In a significant move, the Lok Sabha on Wednesday passed the Promotion and Regulation of Online Gaming Bill, 2025, a landmark piece of legislation that seeks to create a new legal framework for online gaming in India. The bill, which was introduced and passed within minutes, represents a sharp reversal from the government's previous, more industry-friendly approach. It proposes sweeping bans and severe penalties for online gaming platforms and their celebrity promoters, aiming to curb what officials call mounting national security threats and social harms.
At the heart of the proposed law are broad prohibitions on online money games, coupled with harsh penalties. Those who operate such platforms could face up to three years in prison and a fine of ₹1 crore, while those who promote them, such as social media influencers, could face two years in jail and a ₹50 lakh fine. The bill also prohibits banks and financial institutions from facilitating transactions on these platforms. This legislation takes a "calculated decision to take a revenue hit" from the sector, according to a senior government official, who stated that regulation is a "larger public interest" priority.
This legislative action is a stark departure from the IT Ministry's rules introduced in April 2023, which were seen as pro-industry. Those rules, which envisioned a self-regulatory structure, were never fully implemented due to concerns about industry influence. The new bill, drafted with crucial input from the Home Ministry, addresses national security concerns such as the use of digital wallets and cryptocurrencies for money laundering and illicit fund transfers, the potential for terror organizations to use these platforms for communication, and the circumvention of Indian tax laws by offshore entities.
The online gaming industry, a "sunrise sector" valued at over ₹2 lakh crore and projected to become a $9 billion market by 2029, faces a potentially "death blow" from this bill. This comes despite the sector contributing significantly to the economy. Official data shows that GST revenue from online gaming increased by 412% to ₹6,909 crore in just six months after the uniform 28% levy was imposed in October 2023. The industry itself claims to pay over ₹20,000 crore annually in direct and indirect taxes and has attracted over ₹25,000 crore in foreign direct investment, supporting over 2 lakh jobs.
The bill's expansive definition of "online money game" is set to impact all major platforms like Dream11, Winzo, and MPL, as it applies to all games "irrespective of whether they are games of skill or chance." This is a key point the industry has lobbied hard against in the past. An “online money game” is defined as a service where a user pays a fee or deposits money in expectation of a monetary or other reward, but explicitly excludes e-sports.
In a letter to the Home Ministry, three major industry associations, the E-Gaming Federation (EGF), All India Gaming Federation (AIGF), and Federation of Indian Fantasy Sports (FIFS), expressed their concern, stating that the prohibition would "strike a death knell for this legitimate, job-creating industry, and would cause serious harm to Indian users and citizens.” Congress MP Karti Chidambaram echoed these concerns, arguing that the bill was introduced without industry consultation and could drive transactions to offshore platforms and the dark web. He has called for the bill to be sent to a select committee for further review.
In a surprising twist, the government is also using this bill to promote competitive e-sports and game development as a legitimate form of sport. The law envisions the creation of a central authority to support e-sports and facilitate the development of "online social games" for recreational and educational purposes. This dual approach seems to distinguish between money-making and skill-based games, aiming to clamp down on the former while promoting the latter. The bill also grants authorized officials the power to conduct searches at both physical and digital locations without a warrant, similar to the government's approach in the recent Income Tax Bill on digital search and seizures.