CarpeDiem IAS • CarpeDiem IAS • CarpeDiem IAS •

Online Gaming Act, 2025

26 Aug 2025 GS 2 Polity
Online Gaming Act, 2025 Click to view full image

Background

  • Passed by Lok Sabha (Aug 20, 2025) and Rajya Sabha (Aug 21, 2025).

  • Became law with Presidential assent on Aug 22, 2025.

  • Aim: regulate online gaming, promote e-sports and social gaming, prohibit Real Money Games (RMGs).

WHO’s Concerns on Real Money Games (RMG)

  • Linked to compulsive behaviour, psychological distress, financial hardship, and family disruption.

  • 32 suicides in Karnataka (2022–2025) linked to online gaming addiction.

  • Government data: ~₹15,000 crore lost annually by Indians on RMGs.

Segments of Online Games under the Act

  • E-Sports:

    • Recognised under the National Sports Governance Act, 2025.

    • Registered with regulatory authority.

    • Includes participation/registration fees and prize money.

    • Example: Call of Duty, GTA tournaments.

  • Social Gaming:

    • Recreational/educational games played on electronic devices via Internet.

    • No real money stakes.

    • Govt. empowered (Sec. 4) to promote development.

  • Real Money Games (RMGs):

    • Games (skill/chance/both) played with fee or expectation of monetary/convertible stakes.

    • Includes Poker, Rummy, Fantasy Cricket, Ludo.

    • All forms banned along with their advertisements.

 Regulatory Framework

  • Penalties:

    • Offering/engaging in RMGs → Imprisonment up to 3 years, fine up to ₹1 crore, or both.

    • Unlawful advertisements → Imprisonment up to 2 years, fine up to ₹50 lakh, or both.

    • Offences: Cognisable and non-bailable under BNSS, 2023.

  • Enforcement:

    • CERT-IN to block/disable apps; Interpol may be roped in for offshore operators.

    • Players not criminalised.

  • Regulatory Authority: To be constituted by Centre for recognising, categorising, and registering online games.

Government’s Rationale

  • User complaints of massive monetary losses.

  • Algorithms of RMGs: “No net winner in the long run”.

  • Reports linking online gaming to:

    • Terror funding (Parliamentary Panel, 2023).

    • Tax evasion – ₹2,000 crore (2022); ₹30,000 crore in GST (2023).

    • Financial fraud – e.g., FIEWIN app (Chinese) defrauding Indians of ₹400 crore.

  • Offshore operations undermine domestic/state regulations.

Gambling under State List

  • Under the Seventh Schedule of the Constitution, “Betting and Gambling” is placed in Entry 34 of List II (State List) OF 7th schedule.

  • This means, ordinarily, only State Legislatures have the power to make laws on gambling, betting, and related activities.

Where Online Gaming Fits

  • With the rise of online games and real-money gaming apps, a legal question emerged: Is this the same as “gambling” (a state subject) or something else?

  • The Union Government argued that online gaming, particularly involving technology, internet, and cross-border concerns, extends beyond gambling and enters into areas covered under Union List and Concurrent List.

Union’s Legislative Entry Used

The Online Gaming Bill (and rules notified under the Information Technology Act, 2000) are justified by the Centre on these grounds:

  1. Union List, Entry 31 – Posts and telegraphs; telephones, wireless, broadcasting and other forms of communication.

    • The Union has power to regulate the internet, digital platforms, and online communications. Since online gaming operates through digital networks, it can be regulated by Parliament.

  2. Concurrent List, Entry 42 – Inter-State trade and commerce.

    • Online gaming often involves transactions across States, making it a subject of inter-State commerce.

  3. Information Technology Act, 2000 – Parliament already legislated in this area under Entry 31. The Online Gaming Rules were issued under this Act, treating online gaming as part of the digital ecosystem rather than “gambling” alone.

Judicial Interpretation: Games of Skill vs Games of Chance

The Supreme Court has repeatedly distinguished:

  • Games of skill → not gambling, hence outside the scope of Entry 34 (State List).

  • Games of chance → gambling, hence within State power.

Key cases:

  • Past State actions:

    • Telangana (2017): banned all online gaming (including skill-based).

    • Andhra Pradesh (2020), Tamil Nadu (2022): banned Rummy, Poker, online gambling.

    • Supreme Court jurisprudence:

      • State of Andhra Pradesh v. K. Satyanarayana (1968) – Rummy involves skill, not gambling.

      • K.R. Lakshmanan v. Tamil Nadu (1996) – Games of skill ≠ gambling.

      • Shreya Singhal (2015) – Laws must distinguish between permissible and impermissible restrictions.

      • State of Bombay v. R.M.D. Chamarbaugwala (1957) – Games of skill not “gambling.”

      • SC has stayed retrospective 28% GST notices on gaming firms (2024–25).

      • Pending: SC’s final word on whether Fantasy Sports, Rummy, Poker are skill or gambling.

Thus, online games of skill (like rummy, chess, fantasy sports) can be regulated by the Union under IT and commerce laws.

Issues and Criticisms of Online Gaming Act, 2025

  • No distinction between games of skill and games of chance.

  • Possible violation of Article 19(1)(g): Right to Trade/Occupation.

  • Enforcement difficulties: VPNs, offshore platforms.

  • No specific safeguards for minors (except parental controls under IT Rules, 2021).

  • Industry impact: 400+ companies, 2 lakh jobs at stake.

Challenges

  • The Act may face challenges on grounds of:

    • Over-breadth and arbitrariness (Article 14).

    • Violation of trade rights (Article 19(1)(g)).

    • Encroachment on State List powers.



← Back to list