Time’s Up? Fallout of India’s 2025 Ban on Real Money Online Gaming

Introduction

Over the past decade, India’s online gaming industry developed from a niche pastime to one of the country’s fastest-developing digital economy sectors. Fantasy sports, rummy, poker, and other games of chance became explosively popular, with investments from both homegrown and foreign players. The industry contributes over Rs 4,500 crore annually to advertising in India[1], employing thousands of people and making significant contributions to sports sponsorships and media advertising. However, this growth was accompanied by increasing social and regulatory issues. Cases of addiction, monetary losses, and even suicides related to online gaming were giving rise to mounting demands for action from the government. In response, the government issued the Promotion and Regulation of Online Gaming Act, 2025[2], an all-encompassing legislation that placed a total ban on all real-money online games in India. Though the Act was aimed at protecting consumers, especially the young, it has caused massive commercial disruption, constitutional issues, and policy controversies.

The Law and Its Rationale

The Promotion and Regulation of Online Gaming Act, 2025 is the Indian government’s most brazen intervention in the gaming business. The Act prohibits all types of real-money online gambling, irrespective of their skill or chance basis. Supporters of the Act had held that the industry was operating in a legal vacuum, with state-level laws frequently at variance with each other and insufficient to address cross-border digital platforms. In choosing prohibition, the government asserted it was giving greater importance to public good than to private gains. The preamble of the Act frames it as a measure to protect consumers from exploitation and addiction. But the way it was done generated many concerns. Unlike earlier experiments with regulations in other states like Sikkim and Nagaland, which consisted of licensing models, the central law resorted to a blanket ban. This has been criticized as being paternalistic, economically devastating, and out of tune with international best practices, where the culture of regulation but not prohibition prevails.

Economic Consequences and Industry Upset

What was previously estimated to hit a valuation of $7.5 billion by 2028[3], fuelled by real-money games (RMGs), now stands threatened with extinction, with the blanket ban on gambling aspects having a ripple effect extending far beyond gaming platforms to catch ancillary ecosystems. During the weeks immediately after law passed in the parliament, multinational behemoths and domestic unicorns both raced to adjust, unleashing a chain reaction of commercial casualties that experts warn has the potential to wipe out more than 200,000 jobs and lose out on billions of investments[4]. Flutter Entertainment, the Irish giant parent company of FanDuel and PokerStars, closed its Indian units within a week of the ban taking effect, explaining that it faced prohibitive regulatory challenges and criminalization of RMG businesses[5]. It was not an isolated occurrence; some other foreign-based entities, such as the U.S. and European ones, suspended expansions and shifted resources to more liberal Asian markets such as the Philippines and Vietnam.

Local titans suffered the most disruptions. Sites such as Dream11, the fantasy sports giant with more than 200 million users, and Mobile Premier League (MPL), a leader in skill-based tournaments, were compelled to slash back sharply. MPL, after the ban, made some of its employees redundant with over 60% of its Indian workforce in an attempt to shift focus to non-RMG models such as esports and ad-supported casual games[6]. Pro Kabaddi League and hockey leagues (Hockey India League) lost their crucial sources of funding, putting talent-spotting and youth academies that survived on gaming-backed endorsements in danger. This vacuum in sponsorships has continued to ripple through India’s sports ecosystem, opening a funding gap threatening grassroots development. Prior to the ban, RMG companies invested more than ₹1,500 crore each year on sports sponsorship, powering events from the IPL to local tournaments in new sports such as esports and badminton. Even specialty players such as tech legal firms that focused on gaming IP and fintech compliance saw their caseloads decline by major proportion, as clients moved from growth strategies to survival lawsuits. In the single month alone, almost 2,000 direct employment positions disappeared.

Economically, the Act’s shadow looms large. The industry contributed ₹20,000 crore in annual taxes[7] pre-ban, including GST and income levies, bolstering government coffers amid fiscal strains. Innovation centres such as Bengaluru and Hyderabad, which were once abuzz with gaming incubators, now stand at risk of brain drain, impinging on India’s “Make in India” and Startup India dreams.

Constitutional and Legal Issues

Not unexpectedly, the Act has been assailed in the Supreme Court of India. Several petitions in various High Courts were clubbed by the top court to ensure consistency of judgment. The constitutional questions involved are substantial. To begin with, questions of legislative jurisdiction come to mind. According to the Seventh Schedule of the Indian Constitution[8], betting and gambling are included in the State List. Petitioners contend that the Centre has acted beyond its jurisdiction in legislating in this area. The Union government defends its action on the basis that online modes extend themselves across state lines and are thereby within the Centre’s domain to regulate trade and commerce.

The Act is being challenged on the grounds of encroaching on the freedom of trade and profession under Article 19(1)(g)[9]. The operators contend that even if the state can put reasonable restrictions, an outright ban is disproportionate. Courts previously have drawn a distinction between games of skill and games of chance and acknowledged that games of skill entitle protection as a legitimate business activity. Prohibition is objectionable under Article 21 of the Constitution[10], which provides for protection of life and personal liberty. Petitioners argue that adults can be left to their own choices regarding playing online games, particularly skill games. By ordering a blanket ban, the state is being paternalistic and is depriving people of their freedom. Finally, proportionality doctrine will come into play. The Court must consider whether less restrictive options licensing, deposit caps and demanding Know Your Customer requirements might have met the same consumer protection objectives without decimating an entire sector.

