Well, it is time to face the legal and regulatory music. The Government’s draft rules for online games, which were uploaded to invite public feedback till October 31, 2025, are harsher than expected. In some cases, the offenders cannot get bail, with jail being the only option. The proposed regulatory authority may not always require a warrant to investigate, search, seize property, and even arrest an individual. Apart from paying the penalties and fines, those who are judged to be guilty can be imprisoned.
It is not just the errant gaming firms that will be under surveillance of the proposed Online Gaming Authority, the regulator. Banks, payment intermediaries, and advertising agencies can be booked processing transactions for, or advertising, the banned online games. There are several grey areas, and only the regulator will classify the games as money games, which are banned, and social games or e-sports, which are allowed. The latter will need to be registered, and operate under a certificate that will be valid for up to five years.
At present, the Centre’s attitude is clear. Gaming firms that offer money games, which involve stakes for monetary rewards, will get no leeway. They will have absolutely no room to wiggle around, beat around the bush, or find loopholes. If the regulator decides that the game is banned, the prison cells will welcome the offenders. Well, one can argue this in another way. There may be a lot of wiggle room. The Gaming Authority’s decisions will invariably be subjective, as the classification may be vague, or lead to interpretations.
Despite the draft rules, the regulatory uncertainty and legal friction exist. Apart from the above-mentioned punitive clauses, there is a lack of clarity on how the regulator will define and classify “hybrid” games. It will be difficult to pinpoint their nature and structure, which implies that the decisions will evolve over time. Some experts feel that legal social games can be e-sports. So, what will be the certificate issued to the gaming firms? It will create confusion, which means that courts will emerge as the last bastion.
Ultimately, court precedents, especially those by the Supreme Court, will decide the contours and expanse of the online playing area. Those whose games are banned will approach the courts for clarifications. Those, who are unhappy with the regulator’s actions, be it fines or jail terms, will do the same. Even those, whose bails are denied, and whose premises are raided without warrants, will still appeal to the courts. The inclusion of these clauses in the final rules will not matter. Each clause will be legally opposed.
For centuries, the courts, or legal authorities, have invariably been intertwined with gambling, speculation, and games. In India, the first test, which played out over decades, was the skill test. In several cases, the Supreme Court, either in its orders, or in upholding those of the high courts, made a distinction between games of skill, and those of chance. The former were legal, as they did not imply speculation of gambling. The latter were barred.
Thus, horse racing was a game of skill, as it required the bettor to be aware of the talents of the jockeys, their track records, as also the performances of the horses. The race tracks, with their quirks, were equally important. So was the case with card games like rummy and poker. Even fantasy cricket was deemed to be a game of skill. Here too, the person who put the money on the table, needed to be aware of the performances of the various players that she chose in her team.
Frustrated by its efforts to ban these online and offline sports, the Government decided to regulate them. It imposed a high tax on them. At least, there will be revenues flowing in for the games dubbed legal. Despite the efforts by the gaming firms, the tax stayed. There was a feeling of mutual acceptance. The Government was reconciled to let the games go on. The firms, and players could operate in a risk-free environment, if they paid the taxes. The new gaming law disrupted the bonhomie. The Government banned money games.
The draft rules imply the final leg of how far the Government wishes to go down this route. In its current mood, it seems to go all out to curb what it calls a menace to society. One is not sure if critical public feedback will change its stance. The official intent is clearly not to make cosmetic tweaks. It is to substantially lean toward a robust enforcement state, despite the growing questions of overreach, due processes, and chilling effects.
Between the passage of the Act and the final rules, the draft offers an exit route for those who offer money games. They can cross the bridge from the prison to safety. There is a six-month refund window: platforms and payment processors can refund the users’ deposits held for real-money games within this period. In most money games, this was mandatory. Thus, the draft rules provide some breathing room for cash conversions, not to salvage the existing business models.
However, experts feel that if the current rules are finalised as they are, the conundrums will multiply. A rigid, punitive regulating authority may drive inherent online gaming demand underground. This will lead to a parallel ecosystem that comprises offshore operators, grey markets, and proxy payments. Diehard players and gamblers, and firms seeking lucrative profits will shift to unregulated environments. The ban on online money games may backfire, and push users to riskier, unmonitored platforms.
Obviously, the tensions between innovation, and liability avoidance continue. Game developers and hybrid platforms will avoid India. There are start-ups, which set up headquarters overseas, and avoided the Indian market, despite being managed and run by Indians. There are others, which are present in India, but do not charge for the games, although the users pay in the other markets. “There was an uncertainty cloud over online gaming in the country. Many felt that it was best to stay away. The free presence in India was to gain volumes, not profits,” says a co-founder of one the start-ups.
Still, the industry is yet to recover from the ban shock. Mobile Premier League, which generated more than $100 million in Indian revenues last year, announced that it would lay off 60 per cent of its Indian workforce, or 300 employees. Flutter, which ran Junglee in India, quit its money-based operations, despite projecting an annual revenue of $200 million, and EBITDA of $50 million. Those, who are still standing, will opt for compliant offerings, or litigate endlessly and aggressively. Expect a legal showdown post-Diwali.
