The Centre is planning to consolidate India’s online gaming sector under a single regulatory framework, aiming to replace the current patchwork of state-level laws, Mint reported. The Home Ministry has assembled a committee that includes its officials, legal experts, and representatives from the gaming industry to discuss the future course of action, the sources told Mint.
One of the key issues under discussion is whether a new law is required to clearly distinguish between gaming and gambling, a distinction that has remained contentious. Despite the Supreme Court’s ruling that online gaming is a game of skill, and gambling is a game of chance, there is still ambiguity surrounding the classification. From what is understood, the government acknowledges the growth potential of the sector, which has made multiple presentations emphasising its ability to attract foreign investment. The source also told Mint that a unified legal framework would provide regulatory clarity and enable the Financial Intelligence Unit (FIU) to take stronger action against offshore entities, something the current self-regulatory framework proposed by the Ministry of Electronics and Information Technology (MeitY) has struggled to do.
The impetus for these discussions stems from two main concerns: the need for clarity on taxing online gaming companies, and the issue of offshore gaming entities, which could be misused for money laundering. The online gaming industry, already facing regulatory challenges despite the Supreme Court’s clarification, is hopeful that a unified framework will bring much-needed relief. Gaming lawyer Jay Sayta, who represents several gaming companies, told Mint that the regulatory confusion has hindered the industry’s growth. He emphasised that a single regulatory framework could prevent black-market operators from taking over the market and help create a more structured industry.
Several states, including Karnataka, Maharashtra, and Tamil Nadu, have already attempted to regulate online gaming within their borders, leading to conflicting rules that have complicated the industry’s operations. A policy executive at one of India’s top gaming firms said that state-specific regulations have led to “regulatory spillage,” making it difficult for companies to navigate the legal landscape and slowing the influx of foreign investments. The executive highlighted that a unified law could restore investor confidence, noting that foreign investments in the sector have dropped by over 90% in the past two years due to regulatory uncertainty.
According to a report by Google and venture capital firm Lumikai, online gaming companies in India generated $2.4 billion in revenue in FY24. This highlights the significant economic potential of the industry, which could benefit from clearer regulations and a more streamlined legal framework. Industry leaders, including Roland Landers of the All India Gaming Federation (AIGF), have stressed the importance of a centralised regulatory framework to sustain the momentum and attract further investment into the sector.