The Promotion and Regulation of Online Gaming Bill, 2025, approved by the Cabinet today, incorporates several features to formalise the thriving online gaming industry in India, while also aiming to put a hard stop on "online money games" (games of chance) and such services, ads related to them and transfer of funds to these entities, the draft bill copy, accessed by Fortune India, shows.

Bringing central formal regulation to the legitimate online gaming industry in India, the new bill aims to promote e-sports and online social games. It also proposes the formation of an authority to regulate the online games, including e-sports and online social games. The bill will likely be tabled in the Lok Sabha on Wednesday.

As part of the government's crackdown on illegal platforms operating in India and abroad, the government prohibits the offering of any online money gaming services and declares it an "offence". The new bill also prohibits advertisements that promote any person to play any online money game and declares it an offence. To make it tougher for the entities involved to move funds, the government aims to prohibit the transfer of funds, which means no banks, financial institutions, or users can transfer money that will be facilitating payment for any online money games, and declares it an offence.

Govt's Rationale Behind Proposals

The Centre has said the proposal to regulate e-sports, online casual games, and the prohibition on online money gaming in India is "justified" on multiple constitutional, legal, social, and technical grounds. Via the Promotion and Regulation of Online Gaming Bill, 2025, the government aims to curb unregulated online money gaming entities, which pose serious legal, social, financial, and security threats.

Through the bill, the Centre also aims to enhance the ease of living and address the limitations of current laws in addressing challenges associated with the online gaming industry. It believes a central regulation will bring legal clarity, protect public health and order, and establish India as a "digitally responsible nation".

The absence of a clear regulatory framework for e-sports and online social games has led to a fragmented policy environment, resulting in ambiguity for industry stakeholders and insufficient safeguards for users. With India emerging as one of the fastest-growing digital gaming markets, the government believes it is imperative to ensure this growth is aligned with national interests, public safety, and ethical business practices. A structured regulatory approach will help address critical concerns such as content moderation, age-appropriate access, and addiction risks, targeting vulnerable user groups, especially minors.

The government also believes formal recognition and governance of e-sports will enable India to tap into the global competitive gaming ecosystem, promote sportsmanship, and open new career opportunities for youth. Establishing institutional mechanisms for both e-sports and online social games will support innovation, attract responsible investment, and ensure alignment with international best practices. This way, the government believes the regulatory framework will create a safe, inclusive, and well-governed digital gaming environment in India.

Key Risks Posed by Money Gaming Entities

The government believes unregulated and unchecked growth of online money gaming has contributed to addiction, debt traps, suicides, and mental health issues, thereby infringing upon the right to life of vulnerable populations, including minors and economically weaker sections. "Article 47 of the Constitution places a duty upon the State to raise the level of nutrition and standard of living and to improve public health. The state is, therefore, constitutionally obligated to intervene when a digital ecosystem threatens public health, order and societal well-being."

The current scenario involves online money gaming platforms operating across state and national borders, including through offshore servers. "This transforms it from a state subject to a matter of national importance involving cross-border regulation, digital finance, and cybersecurity," believes the government.

Additionally, there exists no uniform national law on online gaming. States have enacted varied laws on gambling, and courts have given inconsistent interpretations regarding the distinction between "games of skill" and "games of chance." This inconsistency has created a regulatory vacuum. Moreover, many games monetise through in-app purchases, virtual currencies, and rewards systems that blur legal boundaries, making it extremely difficult for law enforcement agencies to ensure compliance or protect consumers.

Money Laundering, Illicit Fund Transfers, National Security Risks

The government believes unregulated online money gaming platforms pose significant national security and economic threats, including the use of digital wallets and cryptocurrencies for money laundering and illicit fund transfers. The use of online gaming platforms for messaging can help the terror organisations and cross-border data flows without compliance with Indian data protection laws. They also enable offshore entities, avoiding Indian tax and legal obligations.

Additionally, online games are often integrated with social media, digital wallets, and real-time multiplayer networks, making them difficult to monitor or control at the state level.