India’s Online Gaming Revolution; A Complete Guide to the Promotion and Regulation of Online Gaming w.e.f. May 1, 2026

Overview

India’s online gaming landscape changed forever on 22 August 2025, when the President of India gave assent to the Promotion and Regulation of Online Gaming Act, 2025 (Act No. 32 of 2025) — a legislation that has been both celebrated and contested in equal measure. Then, on 22 April 2026, the Ministry of Electronics and Information Technology (MeitY) notified the Promotion and Regulation of Online Gaming Rules, 2026, bringing the entire regulatory architecture into force from 1 May 2026.

This article is a complete, plain-language guide to both the Act and the Rules — who they affect, what they prohibit, what they promote, how the new regulator works, and what it all means for the online gaming industry, consumers, and the broader tax landscape including GST.

Part I: The Background — Why Did India Need This Law?

1.1 The Rise of Online Gaming in India

India is one of the largest and fastest-growing online gaming markets in the world. With over 500 million smartphone users and cheap mobile data, the country became a prime destination for domestic and foreign gaming platforms alike. The sector contributed approximately ₹20,000 crore in Goods and Services Tax (GST) revenue annually and attracted foreign direct investment (FDI) of roughly ₹25,000 crore. It also employed around two lakh people directly.

The online gaming ecosystem was broadly divided into three types of games:

• Competitive skill-based games (like fantasy sports, chess, or rummy);
• Social and casual games (like puzzles or educational games); and
• Online money games (where users deposit money and play to win more money). It is this third category that became the epicentre of controversy.

1.2 The Problem: Legal Loopholes and Real-World Harm

India’s pre-existing legal framework on gambling and betting was largely based on the Public Gambling Act, 1867 — a 150-year-old colonial law. Section 12 of that Act exempted ‘games of skill’ from its prohibition, but it never defined which games qualified. This gap was exploited extensively by gaming companies.

Indian courts, over decades, tried to fill this vacuum through case-by-case judgements. Rummy was held to be a game of skill (State of Andhra Pradesh v. K. Satyanarayana, 1968). Horse racing was similarly exempt (Dr. K.R. Lakshmanan v. State of Tamil Nadu, 1996). Poker was exempted by a Karnataka High Court ruling (Indian Poker Association v. State of Karnataka, 2013). Dream11 and similar fantasy sports platforms were upheld as games of skill (Varun Gumber v. Union Territory of Chandigarh, 2017).

Each favourable ruling for the gaming industry opened the floodgates wider. Platforms began structuring their products to technically qualify as ‘games of skill’ while operationally functioning like gambling platforms. The result was a regulatory grey area that was being exploited aggressively.

The human cost was staggering. Government data suggested that Indians were losing approximately ₹1,50,000 crore annually to online money games. Reports from Karnataka Police alone recorded over 32 suicides in 31 months linked to financial losses on gaming platforms. The WHO formally recognised ‘Online Gaming Disorder’ as a mental health condition. Young adults between 18 and 25 years were disproportionately affected, with many perceiving online gambling as a legitimate investment activity.

1.3 The GST Controversy That Triggered Legislative Action

The GST regime itself became a battleground. Under the original GST framework of 2017, games of skill were taxed at 18% while games of chance attracted 28% GST. Gaming companies fought hard to be classified as ‘skill-based’ to enjoy the lower rate. The GST Council’s decision in 2023 to impose a flat 28% GST on the full-face value of deposits made to all online gaming platforms — irrespective of skill or chance — sent shockwaves through the industry. Platforms like Dream11, MPL, and many others received massive retrospective GST demand notices.

This GST crisis, combined with mounting social harms, became the immediate catalyst for comprehensive central legislation.

1.4 The Federal Angle: Why Did the Centre Step In?

Gambling and betting traditionally fell under Entry 34 of the State List (List II of the Seventh Schedule of the Constitution), meaning individual states had the authority to legislate on the subject. Several states — Tamil Nadu, Andhra Pradesh, Karnataka, Kerala — had passed their own laws to ban or regulate online gaming, only to have them struck down by their respective High Courts as unconstitutional.

The Union Government argued that online gaming, particularly when operated from foreign jurisdictions or across state lines, fell within its domain under Union List entries relating to communications, broadcasting, inter-state trade, foreign exchange, and national security. The preamble of the Act explicitly acknowledges that offshore platforms operating from outside India were evading all domestic regulations, and that a pan-India uniform framework was urgently needed.

