From Self-Regulation to State Control: The Rise and Fall of Real-Money Gaming in India

For nearly a decade, India’s real-money gaming (RMG) industry grew faster than the laws designed to regulate it. Companies promoted private codes of conduct, courts debated the distinction between “skill” and “chance”, and the Union government even experimented with a self-regulation model under the Information Technology (IT) Rules. Then came a sharp turn. Taxes soared, state bans multiplied, and, most decisively, a national law was passed in August 2025. This is a clear, step-by-step account of how India moved from industry-led self-regulation to direct state control.

What’s the News?

The Indian government’s transition from endorsing self-regulation to enforcing a blanket ban on real-money gaming platforms was executed with unprecedented speed. On August 20, 2025, the Lok Sabha passed the Promotion and Regulation of Online Gaming Bill, 2025, which imposes a blanket ban on all online games involving monetary stakes, regardless of whether they are skill-based or chance-based. Popular platforms such as Dream11, MPL, PokerBaazi and Games24x7 are now prohibited.

The law criminalises not just operating these platforms but also advertising them or facilitating financial transactions. Penalties include fines up to ₹1 crore and up to three years of imprisonment.

The legislation overrides prior frameworks under the IT Rules, 2023, which had proposed self-regulatory organisations (SROs) to certify permissible games. However, no SROs were formally recognised, and the government has now acknowledged that the self-regulatory experiment was a policy misstep.

Why the Ban Happened?

Several factors led to the government’s drastic move. A surge in complaints from Members of Parliament, state governments, and civil society organisations precipitated the ban. Tamil Nadu alone reported 47 suicides linked to gaming addiction in the last five years.

The Ministry of Electronics and Information Technology cited alarming figures of over ₹20,000 crore in household losses and 45 crore individuals negatively impacted by online money games. Self-regulation failed, as platforms often certified their own offerings as skill based.

Adding to industry woes, the GST Council’s decision in August 2023 to impose a 28% tax on player deposits, up from 18% on platform fees. This tax hike increased operational costs by 350–400%, leading to layoffs and shutdowns across startups. Despite industry appeals, the Council reaffirmed the 28% rate in its 54th meeting, citing revenue growth from ₹250 crore to ₹1,100 crore per month.

Legal and Constitutional Tensions

The blanket ban disregards decades of jurisprudence distinguishing games of skill from gambling. Landmark rulings such as R.M.D. Chamarbaugwala (1957), K.R. Lakshmanan (1996), and Varun Gumber (2017) upheld fantasy sports, rummy, and horse racing as skill-based activities protected under Article 19(1)(g) of the Constitution. The new law conflates skill and chance, banning all monetary games without exception.

Legal experts argue that this violates the right to trade and profession, fails the proportionality test, and encroaches on state powers under List II of the Seventh Schedule.

Impact on the Gaming Industry

India’s real-money gaming sector, valued at ₹3.7 billion, collapsed virtually overnight following the Bill’s passage. Here is the detailed impact:

• Over 400 companies are expected to shut down, affecting more than 2 lakh jobs across engineering, marketing, compliance, and customer support.

• Annual revenue of ₹31,000 crore and GST contributions of ₹20,000 crore are now at risk.

• Publicly listed firms such as Nazara Technologies saw share price declines of up to 12.84% following the announcement.

• Offshore platforms, estimated to receive ₹8.2 lakh crore in annual deposits, are gaining traction, posing enforcement and consumer protection challenges.

• Esports, however, has been carved out as a distinct category with regulatory clarity under the National Sports Governance Act, 2025, and is now eligible for government-backed infrastructure and training support.

Impact on Investors

Here is how the new Bill will impact various market participants:

Retail Investors & Traders

Retail investors with exposure to gaming startups through listed entities or tech-focused mutual funds are facing valuation shocks. Nazara Technologies, which holds stakes in PokerBaazi and Classic Rummy, saw a major drop in share price post-ban.

Mutual funds with holdings in digital entertainment and fintech portfolios are expected to reprice assets due to the sudden loss of RMG revenue streams. Traders are witnessing heightened volatility in tech and media stocks, with sentiment-driven swings exacerbated by regulatory uncertainty.

The ₹25,000 crore in foreign direct investment (FDI) that flowed into the sector since FY19 is now at risk, further dampening investor confidence.

Institutional Investors

Venture capital and private equity firms face immediate write-downs on their RMG holdings. Over $3 billion in FDI is exposed to platforms such as Dream11, MPL, Zupee, and Gameskraft. Institutional portfolios are undergoing rebalancing to mitigate sectoral risk, with some funds pivoting toward esports and casual gaming. Global investors, including Tiger Global and Sequoia, are reassessing India’s digital entertainment landscape, citing the ban as a precedent that undermines long-term capital deployment.

Global Context

India’s blanket ban on real-money gaming stands in stark contrast to regulatory models in the UK and the US. The UK Gambling Commission enforces stake limits (£5 for adults, £2 for youth), advertising restrictions, and data-led harm reduction, generating £6.9 billion in Gross Gambling Yield in FY24. The US adopts a state-led approach, with jurisdictions like New Jersey and Pennsylvania licensing online casinos and poker, while others like Utah impose full bans. India’s prohibition model resembles China’s, where all gambling is illegal except for state-run lotteries.

Conclusion

India’s journey from self-regulation to a complete ban on real-money gaming reflects the country’s struggle to balance innovation, consumer protection and governance. The blanket prohibition has left deep economic, legal and investor concerns, while pushing players toward offshore platforms. Whether future courts or policymakers revisit this decision will determine if India moves back towards regulation or stays firmly with prohibition.