The proposed Promotion and Regulation of Online Gaming Bill, 2025, tabled and passed with unusual haste in the Lok Sabha today, has taken the legal fraternity by surprise. Top lawyers have described it as a draconian measure that not only threatens a booming ₹2 lakh crore industry but also endangers the livelihood of lakhs of people employed in the sector.
Legal experts said the contentious Bill, which carries severe legal ramifications, will be taken up in the Rajya Sabha tomorrow before being sent for Presidential assent.
Investor confidence and legal precedents shaken
Expressing her deep disappointment, Ranjana Adhikari, head of Technology, Media and Telecommunications (TMT) at law firm Shardul Amarchand Mangaldas, said: “This step is deeply disappointing and contrary to the expectations that this sunrise industry had from the regulators. In the past few years, this industry has contributed significantly to India’s digital economy and Make in India vision, through tax revenue, job creation and innovation. The bill also seemingly disregards long-standing legal precedents that protect the right to pursue legitimate businesses like skill gaming, as fundamental rights. Blanket bans will only push the consumer to illegal sites, and expose the user to more vulnerability.”
She added: “Such an approach to legislation shakes investor confidence as investors will now have to think twice before investing in India’s sunrise sectors, as they will be unsure about what to rely on to assess the legality of a sector. In fact, in 2023, the government had brought out the IT Rules amendment focusing on regulating online gaming. Today, the ban is completely opposite to this and the sudden swing in policy shakes the confidence of the investors and start-up community.”
Echoing a similar view, Chandrima Mitra, TMT lawyer at DSK Legal, said: “While it is necessary that social issues like negative mental health, financial debts and distress, addiction, youth suicide cases, linked to gaming are addressed, a blanket ban is possibly not the correct answer. The approach can be one where more progressive legislation is brought in place to balance the needs of the industry while controlling or negating the evils, as has been done in some other countries.”
Wider economic and regulatory fallout
She cautioned that the Bill “in its current form can lead to unemployment for the people engaged in the real-money gaming industry, and these are not just the players but the people and companies working in this sector. The damage will also be collaterally felt across related businesses like advertising, entertainment, technology, etc. This will potentially lead to an increase in illegal gaming or gambling and push people towards unregulated and offshore platforms. The pending tax issue has not been addressed in the bill but now a ban of this nature will also deprive the Govt of the GST revenue that it would have received.”
Vikram Jeet Singh, TMT Partner at BTG Advaya, pointed to concerns around money laundering. “One reason that has been suggested for this ban is the alleged use of real money gaming (RMG) for money laundering activities. Gaming companies have been subject to a 28% GST levy, in the past. But the bill indicates a move from regulating to banning, when it comes to RMG.”
Probir Roy Chowdhury, Partner, JSA Advocates & Solicitors, said: “This move disregards numerous Indian Court rulings that have affirmed the legality of skill-based online games, which are distinct from gambling. The industry has been a prime example of Indian startup success, thriving despite challenges like unfavourable GST policies and State-level regulatory uncertainty. These platforms empower individuals to monetize their skills in a legally recognized format – which the Government can easily regulate to ensure safe ecosystem. Furthermore, a prohibition is unlikely to stop online gaming. As is the case with sports betting, prohibition will instead drive players towards illegitimate and predatory offshore platforms, ultimately limiting the Government’s oversight and exposing Indians to greater harm.”
Aman Taneja, TMT lawyer at Ikigai Law, noted: “The Bill marks a dramatic shift from the government’s earlier stance under the IT Rules 2023, where the conversation was about regulating online money gaming.”
Summing up, Mihir Rale, Partner & Co-Head, Digital and TMT, Cyril Amarchand Mangaldas, remarked: “This is a sector that has seen its share of judicial and regulatory scrutiny and emerged on the other side with a defined (and blessed) set of protocols. Any sudden unanticipated change to this signifies unpredictability. And the nature of the change is drastic and virtually existential. Any serious investor (domestic or foreign) banks on the predictability of regulation and a stable environment. This move, should it transpire in the manner threatened, could not only decimate a burgeoning sector overnight, but create a longer-term impact on the image of the country for serious capital to be attracted and remain deployed.”