Part II: The Promotion and Regulation of Online Gaming Act, 2025 — What Does It Actually Say?

2.1 The Three Categories: Understanding the Core Classification

The most fundamental architectural feature of the Act is how it categorises online games. Everything flows from this classification. The Act recognises three and only three types of online games:

A. E-Sports

An e-sport is a competitive online game where the outcome is determined solely by skill — physical dexterity, mental agility, or strategic thinking. It must be played in multiplayer formats governed by predefined rules, recognised under the National Sports Governance Act, 2025, and registered with the new Online Gaming Authority. Registration fees for tournament entry are permitted, as are performance-based prize amounts. What is not permitted is any form of betting, wagering, or staking by anyone — participant or spectator.

Think of it like this: a national-level PUBG Mobile tournament with skill-based elimination rounds, entry fees for participation, and prize money for winners — that is e-sports. No one is ‘betting’ on the outcome; they are competing in it.

B. Online Social Games (OSGs)

OSGs are games that do not involve staking money or any expectation of monetary gain. They can charge a subscription fee or one-time access fee (like buying a game app), but that payment is not a ‘stake.’ They are purely for entertainment, recreation, education, or skill development. Examples include casual mobile games, educational apps, puzzle games, and word games where you pay ₹99 to download the app but are not betting anything.

C. Online Money Games (OMGs)

This is the most critical — and controversial — category. The Act defines an OMG as any online game, regardless of whether it is based on skill, chance, or both, where a user pays a fee or deposits money in expectation of winning monetary or other enrichment in return. The only exception is e-sports.

The key phrase here is: ‘irrespective of whether such game is based on skill, chance, or both.’ This single phrase is the most legally significant in the entire Act. It deliberately overrides decades of judicial precedent that distinguished between skill-based games (which were legal) and chance-based games (which were gambling). Under this Act, that distinction no longer matters for the purposes of prohibition.

If you deposit money expecting to win money back — whether through skill, luck, or a combination — the game is an OMG and it is prohibited.

2.2 What the Act Prohibits: A Prohibitory Framework for Online Money Games

The Act adopts a prohibitory approach towards online money games by restricting their offering, promotion, and financial facilitation through Sections 5, 6, and 7:

Section 5: Prohibition of OMGs Themselves

No person shall offer, aid, abet, induce, or otherwise engage in the offering of any online money game or online money gaming service. This primarily applies to game operators, intermediaries, and entities facilitating the offering of online money games. While the provision is broadly worded, its application to individual users is not explicit and may require judicial interpretation.

Section 6: Prohibition of OMG Advertising

No person shall make, cause to be made, aid, abet, or be involved in any advertisement — in any media including electronic means — that directly or indirectly promotes or induces any person to play an online money game. This means celebrity endorsements of betting platforms, influencer promotions, banner ads, sponsored content, and app store listings for OMGs are all prohibited.

Section 7: Prohibition of Financial Transactions

No bank, financial institution, or any payment facilitator shall engage in, permit, aid, or facilitate any financial transaction or authorisation of funds toward any online money gaming service. This is the financial chokehold — by cutting off payment gateways and bank transfers, the law makes it practically very difficult for anyone in India to fund an OMG account.

2.3 The Penalties: How Serious Is the Government About This?

The Act backs its prohibitions with significant criminal and civil consequences:

For Operating OMGs (Section 9(1))

Imprisonment up to 3 years, or a fine up to ₹1 crore, or both.

For OMG Advertising (Section 9(2))

Imprisonment up to 2 years, or a fine up to ₹50 lakh, or both.

For Facilitating Financial Transactions for OMGs (Section 9(3))

Imprisonment up to 3 years, or a fine up to ₹1 crore, or both.

For Repeat Offenders

Sections 9(4) and 9(5) prescribe enhanced mandatory minimum sentences for those convicted a second time. For repeat OMG operators and payment facilitators, the minimum imprisonment is 3 years extendable to 5 years, with fines ranging from ₹1 crore to ₹2 crore. For repeat advertisers, the minimum is 2 years extendable to 3 years, with fines from ₹50 lakh to ₹1 crore.

