New online gaming law: Expert sees strong safeguards, flags ban and compliance risks

As the Centre’s new online gaming regulatory framework came into effect on May 1 under the Promotion and Regulation of Online Gaming Act, 2025, a legal expert said the law brings long-awaited clarity to the sector while also raising concerns over blanket bans, broad definitions, and compliance burdens.

Vikram Jeet Singh, Partner at BTG Advaya, told Fortune India that the most significant feature of the legislation is the creation of a centralised national legal framework for India’s online gaming industry for the first time. 

National framework for a growing sector 

The Act classifies online gaming into three categories — e-sports, online social games, and online money games — replacing the fragmented state-level regulatory approach that had created uncertainty for operators and users. 

According to Singh, the law introduces targeted regulation by prohibiting online real-money gaming, including advertisements and promotions while promoting and regulating the other two categories. 

A sector-specific regulator will oversee registrations, issue operational rules and guidelines, and support industry development through incentives and policy initiatives. 

Strong focus on user protection 

The legislation places significant emphasis on user safety. The government said the ban on real-money gaming is aimed at preventing social, financial, psychological, and public health harms associated with such platforms. 

The accompanying rules also mandate user safety features such as age verification systems, age-gating tools, parental controls and a grievance redressal mechanism. 

Key concerns around blanket ban 

However, Singh said the most controversial aspect of the law is the complete ban on online money games. 

He noted that sections of the industry had argued for regulation rather than prohibition, especially for skill-based platforms that operate with safeguards such as KYC compliance and age restrictions. 

According to him, the law currently makes no distinction between responsibly run skill-gaming platforms and predatory gambling applications. 

Broad definitions may hit mainstream games 

Another concern is the wide scope of definitions used in the law, particularly for online money games. 

The inclusion of “other stakes” — such as virtual coins, tokens or items convertible into money — could potentially bring in-game purchases and micro-transaction models within the ambit of regulation. He warned this may expose a much wider range of gaming platforms to scrutiny than originally intended. 

Compliance burden on smaller developers 

Singh also said the new framework could disproportionately affect smaller domestic developers. 

Mandatory registration, adherence to rules and ongoing compliance requirements may increase costs for emerging Indian gaming startups, while larger global studios and publishers are likely to be better equipped to meet regulatory obligations. 

How the ban will be enforced 

The government has established multiple enforcement mechanisms under the law. 

A new Online Gaming Authority of India, functioning under the Ministry of Electronics and Information Technology, will monitor compliance, investigate complaints and coordinate with financial institutions and enforcement agencies. 

The authority can issue directions, advisories and enforcement orders. Non-compliance may attract penalties of up to ₹10 lakh, suspension of registration or a ban on operations. 

The government can also block access to platforms offering banned online money games or facilitating related fund transfers under the Information Technology Act and associated blocking rules. 

Operating banned money gaming services may invite imprisonment of up to three years or a fine of up to ₹1 crore. Repeat violations may attract up to five years in jail and fines of ₹2 crore. Advertising such platforms may lead to imprisonment of up to two years or penalties of ₹50 lakh. 

Why the law was introduced 

The government said the move was prompted by rising concerns over addiction, financial losses and exploitation linked to online money gaming, particularly among youth and economically vulnerable groups. 

The law’s preamble also cites concerns around manipulative design features, addictive algorithms, bots, lack of transparency, fraud, money laundering, and national security risks. 

At the same time, it recognises the economic potential of India’s expanding online gaming industry and aims to support structured growth, innovation, and responsible digital entertainment.