By Viral Mehta
The Promotion and Regulation of Online Gaming Act, 2025 (PROGA), appears to be founded on the belief that money is the root of all evil. It imposes a nationwide ban on online games played with money. PROGA’s proponents argue that online money games are addictive, entice the youth to squander their earnings leading to financial distress, and are at times connected to illicit financial activities, posing a threat to public order. Apprehensive of these harmful effects, the Indian government enacted PROGA. While its objectives are laudable, PROGA raises three noteworthy questions of constitutional importance.
Fundamental rights and free speech
First, does an individual have a fundamental right under the Indian Constitution to play online games of skill with money? Children often play games purely for fun. However, as they grow older, games without tangible rewards lose their appeal. Adults seek more than just bragging rights; they crave the thrill of placing a monetary bet and winning a contest. This leads them to play games with money. Until now, these were permitted; but moving forward, they will no longer be allowed online. PROGA enforces an absolute prohibition on online money games, even those based on pure skill or played with trivial amounts. PROGA’s opponents contend that this sweeping ban infringes on an adult’s fundamental right of free speech and expression guaranteed by the Constitution. They point out that other financially risky activities, such as stocks and options trading, are permitted. If adults use their own money to engage in stock trading as a hobby, it is a protected activity under free speech rights. This seems odd since both activities involve skill and risk and both can lead to significant financial losses. Last year, securities regulator, the Securities and Exchange Board of India (Sebi), was concerned that millions of young Indians were playing in the derivatives market, aiming to make quick money amid the booming stock market. Its study showed that nine out of 10 Indians lost money in the futures and options market. Despite this, Sebi imposed trading restrictions rather than an absolute ban. If stocks and options trading is a protected fundamental right, then it’s hard to imagine why online money gaming is not.
Fundamental rights and free speech
Second, should online money games be regulated or outright banned? Consider stock trading as an example; it operates within a framework regulated by Sebi. Sebi’s main goal is to safeguard the investing public, and it has established rules for those wishing to trade in the stock markets. These include obtaining a permanent account number, opening a bank account, and a dematerialised securities account to be able to trade in securities. Sebi has a separate set of rules prohibiting insider trading and unfair dealing. It also mandates risk disclosures. A similar regulatory regime could be devised for online gaming. Such a framework could include minimum age requirements, compulsory registration, reporting obligations, advertisement bans, and explicit risk warnings. It can also set limits on deposits and losses, and require players to opt out once thresholds are reached. By enforcing a stringent set of regulations with appropriate safeguards, online money games could be made safer, serving as a better solution than an outright ban.
Third, does the Indian Constitution grant the Centre or the states the authority to regulate online gaming? In 2018, the US Supreme Court decided a similar question of whether sports betting should be regulated by the federal government or the individual states. The federal law challenged in that case prohibited state-sanctioned sports betting. The court invalidated the law, ruling that its restriction on state authorisation of sports betting violated the anti-commandeering doctrine inherent in the Tenth Amendment of the US Constitution. This doctrine prevents the US Congress from compelling states to enforce federal policies on matters not delegated to it. PROGA raises similar anti-commandeering concerns. Online gaming is considered a state subject falling within the category of betting and gambling under the State List of the Constitution. Critics contend that the central legislation encroaches upon state authority because it seeks to regulate an area exclusively reserved for the states. The issue is compounded by PROGA’s definition of “person”, which expressly includes the states themselves. As a result, by banning any person from engaging in online money games, PROGA effectively imposes a direct prohibition on states that have laws permitting such activities, creating a clear conflict with existing state legislation.
PROGA is an ambitious attempt by the Indian parliament to tackle the societal ills associated with online gaming. It is designed to create a uniform national law for the online gaming industry. The Constitution allows Parliament to legislate on matters within the State List if it serves the national interest. PROGA can be viewed as a bold move toward that objective. However, in its pursuit of the public good, the legislation overreaches by wielding an axe when a scalpel could have sufficed. Its approach—promoting and regulating online gaming while imposing a blanket ban on online money games, even those that are entirely skill-based or involve trivial stakes—misses the point. It is akin to promoting root beer while banning alcoholic beer altogether. The difference between the two is clear and palpable.
The writer is lead, private equity and financial services regulatory, Nishith Desai Associates.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.