For Companies

Section 11 creates corporate liability. Where an OMG offence is committed by a company, every person ‘in charge of and responsible for’ the relevant part of the business is also personally liable — unless they can prove the offence was committed without their knowledge or that they exercised due diligence. Independent and non-executive directors who are not involved in actual decision-making are protected.

Cognizable and Non-Bailable

Section 10 is especially significant: all offences under Sections 5 and 7 are cognizable (police can arrest without a court warrant) and non-bailable (bail is not a right; it requires a court application). This places OMG offences in the same legal category as serious crimes.

2.4 The Online Gaming Authority: The New Regulator

Section 8 of the Act empowers the Central Government to constitute an Authority — the Online Gaming Authority of India (OGAI) — to assist in performing the Act’s functions. The Authority is not structured as an independent regulatory body with external members but as an inter-ministerial governmental body, raising questions about its institutional independence.

The most critical power vested in the Authority is the power of determination: the Authority can decide — either on a complaint received or suo motu (on its own motion) — whether any particular online game is an online money game or not. This quasi-judicial power is the gateway to the entire enforcement mechanism. If the Authority determines a game to be an online money game, the prohibitions under Sections 5, 6, and 7 become applicable, subject to any legal challenge or appeal available under the framework.

Additional powers include: recognising, categorising, and registering online games; issuing binding guidelines and codes of practice to all game providers; and directing online game service providers to comply with its decisions.

2.5 Search and Seizure Without Warrant: Section 16

Section 16 is among the most controversial provisions of the Act. It authorises any officer authorised under Section 15 to enter any place — physical or digital — and search and arrest without a warrant any person reasonably suspected of having committed, committing, or about to commit any offence under the Act.

The explanation to Section 16 clarifies that ‘any place’ includes premises, buildings, vehicles, computer resources, virtual digital spaces, electronic records, and electronic storage devices. The officer may even override access controls and security codes to gain access to digital resources.

This provision confers wide investigative powers, including warrantless search and access to digital resources, which may be subject to constitutional scrutiny on grounds of proportionality and privacy. Critics have pointed out that the Supreme Court’s judgment in Jacob Puliyel v. Union of India (2022) cautioned that encroachment on rights must not be disproportionate to the law’s purpose — and the breadth of Section 16 may face judicial challenge.

2.6 Blocking of OMG Services: Section 14

In addition to criminal prosecution, Section 14 empowers the Central Government to block access to any OMG service — treating it under the mechanism of Section 69A of the Information Technology Act, 2000, which is the same provision used to block apps and websites on national security and public order grounds. This is the same tool that was used to ban TikTok and several hundred Chinese apps in 2020.

Part III: The Promotion and Regulation of Online Gaming Rules, 2026 — The Operational Details

While the Act creates the legal framework, the Rules — notified on 22 April 2026 and effective from 1 May 2026 — provide the operational machinery. The Rules are organised into 6 Parts covering 26 Rules.

3.1 The Online Gaming Authority of India: Structure and Composition

The Rules formally constitute the Online Gaming Authority of India (OGAI) as an attached office of MeitY, with its head office at the National Capital Territory of Delhi. The composition, notified on 22 April 2026, is:

• Chairperson (ex officio): Additional Secretary, Ministry of Electronics and Information Technology
• Member (ex officio): Joint Secretary, Ministry of Home Affairs
• Member (ex officio): Joint Secretary, Department of Financial Services, Ministry of Finance
• Member (ex officio): Joint Secretary, Ministry of Information and Broadcasting
• Member (ex officio): Joint Secretary, Ministry of Youth Affairs and Sports
• Member (ex officio): Joint Secretary, Department of Legal Affairs, Ministry of Law and Justice

This is a lean, inter-ministerial body — no independent experts, no industry representatives, no civil society voices in the composition. This has drawn criticism from those who argue it is merely a government committee rather than an independent regulator. However, Rule 3(7) allows the Chairperson to invite domain experts as and when needed.

The Authority is designed to function as a digital office, conducting proceedings online to the maximum extent possible, without requiring physical presence of parties.

3.2 The Determination Process: How Is a Game Classified?

This is the most practically important part of the Rules for the gaming industry. It creates a structured process to decide whether an online game is an OMG.

When Is Determination Triggered?

