Cabinet nod to Online Gaming Bill; set to tighten rules on betting, offshore platforms, and celebrity endorsements

In a step towards formal regulation of the online gaming sector in India, the Union Cabinet has reportedly approved the much-awaited Online Gaming Bill, which will regulate the online gaming ecosystem in India. The proposed bill specifically targets betting and real money gaming platforms operating in the "game of chance" domain, sources suggest. The proposed bill, which, as per sources, makes online betting a punishable offence, equates games involving luck with gambling. The bill, which proposes stricter enforcement of rules, is expected to be tabled in the Lok Sabha on Wednesday.

The proposed bill aims to distinguish between free-to-play and pay-to-play games and skill-based and chance-based formats. The new act proposes a clearer legal framework, which aims to allow the legal gaming industry to thrive and also protect national interests.

The government's move is seen against the backdrop of its intention to curb the usage of gaming in fraud activities. In the recent past, the government has taken note of several celebrities and cricketers, as well as YouTube, WhatsApp, and Instagram influencers, endorsing illegal gaming companies. Sources suggest the bill may propose stringent rules for such actions.

The government has already made it clear that it aims to ensure an open, safe, trusted and accountable internet for its users. To curb the growing presence of offshore online gaming platforms operating without adhering to Indian tax and regulatory norms, as opposed to legal skill gaming companies, it has issued 1,524 blocking directions related to online betting/gambling/gaming websites and mobile applications from 2022 till June 2025.

In its intensified action against gaming offshore online gaming entities, DGGI has increased scrutiny on around 700 offshore entities involved in the supply of online money gaming or betting or gambling. These platforms are believed to be evading GST by failing to register, concealing taxable pay-ins, and bypassing tax obligations. So far, 357 websites/URLs of illegal/non-compliant offshore online money gaming entities have been blocked by the DGGI with the Ministry of Electronics and Information Technology (MeitY).

Notably, gaming companies operating legally in India pay GST at the rate of 28% since 1st October, 2023. In the recent past, the central government has taken key steps to counter the risks and harms posed by illegal online gaming entities. These measures aim to safeguard users from addiction, financial fraud, money laundering and other unlawful activities. The Information Technology Act, 2000, allows a legal and regulatory framework for gaming companies, which mandates them to ensure that information that violates any extant law is not hosted or transmitted on the network. They are also required to register with online gaming self-regulatory bodies (SRBs). Section 111 of Bharatiya Nyaya Sanhita 2023 (“BNS”) also deals with penalties for the commission of unlawful activity, including economic offence, and cyber-crimes. Section 112 of BNS penalises commission of unauthorised betting & gambling with a minimum imprisonment of 1 year, extendable up to 7 years, and has a provision of fine too.

Foreign entities that do not pay 28% GST distort fair competition, harm local businesses, and skew the market. These unscrupulous foreign entities often circumvent restrictions by creating new web addresses. They operate through ‘mule’ bank accounts to process transactions, and funds collected are often funnelled into illicit activities, posing a national security threat.