India to Ban Real-Money Gaming

India Considers Comprehensive Ban on Real-Money Gaming

Companies operating in the real-money gaming sector in India are facing significant uncertainty as the nation prepares to potentially enact legislation imposing a complete prohibition on their activities.

Proposed Legislation Details

According to a draft of the proposed “Promotion and Regulation of Online Gaming Act, 2025,” obtained by TechCrunch and corroborated by multiple sources – including a consultant within the Indian IT ministry and individuals closely involved with both the government and real-money gaming firms – all forms of real-money gaming, regardless of whether they rely on skill or chance, will be outlawed.

The legislation aims to restrict online games involving monetary stakes, and will also prohibit any advertising related to these games, as well as the processing of financial transactions associated with them.

Specifically, the draft stipulates that financial institutions are forbidden from facilitating any transactions related to online money gaming services. This includes engaging in, permitting, aiding, or inducing payments for such services.

Industry Revenue and Recent Growth

Real-money gaming has been a primary contributor to the growth of India’s online gaming industry. In the financial year 2023–24, the industry generated $3.8 billion in revenue, representing a 23% increase compared to the previous year, as reported by Lumikai, a gaming-focused venture capital firm.

Of this total revenue, $2.4 billion was solely attributable to real-money gaming.

Growing Scrutiny and Public Concerns

Despite its financial success, the sector has faced increasing scrutiny due to public concerns regarding potential harm. Reports of individuals experiencing financial distress, including instances of suicide following substantial losses, have fueled these concerns.

Industry representatives often point to offshore betting and gambling applications as the primary source of these issues, noting that these apps continue to operate despite enforcement efforts by authorities.

Recent Tax Implications

In 2023, the Indian government implemented a 28% tax on online gaming to curtail real-money play. This measure was widely criticized by the industry as being “catastrophic” and “unconstitutional.”

Leading investors, including Tiger Global and Kotak, appealed to Prime Minister Modi to reconsider the tax, citing potential write-offs of $2.5 billion and the loss of 1 million jobs. Despite these concerns, the tax remained in effect, although its retrospective application is currently being challenged in the Supreme Court.

Recent reports suggest that this tax could potentially increase to 40% under new regulations.

Potential Penalties

The proposed legislation outlines severe penalties for violations. Real-money gaming companies could face imprisonment of up to three years, a fine of up to ₹10 million (approximately $115,000), or both.

Celebrities who endorse such games could be subject to imprisonment for up to two years or a fine of ₹5 million (around $57,000). The bill also grants the Indian government the authority to establish a regulatory body to oversee its implementation.

Industry Reaction

“Businesses will shut down if this legislation is enacted,” stated the founder of a prominent Indian real-money gaming startup, requesting anonymity due to the draft’s non-public status.

Investors share these concerns, anticipating significant repercussions if the proposed law is passed.

“All unicorns in this sector will be substantially affected by this move if it becomes law,” commented an investor in Indian real-money gaming startups, who wished to remain unnamed as the proposal has not yet been officially released.

Key Players in the Indian Market

Dream Sports, Games24x7, and WinZO are among the leading real-money gaming startups in India. These companies have collectively raised billions of dollars and serve millions of users.

India currently boasts the highest number of real-money gaming startups globally, surpassing the U.S. and the U.K., according to Tracxn.

While many companies offer both monetized and non-monetized games, one founder revealed that real-money gaming accounts for over 85% of their total revenue.

Exploration of International Markets

Some startups are exploring opportunities to expand outside of India to mitigate the regulatory challenges within the country. However, these efforts have not yet yielded significant results, as the vast majority of their revenue currently originates from the Indian market.

Previous Regulatory Attempts

This is not the first attempt by New Delhi to regulate real-money gaming. In 2023, the government amended the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to address “user harm” associated with these games.

The amendments proposed the creation of self-regulatory bodies to approve legitimate games while restricting illegal betting and gambling. However, this self-regulation model encountered difficulties due to disagreements among industry stakeholders regarding enforcement and standards.

Recent Developments

Reports surfaced on Tuesday indicating that India’s Union Cabinet had approved the proposed bill for introduction in the lower house of parliament, potentially as early as Wednesday. However, the Indian government has not yet confirmed this development.

The Indian IT ministry has not responded to requests for comment.

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