Not every game needs to go through the determination process. Determination is required only in three situations:

• The Authority acts suo motu and directs a game provider to seek determination for one or more of its games.
• A game provider wants to offer a game as an e-sport and therefore needs confirmation that it is not an OMG.
• The Central Government, by notification, requires a specific category of online social games to be determined — having regard to the nature and value of financial transactions involved.

What Factors Does the Authority Consider?

Rule 9 lists the objective factors the Authority must consider in making its determination:

• Whether the game involves payment of fees, deposit of money, or other stakes at any stage.
• Whether users expect to win money or other enrichment in return for what they deposited.
• How the fee or deposit is used — is it purely a participation or registration fee for a competitive event, a subscription fee for access, or a wager/bet in expectation of winning?
• The structure and operation of the revenue model.
• The manner in which rewards, benefits, or in-game assets can be transferred, redeemed, monetised, or used outside the game environment.

Timeline

Rule 10(3) mandates that determination must be completed within 90 days of receipt of a complete application or issuance of the suo motu notice. Time taken to seek additional information from the provider is excluded from this 90-day clock.

Game-Specific and Provider-Specific

A crucial clarification in Rule 10 is that every determination order is specific to the particular game AND the particular provider offering it. If Provider A’s version of Game X is determined to be an OSG, that does not automatically mean Provider B’s version of the same game is also an OSG. Each provider must seek its own determination.

3.3 Registration of Online Games

Unlike the determination process, registration is not mandatory for all online games. It is required only in two situations under Rule 12:

• The Central Government, by notification, requires a specific category of games to be registered — weighing factors like risk of harm to users (especially children), scale of user participation, nature and volume of financial transactions, and country of origin of the provider.
• The game is intended to be offered as an e-sport (in which case registration is always mandatory).

Once registered, the Authority issues a digital Certificate of Registration with a unique registration number, valid for up to 10 years (as applied for by the provider). The certificate can be surrendered, suspended, or cancelled on specific grounds listed in Rule 14 — including if the game changes in a way that makes it likely to be classified as an OMG, or if the provider repeatedly fails to comply with the Authority’s directions.

3.4 User Safety Features: What Platforms Must Implement

Rule 2(1)(i) introduces the concept of ‘user safety features’ — a mandatory set of safeguards that online game service providers must implement. These include:

• Age verification and age-gating mechanisms to prevent underage access.
• Time restrictions to limit how long a user can play.
• Parental controls for family-friendly access management.
• User reporting tools and grievance redressal mechanisms within the platform.
• Counselling support links and resources for users showing signs of addiction.
• Fair-play and integrity monitoring tools to detect bots, manipulative algorithms, and unfair outcomes.

These features must be disclosed by the provider at the time of applying for determination or registration (Rule 23). The Authority can issue codes of practice prescribing specific standards for these features.

3.5 Two-Tier Grievance Redressal and Appeals

The Rules create a layered consumer protection mechanism:

Tier 1: Provider’s Own Grievance Mechanism

Every online game service provider offering social games or e-sports must maintain a functional internal grievance redressal system.

Tier 2: Appeal to the Authority

If a user is dissatisfied with the provider’s resolution (or gets no response), they can approach the OGAI within 30 days. The Authority must endeavour to dispose of the appeal within 30 days of receipt.

Tier 3: Appeal to the Appellate Authority

Decisions of the OGAI can be challenged before the Appellate Authority — the Secretary of MeitY. This second appeal must also be disposed of within 30 days.

Rule 7 also allows any person aggrieved by the Authority’s determination order, registration decisions, cancellation of registration, or imposition of penalties under Section 12 to appeal to the Appellate Authority within 30 days.

3.6 Penalty Procedure Under Section 12 (Non-Criminal Penalties)

Rule 21 lays down the detailed procedure for imposing civil penalties under Section 12 of the Act — which apply to providers of permissible games (OSGs and e-sports) who fail to comply with the Authority’s directions. These are distinct from the criminal penalties for operating OMGs.

The process begins with a show-cause notice, proceeds through digital hearings (unless physical presence is specifically required), and must be concluded within 90 days of the complaint. The Authority can impose fines up to ₹10 lakh, suspend or cancel registration, or prohibit the provider from offering the game for a specified period.

Rule 21(8) requires the Authority to consider proportionality — the gain from non-compliance, the loss caused to users, recurrence history, gravity and duration of violation, number of affected users, and whether the provider took any mitigating action.

