By Alkesh Kumar Sharma

India’s online gaming sector is navigating a dynamic ecosystem, with states taking bold steps to address the regulatory gaps. While the central government has come out with intermediary rules and is yet to introduce comprehensive implementation guidelines under the Information Technology (IT) Act, several states are taking proactive measures. Tamil Nadu has already established a regulatory framework through the Tamil Nadu Online Gaming Authority (Real Money Games) Regulations, 2025. Meanwhile, Maharashtra and Karnataka are reportedly exploring similar regulatory approaches. These state-led initiatives reflect a growing urgency to bring clarity and oversight to the sector amid its exponential growth. If the rules remain fragmented throughout India, it may cause a lack of ease of doing business for the industry and eventually result in a loss of revenue to the government.

Online gaming aligns closely with the Prime Minister’s vision of Digital India and our ambition to position India as a gaming superpower. With 45 crore gamers and a compound annual growth rate of ~14%, the industry bolsters India’s status as the third-largest digital economy, third-largest start-up ecosystem, and fastest-growing G20 nation. However, the developments around states and the Centre’s regulations have sparked a broader discourse on the best way to govern the sector.

Developments in Tamil Nadu, Karnataka, and Maharashtra reflect that the states are stepping in to address regulatory gaps in the run-up to a comprehensive national framework. However, when states independently regulate internet-based industries like online gaming, businesses face a patchwork of rules that can complicate operations. This is especially true for platforms relying on seamless cross-border connectivity, where varying compliance requirements make governance complex, and may hinder innovation and expansion. Players too encounter inconsistent protections, while start-ups and smaller enterprises bear the heaviest burden of compliance, potentially stifling competition.

Constitutionally, states hold authority over betting and gambling under Entry 34 of List II, but online games of skill deemed legal by multiple high courts and the Supreme Court require a central oversight in view of a lack of clarity about it in the 7th schedule of the Constitution. They may therefore fall under the Centre’s purview looking at their geographical reach, with the ministry of electronics and information technology being allotted the subject as per the allocation of business rules by the Indian government. The Madras High Court recently clarified that Tamil Nadu could regulate — but not prohibit — games of skill, although the broader question of state jurisdiction awaits a Supreme Court ruling. This legal complexity underscores the need for a unified yet inclusive approach.

Rather than a top-down model, a cooperative framework where the states and the Centre collaborate on regulation could better serve India’s gaming industry. Including states in decision-making would harmonise rules, reduce duplicative provisions, and ease the compliance burden on businesses. It would also allow states to address the unique needs and concerns of their residents, ensuring both effective and regionally relevant regulations.

India’s gaming boom, fuelled by rapid digitalisation, affordable internet, and a young population, has attracted significant investor interest. Yet, growth depends on a supportive regulatory environment that encourages innovation and sustains investment. Investors favour stable, predictable policies, and the lack of clarity can deter both domestic and global capital.

A collaborative regulatory approach could reverse this trend. By aligning central and state efforts, India could create a borderless, unified market that reassures investors while safeguarding users. The IT Rules already incorporate global best practices like age-gating, KYC, and need for responsible gaming measures, but further refinements such as content ratings and parental controls could be developed jointly with states to tackle addiction and inappropriate content effectively.

With over 30% of India’s population engaged in gaming, the absence of cohesive oversight has allowed illegal platforms to thrive, raising risks of consumer harm and anti-social activities, as noted by the Directorate General of Goods and Services Tax Intelligence and in a report by the Rashtriya Raksha University. State-level efforts alone cannot fully address these challenges, given their reliance on the Centre for internet governance. A joint framework would enable more robust enforcement on online betting and gambling, curbing grey markets while protecting players.

Models like Tamil Nadu’s regulations draw inspiration from South Korea and China, where similar measures faced pushback due to limited compliance and user shifts to virtual private network-enabled grey markets. India can learn from these experiences by fostering Centre-states dialogue to design practical, enforceable rules tailored to its context.

India’s ambition to become a global hub for gaming depends on three key pillars: attracting investment, fostering innovation, and building a skilled workforce. Achieving these goals requires regulatory clarity and a cohesive national market.

To make this framework truly effective, it is vital to involve states as active partners in policymaking. This is where cooperative federalism becomes essential. A collaborative approach where the Centre and states work together to create harmonised regulations can ensure consistency, legal certainty, and robust consumer protection across India. At the same time, it allows states the flexibility to address region-specific concerns, creating a well-rounded and resilient regulatory ecosystem for online gaming.

The writer is former secretary, ministry of electronics and information technology.

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