Online Gaming Act, 2025

Why the Act was Passed:

• Banning Online Money Games:
  The Act effectively bans online games involving real money stakes (often resembling gambling), which have been linked to addiction and financial losses.

• Promotion and Regulation of Other Online Games:
  While restricting money games, the Act aims to promote and regulate skill-based and other non-money online gaming sectors to foster innovation and economic growth.

Objectives of the Act:

• Establish a robust legal framework for online gaming.

• Encourage innovation and economic growth in the online gaming industry.

• Ensure a safe, responsible, and developed digital environment for citizens.

• Support the growth of e-sports, a sector with significant potential for job creation and the creative economy.

Why Was This Law Needed?

• Addiction and Financial Ruin:
  Online money games create compulsive playing behaviors, leading to financial distress for families.

  • As per the Union Minister for Electronics and IT, about 45 crore people have been affected with losses exceeding ₹20,000 crores.

• Mental Health Concerns:
  The World Health Organization recognizes gaming disorder as a diagnosable health condition, characterized by loss of control and continued play despite harmful consequences.

• Closing Legal Loopholes:

  • Existing gambling laws (e.g., Bharatiya Nyaya Sanhita, 2023) regulate offline betting but had limited scope online.

  • Many online platforms operate offshore, complicating enforcement due to jurisdictional challenges.

• Threat to National Security:
  Some platforms have been implicated in terror financing, illegal messaging, and money laundering, posing serious security risks.

• Encouraging Positive Digital Engagement:
  The Act promotes e-sports and other skill-based games, supporting the creative economy and innovation.

Legal and Constitutional Context:

• Introduced as a Finance Bill under Articles 117(1) and 117(3) of the Constitution with Presidential recommendation — indicating its financial and regulatory importance.

Implications:

• The ban on money games will impact several popular online platforms focused on real-money gaming.

• Skill-based gaming and e-sports sectors are likely to see growth due to legal clarity and promotion efforts.

• Law enforcement and regulators will have better tools to crack down on illegal gaming operations and associated crimes.

Key Provisions of the Promotion and Regulation of Online Gaming Act, 2025

Key Definitions:

• Online Games:
  Games played on electronic or digital devices, managed and operated via software over the internet or other electronic communication technologies.

Categorization of Online Games:

• E-Sports:
  Competitive digital sports involving teams or individuals competing in organized tournaments. Requires strategy, coordination, and advanced decision-making.
  Example: Ved “Beelzeboy” Bamb winning the Pokémon GO World Championship 2025.

• Online Social Games:
  Primarily skill-based games designed for entertainment, learning, or social interaction.
  Examples: Wordle, Kahoot!

• Online Money Games:
  Games involving financial stakes—fees or deposits made for playing with expectation of monetary or other gains. Can be chance-based, skill-based, or mixed.
  Examples: Dream11, Rummy, Poker, WinZO.

Applicability:

• Applies across India and to any online money gaming service operated within or outside India but offered to Indian users.

Absolute Prohibition of Online Money Games:

• Ban on Offering, Advertising, and Financial Transactions related to online money gaming.

• Banks and financial institutions cannot process payments for these games.

• Authorities empowered to block access to unlawful platforms under the Information Technology Act, 2000.

Promotion of E-Sports:

• Recognized as a legitimate competitive sport.

• Ministry of Youth Affairs and Sports tasked with developing guidelines, infrastructure, training academies, and research centers.

Promotion of Social and Educational Games:

• Government empowered to recognize and register safe, age-appropriate social games.

• Dedicated platforms will be set up for content distribution.

Online Gaming Authority:

• A national regulatory authority will be established to:

  • Categorize and register games.

  • Determine whether a game qualifies as a “money game.”

  • Address consumer grievances.

Offences and Penalties:

• Offering online money games:

  • Up to 3 years imprisonment and a fine of up to ₹1 crore.

• Advertising online money games:

  • Up to 2 years imprisonment and a fine of up to ₹50 lakh.

• Offences are cognizable and non-bailable.

Corporate and Institutional Liability:

• Companies and their officers can be held criminally liable.

• Independent and non-executive directors have specific safeguards if they act with due diligence.

Investigation and Enforcement Powers:

• Central Government can authorize officers to conduct investigations, searches, seizures, and arrests (including without warrant in certain cases).

Other Notable Government Initiatives to Counter Online Gaming Risks:

• Section 69A, IT Act, 2000:
  Blocks illegal websites/apps (e.g., over 1,500 betting/gambling sites blocked from 2022-25).

• IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021:
  Registration of online gaming platforms with self-regulatory bodies.

• Bharatiya Nyaya Sanhita, 2023:
  Penalizes unlawful economic activities, cybercrimes, and unauthorized betting/gambling.

• IGST Act, 2017:
  Regulates illegal and offshore gaming platforms.

• Consumer Protection Act, 2019:
  Prevents misleading advertising; advisories issued against celebrity endorsements of betting platforms.

Implications & Concerns:

• Advantages:

  • Promotes e-sports and skill-based gaming, fostering innovation and the creative economy.

  • Provides strong consumer protection and tackles addiction, mental health, and security threats.

• Concerns:

  • Policy volatility and abrupt ban on online money gaming may create uncertainty.

  • Potential negative impact on industry growth and investor confidence, particularly affecting foreign investments.

  • Risk of perception of policy inconsistency given the sector’s rapid growth.