Today, I am diving into the Promotion and Regulation of Online Gaming Bill, 2025, passed by the Lok Sabha on August 20, 2025. Introduced by Union Minister Ashwini Vaishnaw, this legislation reshapes India’s ₹31,000 crore online gaming sector.
Summary of Promotion and Regulation of Online Gaming Bill, 2025
The Online Gaming Bill, 2025, governs the thriving gaming sector while addressing addiction, fraud, and security threats. Introduced during Lok Sabha discussions, it establishes a national regulator under the Ministry of Electronics and Information Technology (MeitY) to impose compliance, classify games, and harmonize rules in India in place of varying state legislations. This is reminiscent of the GST’s harmonization of taxation.
Since October 2023, a 28% GST is levied on all online gaming, regardless of being skill or chance games. More than 1,400 betting/gambling websites were blocked between 2022 and February 2025, and the Ministry of Information and Broadcasting now mandates addiction risk disclaimers in gambling advertisements. Clause 19 authorizes MeitY to issue rules, such as guidelines for e-sports promotion, though no new circulars have been issued since the passage.
Rules, Guidelines, and Applicability
The Bill encompasses all gaming stakeholders: platforms, developers, advertisers, payment gateways, and influencers. Major provisions are:
- Central Regulatory Authority: A MeitY-headed body will register games, determine content standards, and block non-compliant services under the IT Act, 2000.
- Game Categories: Games are grouped into e-sports (skill-based, competitive), social/educational (non-monetary, recreational), or real-money games (RMG, involving stakes).
- Compliance Requirements: Sites will need to verify users, ensure data protection, and block addiction. Campaigns will extend to schools.
- Financial Restrictions: Transactions cannot be processed by banks for prohibited games, with a penalty for default.
The Bill comes into force on presidential assent, with the phasing of the regulatory agency (one-time cost: ₹50 crore, recurring: ₹20 crore annually). Foreign sites will need to comply or risk blocking, also covering offshore tax avoidance.
What’s Allowed and What’s Banned: –
The Bill promotes safe gaming and bans harmful practices. Here is the breakdown:
| Category | Allowed | Banned | Details |
| E-Sports & Competitive Gaming | Yes | No | Recognized as sports; supported via tournaments and academies. Prizes allowed, but no monetary stakes in gameplay. |
| Social & Educational Games | Yes | No | Non-monetary games for recreation or learning, promoted through campaigns. |
| Real-Money Games (RMG) | No | Yes | Banned, including fantasy sports (e.g., Dream11), rummy, and poker, regardless of skill. |
| Advertisements | Selective | Yes, for RMG | Ads for e-sports/social games allowed; RMG ads banned, with penalties for influencers. |
| In-App Purchases/Loot Boxes | Gray Area | Not Explicitly | Not banned but may face scrutiny if resembling gambling. |
| Player Participation | Yes, for Allowed Games | No Penalty | Players in RMG are not penalized; operators face enforcement. |
Penalties range up to 3 years of imprisonment and ₹1 crore as fine for running RMG, and 2 years with ₹50 lakh for connected advertisements or financial assistance.
Financial and Economic Effects
The gaming sector, which is yielding ₹20,000 crore in tax and 200,000 employments, gets disrupted. The ban on RMG will destroy startup businesses like Games24x7 at a cost of ₹25,000 crore in investments and affecting GST revenues, as in state liquor ban revenue losses (20-30% decline in taxes). But the prevention of RMG-related frauds and money laundering (valued at billions) saves consumers. Promotion of e-sports may bring in FDI with the market likely reaching $9 billion by 2029.
Shares such as Nazara Technologies declined 6-7% after passing. Fantasy platforms’ IPL sponsorships might go down, impacting media revenues. Compliance expenses will grow, but a secure ecosystem could increase trust and consumption in approved games.
Pros and Cons
Pros:
- User Protection: Curbs addiction and financial destruction, with RMG referred to as “bigger than drugs”
- E-Sports Development: Prepares India for international events (e.g., 2027 Olympics), generating tech employment.
- Unified Framework: Simplifies compliance, ending state-level disputes.
- Public Welfare: Places safety ahead of revenue, similar to tobacco duties.
Cons:
- Economic Blow: Endangers 200,000 jobs and ₹20,000 crore in revenues, possibly killing a ₹3 billion industry.
- Black Market Bloom: Bans can push consumers to illicit apps, as observed in Telangana (3,900 offenses).
- Over-Reach of Law: Disregards the court judgments on skill games, potentially inviting Article 19(1)(g) challenges.
- Gaps in Regulation: Loot boxes and in-app purchases are left unregulated, which could upend the ban.
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