real money

The Indian government has proposed a new bill that aims to ban online games where users pay money to win a monetary prize. The new legislation, the Promotion and Regulation of Online Gaming Bill, 2025, approved by the Union Cabinet for presentation in parliament, aims to criminalise online betting and is rooted in concerns about addiction, debt, mental health, and financial fraud.

The government cites concerns about online gaming addiction, financial fraud, and a growing number of cases where players fall into debt. An official note on the bill states that the unchecked rise of these games has led to "debt traps, suicides and mental health issues." Authorities also point to national security risks, including the use of these platforms for money laundering and illicit fund transfers.

The new bill proposes a strict definition for "online money games," which includes any game where a user pays a fee or stake to win a prize. This definition effectively removes the long-standing legal distinction between "games of skill" and "games of chance" that has protected many real-money gaming companies in courts.

A major economic player

The proposed ban has caused alarm across the online gaming industry. The sector is a significant part of India’s digital economy, with a market valued at over Rs. 2 lakh crore and annual revenue of Rs. 31,000 crore. The real-money gaming segment, which includes fantasy sports and rummy, accounts for over 85% of this revenue.

The industry is also a major employer, providing over 200,000 direct and indirect jobs. It has attracted substantial foreign investment, with over Rs. 25,000 crore in Foreign Direct Investment (FDI) flowing into the space. The government itself benefits from the industry's growth, collecting over Rs. 20,000 crore annually in direct and indirect taxes.

Shift in policy

The new law represents a significant change in the government's approach. In recent years, authorities have focused on regulation and taxation rather than prohibition. The government had already imposed a 28% Goods and Services Tax (GST) on online gaming and a 30% Tax Deducted at Source (TDS) on winnings. These measures aimed to bring the industry under the tax net.

The new bill, however, suggests the government believes regulation is not enough to address the social and financial risks. The legislation also introduces severe penalties, including imprisonment up to three years and fines up to Rs. ₹1 crore, for those who do not comply. The bill also makes advertising such games a criminal offence.