India Passes Bill to Regulate Online Gaming and Ban Money Games

Lok Sabha Passes Promotion and Regulation of Online Gaming Bill, 2025

The Lok Sabha, India's lower house of Parliament, passed the Promotion and Regulation of Online Gaming Bill, 2025, by voice vote on August 20, 2025. The legislation represents a significant regulatory step, aiming to distinguish between legitimate digital gaming such as esports, educational, and casual social games, and online games involving real money transactions or monetary enrichment.

Key Provisions of the Bill

The Promotion and Regulation of Online Gaming Bill, 2025, was introduced to address challenges posed by the rapid proliferation of online money games and their associated risks. The Bill specifically focuses on:

• Completely prohibiting the offering, operation, facilitation, advertisement, promotion, and participation in online money games.
• Imposing a blanket ban on gambling addiction, money laundering, and financial frauds commonly linked to such platforms or offerings.
• Clearly distinguishing "esports," educational, and social games from money games and expressly supporting their responsible development and governance.
• Putting restrictions on banks and financial institutions from transferring funds for any online money games.
• Prohibiting all forms of advertisements related to online money games.

The bill defines an online money game as any game that requires a user to deposit money with the potential expectation of monetary rewards or enrichment. Such games are now slated to be illegal, with severe penalties envisaged for violations.

Penalties Under the New Law

The legislation prescribes strict penalties upon enactment. If the Bill is passed by the Rajya Sabha and becomes law, anyone offering or facilitating online money gaming will be subject to:

• Imprisonment for up to three years.
• Fines of up to Rs 1 crore.
• Both imprisonment and fines, depending on the severity and recurrence of violations.

These penalties are intended to deter both operators and enablers of online money games, including financial intermediaries and advertisers, from supporting or facilitating such activities.

Government's Rationale for the Bill

The Government of India stated that the rise in online money gaming platforms has led not only to increased cases of addiction and financial loss among citizens, but has also been associated with grave consequences including the destruction of families and, in some reported cases, suicides.

"Online money games have become a problem. Many people have become addicted and frittered away their earnings. There are opaque algorithms that lead to losses. Many families have been destroyed. In Karnataka, there were 32 suicides reported in 31 months," — Union IT Minister Ashwini Vaishnaw, Lok Sabha, August 20, 2025.

The Minister also observed that, according to the World Health Organization, dangers associated with online gaming addiction need comprehensive and targeted regulatory intervention. Beyond personal harm, these platforms have been identified as channels for money laundering, financial fraud, and even potential terror financing and illicit messaging which can compromise national security.

"The government believes that the harms of addiction, financial loss and even extreme consequences such as suicides associated with online money gaming can be prevented by prevention of such activities... Online money gaming platforms are often misused for financial fraud, money laundering, terror financing and messaging activity that compromise national security." — Government media statement, August 2025.

Distinguishing Esports and Legitimate Online Games

The Bill makes a clear distinction between esports (competitive video gaming), educational games, and social or casual games, expressly allowing and supporting these sectors.

As defined by the Bill:

• Esports refers to online games conducted as part of multi-sport events involving organized, often team-based competition under pre-defined rules.
• These activities are recognized under the National Sports Governance Act, 2025, and outcomes are determined solely by players' skill, which may include physical dexterity, mental agility, and strategic thinking.

The Central Government is tasked with advancing responsible esports growth in India through:

• Developing guidelines for organizing and governing esports events.
• Establishing training and research institutions related to esports.
• Implementing incentive and public awareness programs.
• Coordinating with state governments and sports federations for sector development.

Earlier in 2025, esports received formal recognition with their inclusion in the Khelo India Youth Games. Several states, including Bihar, Maharashtra, Tamil Nadu, and Nagaland, have instituted local championships and structured programs to foster grassroots esports growth.

Implementation Approach and Next Steps

At present, the Promotion and Regulation of Online Gaming Bill, 2025 stands passed by Lok Sabha and will be considered by the Rajya Sabha. Passage in both Houses is required before the legislation can receive Presidential assent and become law.

The administrative rollout will involve:

• Formal notification specifying the effective date for the new law.
• Setting up dedicated agencies or empowering existing structures under the Ministry of Electronics and Information Technology (MeitY) for implementation and oversight.
• Coordination with the Reserve Bank of India (RBI), Department of Financial Services, and financial institutions to monitor and restrict monetary flows to prohibited platforms.
• Issuing standard operating procedures for state governments, law enforcement, and telecom authorities regarding compliance monitoring, investigation, and enforcement actions against violators.
• Developing awareness programs and helplines for citizens regarding the risks of online money gaming and mechanisms for reporting violations.
• Preparing periodic reports to Parliament on the effectiveness and challenges related to the new framework.

The law also provides a framework for ongoing review and amendment as technology and gaming landscapes evolve. Government may issue supplementary guidelines or notifications as needed.

Anticipated Administrative and Sector Impact

The Bill is expected to bring about several key administrative and social changes:

• A significant reduction in gambling-related harms, including addiction and financial distress, particularly among youth.
• Stronger prevention of money laundering and financial frauds within the rapidly growing online gaming landscape.
• Improved coordination between central and state authorities in regulating digital gaming and enforcing compliance.
• Promotion and formalization of esports as a legitimate sporting activity, opening up avenues for institutional support and international competitive participation.
• Increased public awareness and digital literacy regarding safe online gaming practices.

Banks, payment providers, and fintech firms will need to update due diligence systems to ensure compliance, while internet platforms and app stores will be required to promptly take down or block access to prohibited games or advertisements.

State governments are likely to be involved in both enforcement and awareness efforts, with scope for creating region-specific advisory bodies or educational outreach programs focused on safe gaming.

Position Within National and International Practice

The regulation of online gaming has been an evolving field globally, with several countries drawing a line between games of mere chance (often deemed gambling) and games of skill (like many esports and board games). India, through this Bill, has now drawn a clear legislative boundary, formalizing support for competitive and educational gaming while categorically prohibiting games involving direct monetary wagering.

Similar frameworks exist in jurisdictions such as the United Kingdom, Singapore, and some European nations, where money games and online gambling face strict regulatory bans or licensing requirements, and enforcement agencies are empowered to block violative content or financial transactions.

Sector Reactions and Future Directions

The Bill has prompted significant interest from both the gaming sector and broader stakeholders. Esports and technology companies supporting skill-based games welcomed the step as affording recognition and growth opportunities for the industry. Educational technology firms anticipate greater official support for the development of interactive learning games.

On the administrative side, challenges remain in ensuring swift and effective enforcement at the scale required given India's large and youthful population of internet users. Strengthening monitoring mechanisms, cross-border cooperation to control offshore operators, and robust consumer outreach will be central to the law's effectiveness in the coming years.

In the words of the Union IT Minister:

“While digital technology has brought many benefits, the online money games have become a challenge. E-sports and online social games like chess and solitaire can be useful and positive. Regulation will ensure responsible innovation and safeguard public interest.”

The passage of the Promotion and Regulation of Online Gaming Bill, 2025, marks a pivotal moment in India's digital governance journey, combining consumer protection with responsible sectoral promotion for a rapidly changing digital society.