Enforcement and the Risk of a Grey Market

Assuming the Act passes scrutiny in court, enforceability remains a concern. Online ecosystems are notoriously hard to control via prohibition in isolation. Apps can resurface on other app stores, payments can be processed via cryptocurrencies or overseas gateways, and consumers can simply reach offshore platforms via VPNs. As happened in other prohibitionist regimes, prohibitions tend to encourage the expansion of dark markets. Rather than eradicating harm, these environments subject consumers to even higher risks fraud, unregulated sites, and absence of grievance redressal channels. Enforcement is also a burden on ancillary industries like advertising, broadcasting, and financial services. The Act makes payment processors, advertisers and influencers liable for advertising or facilitating real-money gaming, giving rise to a chilling effect on legitimate commercial expression. By creating confusion between operators and service providers, the law has a chance of suppressing innovation in unconnected industries.

Conclusion: Way Forward

The Promotion and Regulation of Online Gaming Act, 2025 is a turning point in India’s digital industries regulation. Though its aim to protect consumers from addiction and exploitation is noble, its approach to doing so is extremely flawed. The costs to the economy have been staggering, ranging from job loss and investment flight to the breakdown of sports sponsorships. Constitutionally, the legislation is in jeopardy on the grounds of legislative competency, proportionality, and human rights. Pragmatically, implementing a prohibition in a virtual economy is problematic and likely to feed unregulated grey markets.

A better solution would have been to implement a strong regulatory framework. Licensing, consumer protection, and specialized regulatory supervision could have promised both protection and expansion. Worldwide, this has been the model of choice, finding a middle ground between innovation and accountability. The final judgment of the Supreme Court would not only decide the fate of online gaming but also lay down a precedent for the way India decides regulations in the future.

Author:– Arihant Mishra Tiwary,  in case of any queries please contact/write back to us at support@ipandlegalfilings.com or   IP & Legal Filing.

References:

1. Kriti, Parliament passes Promotion and Regulation of Online Gaming Bill, 2025 without debate: What Experts are saying, https://www.scconline.com/blog/post/2025/08/22/promotion-and-regulation-of-online-gaming-bill-2025/
2. Promotion and Regulation of Online Gaming Bill, 2025, https://static.pib.gov.in/WriteReadData/specificdocs/documents/2025/aug/doc2025821618101.pdf
3. Rajeev Gowda, Cutting off online gaming with the scissors of prohibition, The Hindu,

https://www.thehindu.com/opinion/op-ed/cutting-off-online-gaming-with-the-scissors-of-prohibition/article70049718.ece

4. Hike to shut down fully after online money gaming ban; CEO Kavin Mittal says not worth it, Indian Express, https://indianexpress.com/article/technology/tech-news-technology/hike-full-shut-down-online-money-gaming-ban-kavin-mittal-10249334/
5. Online Gaming Act, 2025: Game over for RMG?, Law Asia, https://law.asia/online-gaming-ban-india/
6. Online gaming app ban: MPL to layoff 60% of India Staff, The Times of India, Online gaming app ban: MPL to layoff 60% of India Staff – The Times of India
7. Gaming bodies write to Amit Shah; urge to block blanket ban, warn of Rs 20,000 crore tax loss, The Economic Times, Gaming bodies write to Amit Shah; urge to block blanket ban, warn of Rs 20,000 crore tax loss – The Economic Times
8. Pankaj Doval, Online real-money gaming stares at a squeeze: Report, The Times of India, Gst: Online real-money gaming stares at a squeeze: Report – The Times of India
9. India’s real-money gaming ban could put $25-billion sector and 200,000 jobs at risk, industry warns, Money Control, India’s real-money gaming ban could put $25-billion sector and 200,000 jobs at risk, industry warns
10. Koustav Das, Real-money gaming ban rocks advertising, sports sponsorships: What’s at stake?, India Today, Real-money gaming ban rocks advertising, sports sponsorships: What’s at stake? – India Today

[1] Koustav Das, Real-money gaming ban rocks advertising, sports sponsorships: What’s at stake?, India Today, Real-money gaming ban rocks advertising, sports sponsorships: What’s at stake? – India Today

[2] Promotion and Regulation of Online Gaming Act, 2025, Acts of Parliament, 2025

[3] Pankaj Doval, Online real-money gaming stares at a squeeze: Report, The Times of India, Gst: Online real-money gaming stares at a squeeze: Report – The Times of India

[4] India’s real-money gaming ban could put $25-billion sector and 200,000 jobs at risk, industry warns, Money Control, India’s real-money gaming ban could put $25-billion sector and 200,000 jobs at risk, industry warns

[5] Flutter to stop Junglee real-money gaming operations in India due to unexpected regulatory change, Flutter, Flutter to stop Junglee real-money gaming operations in India due to unexpected regulatory change | Flutter Entertainment

[6] Online gaming app ban: MPL to layoff 60% of India Staff, The Times of India,  Online gaming app ban: MPL to layoff 60% of India Staff – The Times of India

[7] Gaming bodies write to Amit Shah; urge to block blanket ban, warn of Rs 20,000 crore tax loss, The Economic Times, Gaming bodies write to Amit Shah; urge to block blanket ban, warn of Rs 20,000 crore tax loss – The Economic Times

[8]  Constitution of India, 7^th Schedule

[9] Constitution of India, Article 19(1)(g)

[10] Constitution of India, Article 21