Real-money gaming companies in India are facing an existential crisis as the central government prepares to introduce sweeping legislation that would completely ban their operations nationwide. The proposed legislation, titled the Promotion and Regulation of Online Gaming Act, 2025, seeks to prohibit all online games involving real-money stakes—regardless of whether they are classified as games of skill or chance—while banning all associated advertising and financial transactions.
Banking Restrictions and Criminal Penalties
The draft legislation outlines strict measures to cut off the financial infrastructure supporting real-money gaming platforms across the country. According to the text of the draft bill, financial intermediaries will be prohibited from facilitating any funds designated for these services.
“No bank, financial institution, or any other person facilitating financial transactions or authorization of funds shall engage in, permit, aid, abet, induce, or otherwise facilitate any transaction or authorization of funds towards payment for any online money gaming service,” the draft specifies.
To enforce compliance, the proposed law establishes severe criminal penalties. Companies operating real-money games could face up to three years in prison, a fine of up to ₹10 million (approximately $115,000), or both. Celebrities promoting these platforms across media outlets face up to two years of imprisonment or fines reaching ₹5 million (around $57,000). The bill also mandates the creation of a specialized regulatory authority to oversee enforcement.
A $2.4 Billion Sector Under Scrutiny
Real-money gaming serves as the primary financial engine for India’s digital gaming industry. Data from a recent report by venture capital firm Lumikai reveals that India’s online gaming market reached $3.8 billion in revenue during FY2023–24, reflecting a 23% year-over-year growth. Real-money gaming accounted for $2.4 billion of that total revenue.
Despite its financial scale, the sector faces intense public backlash over social harms, including addiction and debt-driven tragedies where individuals reportedly died by suicide after experiencing severe financial losses. Domestic operators contend that these issues stem primarily from illegal offshore betting and gambling apps. These unauthorized platforms continue to operate and even expand across the country, despite government efforts involving website blocks and account freezes.
Escalating Taxes and Past Policy Failures
The legislative effort follows years of tightening regulatory controls. In 2023, India imposed a 28% Goods and Services Tax (GST) on online gaming to deter participation, a move criticized by industry leaders as “catastrophic.” Prominent investment firms, including Tiger Global and Kotak, petitioned Prime Minister Narendra Modi to reconsider, warning that the tax could lead to $2.5 billion in write-offs and the loss of 1 million jobs. While the tax remained intact and companies challenged its retrospective application in the Supreme Court, subsequent industry reports indicated the tax burden could rise to 40%.
This is not New Delhi’s first attempt to regulate the industry. In 2023, the government amended the Information Technology Rules to curb user harm by proposing self-regulatory bodies to certify legitimate gaming platforms. However, the self-regulation model faltered after stakeholders failed to reach a consensus on enforcement standards.
Widespread Impact on India’s Tech Unicorns
If enacted, the complete ban threatens to destabilize India’s startup ecosystem. Data from Tracxn shows that India leads the world in the number of real-money gaming startups, ahead of both the United States and the United Kingdom. Major domestic unicorns—including Dream Sports, Games24x7, and WinZO—have raised billions from global investors and serve millions of active users.
While several platforms offer free-to-play options, founders indicate that real-money mechanics generate over 85% of total company revenue. Attempts by domestic startups to pivot to international markets have yielded limited results, leaving them almost entirely dependent on revenue generated within India.
Industry executives and investors express deep concern over the impending legislation. A founder of a prominent gaming startup confirmed that businesses in the sector will be forced to shut down entirely if the bill passes. Similarly, venture investors warn that the entire class of gaming unicorns in India will suffer devastating losses.
Local reports indicate that the Union Cabinet has already cleared the proposed bill for introduction in parliament. The Indian government and the Ministry of Electronics and Information Technology have not issued official statements regarding the timeline of the bill.
Leave a Reply