The New Digital Order: Decoding PROG Act And Ban On Online Money Gaming

India's online gaming sector, with 488 million gamers in 2024 and surging toward 517 million by 2025, is set to balloon from a $3.7 billion market to a projected $9.1 billion by 2029.

Yet, this boom masks a crisis: predatory real-money games have ensnared 450 million users, inflicting Rs 20,000-crore annual losses, addiction, mental health woes and suicides. The World Health Organization labels gaming disorder as persistent, harmful behaviour ignoring consequences.

Addressing this, the Promotion and Regulation of Online Gaming Act, 2025, passed on August 22, 2025, effective October 1—bans exploitative RMG while nurturing e-sports and social games. As minister Ashwini Vaishnaw stated in Rajya Sabha, it shields middle-class families from digital pitfalls, building on stalled 2023 IT Rules amendments that left regulatory voids.

This uniform framework, backed by MeitY's Draft Rules under Section 19, prohibits RMG any game with stakes or monetary returns, skill- or chance-based targeting operators, advertisers and facilitators, even offshore. From 2022 to June 2025, 1,524 blocking orders under IT Act Section 69A curbed betting apps. Violations invoke Bharatiya Nyaya Sanhita penalties: up to seven years' imprisonment for unauthorized gambling (Section 112) and economic offenses (Section 111).

The Online Gaming Authority of India, a digital entity with civil court powers, determines RMG status, registers legitimate games (e-sports via National Sports Governance Act prerequisite; social games voluntary), maintains a national registry, and enforces via inquiries. Certificates last 5 years, revocable for "material changes" like monetization shifts.

Penalties are severe: three years' jail and Rs 1 crore fine for offering RMG; two years and Rs 50 lakh for advertising; repeat offenses mandate three-five years and up to Rs 2 crore. Cognizable, non-bailable offenses consider user harm and gains. A 180-day transitional window allows fund repayments.

Grievance redressal is tiered: provider-level, then Grievance Appellate Committee (IT Rules 2021), culminating at the Authority, empowered to block and penalize. This integrates Consumer Protection Act bans on misleading ads via CCPA advisories, MIB warnings against surrogate promotions (e.g., 2022–2024), and cybercrime reporting via 1930 helpline.

Promotion emphasizes e-sports (Ministry of Youth Affairs and Sports guidelines for tournaments, academies) and social games (MIB categorization for education, skills, age-appropriateness), fostering innovation in safe segments.

The Act prioritizes welfare over revenue, yielding trade-offs:

• Societal Safeguard: Counters addiction, suicides, and family ruin; WHO-recognized disorder links to RMG's manipulative designs.

• Financial Security: Halts money laundering, fraud; aligns with IGST Act blocking offshore platforms.

• Legal Clarity: Distinguishes RMG from e-sports/social games, spurring investments in non-monetary innovation.

• National Boost: Positions India as an e-sports hub, enhancing skills, employment in the creative economy.

• Industry Upheaval: RMG, core to Rs 25,000 crore sector, faces shutdowns; over 200,000 jobs lost, per industry estimates.

• Revenue Hit: Annual Rs 20,000 crore tax losses (GST, income); ripple effects on broadcasters, sponsors.

• Black Market Risk: Drives users to unregulated offshore sites, evading KYC/AML, heightening fraud.

• Overreach Concerns: Blanket ban ignores skill-chance distinctions; potential Article 19/14 violations, with Supreme Court consolidating challenges (September 8, 2025).

While laudable, the act's broad RMG definition encompassing fantasy sports, poker may stifle legitimate skill-based ventures, facing enforcement hurdles against extraterritorial operators. Recent consultations (post-Act) highlight industry pleas for nuanced rules, yet bans could backfire, fuelling underground markets.

Positively, it unlocks e-sports growth, with firms pivoting to ad-supported models amid 14.8% CAGR projections to $8.74 billion by 2030. Stakeholders must adapt, as consultations refine Draft Rules.

The Act effectively bars virtual digital assets in RMG, defining prohibitions by activity, not currency stakes in crypto equate to fiat violations. Aiming to preserve financial integrity, it targets laundering risks, amplified by VDAs' borderless nature.

The BCCI's crypto sponsorship ban exemplifies this; coupled with 30% crypto tax, 1% TDS, and IGST enforcement, formal channels are sealed. P2P evasion persists, but the ban extends comprehensively, steering toward fiat-free ecosystems.

However, tracking illegal crypto transactions proves nearly impossible if users deploy privacy coins like Monero, tumblers, or decentralized exchanges to obscure trails, enabling offshore evasion. Pseudonymous wallets and cross-border anonymity defy real-time monitoring, as admitted by the government, undermining enforcement against illicit gaming.

Recent FIU-IND notices to 25 offshore exchanges spotlight these gaps, potentially allowing black-market RMG to flourish unchecked despite the PROG Act's intent. P2P evasion persists, but the ban extends comprehensively, steering toward fiat-free ecosystems.

The PROG Act heralds responsible digital evolution, curbing RMG harms while catalysing e-sports and social gaming. Though disruptive derailing RMG giants and sparking job losses, it's vital for youth protection and sustainable growth. As the authority operationalises amid consultations, India eyes global leadership in ethical gaming policy.

The PROG Act, 2025 is a seminal piece of legislation that moves India away from regulatory ambiguity towards a structured, protective and promotion-focused framework. While the pivot is challenging for the former RMG giants, it is a necessary step to secure the financial health and social well-being of the nation’s youth, guiding the Indian gaming sector towards a sustainable and responsible future centered on e-sports and skill development.