3.7 Investigation Powers: Who Can Investigate?

A separate notification issued on 22 April 2026 under Section 15 of the Act authorises the following officers to investigate offences:

• Police officers in charge of cyber cells in any state or union territory.
• Any nodal cyber cell officer in a state government or union territory administration, including officers at police station, district, or commissionerate level.

This effectively deploys the existing state police cyber crime infrastructure as the enforcement arm for the Act, without creating a separate central investigation force.

Part IV: Impact on the Online Gaming Industry

4.1 Who Is Immediately Affected?

The Act and Rules come into full force from 1 May 2026. The gaming industry segments most immediately affected are:

Real Money Gaming (RMG) Platforms

Platforms like Dream11 (fantasy sports), MPL, WinZO, Zupee, and hundreds of smaller operators where users deposit real money and win real money are squarely in the cross-hairs of the OMG prohibition. Even those that have consistently argued their platforms are skill-based, now face potential determination as OMGs because the Act explicitly removes the skill-chance distinction for this purpose.

Online Rummy and Poker Platforms

Platforms like Rummy Circle, Adda52, and similar sites, which had secured judicial protection as games of skill, now face existential uncertainty. The determination process will decide their fate — but under a framework where ‘skill’ is no longer a determinative criterion.

E-Sports Platforms and Tournament Organisers

This segment is positively impacted. The Act for the first time gives e-sports formal legal recognition as a competitive sport. E-sports platforms that successfully register with the OGAI gain legal certainty, can continue charging entry and participation fees, and can distribute performance-based prize money. They also benefit from active government promotion under Section 3 of the Act.

Casual and Social Gaming Developers

This segment — think mobile puzzle games, educational apps, casual multiplayer games — is largely unaffected and positively supported. The Act actively promotes OSGs under Section 4 through registration mechanisms, awareness campaigns, and government support programmes.

Payment Gateways and Banks

Section 7 and Rule 19 create significant compliance obligations. Banks and payment processors must verify determination or registration status before processing payments for any online game. Rule 19(2) requires immediate compliance with OGAI’s payment-blocking directions for any game determined to be an OMG.

Advertisers and Media Platforms

The advertising prohibition under Section 6 has immediate implications for digital media companies, OTT platforms, sports broadcasters, and celebrity management agencies. Endorsement contracts for gaming platforms need to be urgently reviewed.

4.2 What Should Online Gaming Companies Do Right Now?

For companies operating in India’s online gaming space, the immediate compliance checklist should include:

• Audit your game portfolio: For each game, determine whether it likely falls in the OMG, OSG, or e-sport category based on the definitions and factors in Rule 9.
• Halt OMG operations immediately: Any game that involves monetary stakes outside the e-sport exemption must be paused pending legal clarity.
• File for determination (if intending to continue as e-sport): Begin compiling the application materials specified in Rule 23 — identity details, registration/licences held, game description, revenue model, user safety features, and internal grievance mechanism.
• Review advertising contracts: Terminate or modify any contracts for promotion of games that may be classified as OMGs.
• Brief payment partners: Inform all payment gateways and banking partners of the new legal position and ensure they are aware of their obligations under Section 7.
• Implement user safety features: Begin rolling out age verification, parental controls, time restriction features, and grievance redressal systems immediately.
• Designate a point of contact: In accordance with Rule 16, designate a named officer as the point of contact for the OGAI.
• Prepare for data retention requirements: Review data storage infrastructure to comply with Rule 17 requirements for traffic data and metadata retention.
• Evaluate litigation strategy: The Act is already the subject of academic criticism on constitutional grounds (Article 14, Article 19(1)(g), and federalism). Companies may wish to monitor or participate in anticipated constitutional challenges.

Part V: GST and Taxation — How the Tax Landscape Has Shifted

5.1 The Pre-Act GST Position

Prior to the PROG Act, the GST on online gaming was governed by the Central Goods and Services Tax (CGST) Act and the GST Council’s decisions. The original position was:

• Games of Skill: 18% GST (on the platform fee/gross gaming revenue).
• Games of Chance: 28% GST.
• Vide Notification No. 09/2025-Central Tax (Rate) dated September 22, 2025, effective from September 22, 2025, implements 40% GST rate.

This tiered structure incentivised platforms to argue skill-based classification. The GST Council’s October 2023 amendment, however, imposed a flat 28% GST on the full-face value of deposits in all online gaming platforms — effectively treating all real money games the same regardless of skill or chance. This was a seismic change. For a platform charging, say, a 10% platform fee, the effective tax burden jumped from 1.8% (18% of 10%) to 28% of the full deposit amount — a nearly 15x increase in effective tax rate.

The industry challenged these GST notices vigorously. Multiple writ petitions were filed in various High Courts, with the Supreme Court eventually taking up the constitutional challenge. The PROG Act significantly alters the GST landscape for online money gaming; however, existing disputes for the pre-ban period remain subject to judicial determination for the pre-ban period. Post-prohibition, the absence of a lawful supply significantly limits the applicability of GST to such activities.

5.2 GST Position After the PROG Act

Post-PROG Act, the GST implications crystallise differently for each category:

OMGs — Prohibited, GST Irrelevant

Since OMGs are now outright prohibited, there is no lawful taxable supply. The 28% GST on full deposit value becomes largely academic for legally operating platforms. However, pending GST demand notices for the period before the ban will continue to be litigated. Platforms that operated in the interim may still face retrospective GST liability for the period when operations were lawful.

E-Sports — Likely 18% GST on Platform Fees and Entry Fees

E-sports, now formally recognised as a competitive sport, will be treated differently from gambling. Registration fees paid solely for tournament participation and performance-based prize money should, in principle, attract GST at the standard service rate (likely 18%) on the platform’s commissions or administrative charges. The prize money itself to players is not a ‘supply’ and should not attract GST. However, clarification from the GST Council or CBIC (Central Board of Indirect Taxes and Customs) would be welcome.

Online Social Games — GST on Subscription and Access Fees

OSGs that charge subscription or one-time access fees will attract GST as standard digital services at 18%. There is no wagering element, so the 28% rate applicable to gambling-type activities does not apply.

Income Tax on Gaming Winnings: Section 115BBJ of the Income Tax Act

It is important to note that the 30% flat income tax on net winnings from online games under Section 115BBJ of the Income Tax Act, 1961 (introduced through the Finance Act 2023) was already applicable regardless of skill or chance. With OMGs banned, the practical applicability of this provision post-enactment will largely be limited to winnings from legally permissible categories such as e-sports and certain online social games, although the statute itself does not impose such a restriction of this provision will largely be limited to winnings from legally permissible categories such as e-sports and certain online social games, though the statute itself does not restrict its scope in this manner — i.e., e-sport prize money and OSG winnings. TDS at 30% under Section 194BA continues to apply on net winnings from online games exceeding the threshold.

GST Revenue Implications for the Government

The ban on OMGs will almost certainly reduce GST revenue in the short to medium term. The industry had been contributing approximately ₹20,000 crore annually in GST — a significant portion of which came from the real money gaming segment now prohibited. While the government will gain from the growth of the e-sports and OSG sectors (which it is actively promoting), the revenue gap from banned OMGs will take time to offset.

The government has implicitly decided that this revenue sacrifice is worth the public health and social benefits of the ban — a significant policy statement about the primacy of citizen welfare over tax revenue in this context.

Part VI: Critical Analysis — Does the Act Succeed?

6.1 Constitutional Challenges on the Horizon

Article 14 — Right to Equality

Critics argue that the Act violates Article 14 by arbitrarily clubbing games of skill and games of chance into a single ‘OMG’ category. Decades of judicial precedents established that skill-based games are constitutionally distinct from gambling. Overriding this without amending the underlying premise — the Public Gambling Act, 1867 — is challenged as arbitrary classification inconsistent with the doctrine that ‘equality is the antithesis of arbitrariness,’ as articulated by Justice P.N. Bhagwati in E.P. Royappa v. State of Tamil Nadu (1974).

Article 19(1)(g) — Right to Profession and Trade

The blanket ban on OMGs prevents thousands of gaming entrepreneurs, developers, employees, and players from conducting what was previously a lawful profession. The constitutional standard for restricting this right under Article 19(6) requires that the restriction be ‘reasonable’ and in the ‘interest of the general public.’ A total prohibition — as opposed to strict regulation — may be challenged as disproportionate, especially for games judicially recognised as skill-based.

Federal Concerns

Gambling and betting are specifically included in the State List (List II, Entry 34) of the Seventh Schedule. During the Constituent Assembly debates, Dr. B.R. Ambedkar himself argued for this placement, stating that states needed full control to ‘prevent gambling’ effectively. The Act’s centralisation of regulatory authority — including the power to determine, investigate, and block content — may be viewed as an encroachment on State legislative competence under Entry 34 of List II, raising federal constitutional questions that are likely to be tested judicially.

6.2 Practical Enforcement Challenges

The Dark Web and VPN Problem

Banning OMGs from mainstream platforms does not make them disappear — it pushes them underground. Users determined to play can access prohibited platforms through VPNs to mask their geographic location, or through dark web platforms completely beyond government reach. Experience from other regulated sectors suggests that strict prohibitions may lead to migration toward unregulated channels, including VPN-based access and offshore platforms: historical experience with strict gambling prohibitions suggests that such measures may be difficult to enforce effectively and may shift activity to unregulated channels but increased associated criminal activity. A total ban may paradoxically result in more harm — because when users move to unregulated platforms, there are no consumer protections, no grievance mechanisms, no age verification, and no oversight.

The Piracy Parallel

Analogies from digital piracy regulation suggest that restricting legitimate access may lead users toward unregulated alternatives. When legitimate channels are shut down, consumers shift to unregulated alternatives rather than stopping the behaviour altogether. The same dynamic is likely with online gaming. The government will have no regulatory handle on platforms operating from jurisdictions beyond its reach.

Law Commission’s Warning

The Law Commission of India’s Report No. 276 on gambling and sports betting (July 2018) explicitly observed that since it is not possible to completely prevent gambling, effectively regulating it is the only viable option. The PROG Act appears to have chosen a path the Law Commission itself cautioned against.

Part VII: Conclusion — A Landmark Law with Unfinished Business

The Promotion and Regulation of Online Gaming Act, 2025, and the Promotion and Regulation of Online Gaming Rules, 2026, together represent India’s most ambitious attempt yet to regulate the digital gaming space. The legislative intent is to protect citizens, particularly vulnerable users, from financial and psychological harm associated with online money gaming, especially the young and vulnerable, from predatory platforms, financial ruin, and psychological harm.

The Act makes a significant attempt to create a structured regulatory framework for e-sports and online social games, both of which deserve regulatory clarity and active government support. India’s potential as a global gaming hub — in terms of technology, talent, and market size — is enormous, and the framework for e-sports recognition and OSG promotion takes important steps toward realising that potential.

However, the blanket prohibition on online money games — without distinguishing between well-regulated skill platforms and predatory gambling operations, without providing a licensing regime for responsible operators, and without a realistic assessment of enforcement limitations — is the Act’s most significant weakness. The Law Commission’s own wisdom, the Supreme Court’s proportionality doctrine, and the basic logic of digital markets suggest that prohibition without a regulated alternative will simply drive activity underground.

From a taxation perspective, the Act fundamentally disrupts a ₹20,000 crore GST revenue stream in the short term. The long-term revenue trajectory will depend heavily on whether the e-sports and OSG sectors can scale quickly enough to offset the loss from banned OMGs. The GST Council will need to issue fresh circulars to clarify the applicable rates for e-sport activities, subscription-based OSGs, and any hybrid models that may emerge under the new framework.

For the online gaming industry, the most urgent task right now is compliance assessment and legal strategy. For consumers and users, the new grievance redressal architecture and user safety requirements are steps in the right direction. For the government, the true test will come in enforcement — in whether the OGAI has the institutional capacity and the technical sophistication to keep pace with a dynamic, technology-driven, borderless industry.

India has made a decisive regulatory choice; its long-term success will depend on effective enforcement, judicial scrutiny, and the ability of the framework to adapt to technological and market realities.

Source/References:

• Promotion and Regulation of Online Gaming Act, 2025
• Notification (Extraordinary) regarding date of appointment for enforcing the Promotion and Regulation of Online Gaming Act, 2025
• Notification (Extraordinary) regarding authorisation of officer(s) to investigate offences under the Promotion and Regulation of Online Gaming Act, 2025
• Notification (Extraordinary) regarding establishment of the Online Gaming Authority of India under the Promotion and Regulation of Online Gaming Act, 2025
• Promotion and Regulation of Online Gaming Rules, 2026
• Press Release on Promotion and Regulation of Online Gaming Rules, 2026

(Author can be reached at info@a2ztaxcorp.com)

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