The online gaming industry has witnessed significant growth in recent years in India, propelled by widespread Unified Payments Interface adoption and increasing internet penetration.
The Ministry of Electronics and Information Technology was appointed as the nodal ministry for online gaming and introduced the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules).
However, there has since been considerable uncertainty about the regulatory landscape for the sector, with the enforcement status of the IT Rules currently uncertain, and with various states introducing their own rules governing (and, in some cases, prohibiting) these games.
The Ministry of Electronics and Information Technology was appointed as the nodal ministry for online gaming and introduced the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules).
However, there has since been considerable uncertainty about the regulatory landscape for the sector, with the enforcement status of the IT Rules currently uncertain, and with various states introducing their own rules governing (and, in some cases, prohibiting) these games.
Who Can Legislate?
The regulatory logjam for online gaming stems from the rule-making power of the Union and state governments under the Constitution of India. States are exclusively empowered to legislate on matters concerning betting and gambling, and several states have acted on this by restricting or prohibiting online gaming.
The natural corollary of this principle, however, is that if a given activity does not amount to betting or gambling, then it would fall outside of state purview and would be subject to central legislation. The generally-accepted principle — as confirmed repeatedly by the Supreme Court and central laws like the Public Gambling Act, 1867 — is that a 'game of skill', where a player's skill (and not random chance) is the primary determinant of success or failure, is not considered to be betting or gambling.
Recent state laws, like the Haryana Prevention of Public Gambling Act, 2025, recognise this principle by explicitly carving out games of skill from the ambit of prohibited activity. As recently as May 9, 2025, the Chhattisgarh High Court (in a matter concerning the opinion trading platform Probo) confirmed that games of skill are a matter for central law-making and not State-level legislation.
Regulatory Vacuum
For games of skill, the Centre must step in and legislate. In fact, the IT Rules are based on this premise, providing a regulatory framework for online gaming intermediaries that operate games of skill. This would, of course, require determining which games actually qualify as games of skill. Courts across the country have confirmed that an array of games — ranging from rummy to fantasy cricket — amount to games of skill, and gaming operators have continued to host such games on this basis.
Outside of judicial action, however, there is no governing arrangement for assessing whether a given game qualifies as a game of skill, which leaves every game potentially subject to rules for betting and gambling; accordingly, while some states do not impose restrictions on the sector, others, like Karnataka and Tamil Nadu, have implemented state-level laws that would prohibit all online games that involve real money. These laws have since been challenged in the courts — naturally, as this legislative debate continues, this lack of certainty means gaming companies, and players, will have to operate in the dark.
Determining Skill
The lack of an adequate distinction between online games of skill and chance creates a significant regulatory gap, where a legitimate game of skill risks being painted with the same brush as a chance-based game, simply because it is now played online. The IT Rules attempted to resolve this conundrum by proposing that self-regulatory bodies be set up to evaluate whether particular games would qualify as games of skill. These SRBs have not yet been set up, however, and MeitY has reportedly made submissions before the Madras High Court to the effect that the IT Rules currently cannot be enforced at all in the absence of this infrastructure.
Dedicated legislation at the central level would be the definitive solution here. Varying restrictions at the state-level make it difficult for Indian companies to operate — they provide services at a national level, but need to track a diverse set of local restrictions and requirements, and restrict access and implement control measures on a state-by-state basis. Legislation at the Union level would help resolve such issues for operators of bona fide games of skill, and harmonise implementation across states to prevent potential inconsistencies between different sets of state-level rules.
A proper assessment process for games of skill is also key. The involvement of industry operators (along with independent experts, consumer rights advocates, and government representatives) would be important here, as determining whether the mechanics of a specific game sufficiently prioritise a player's skill is a rigorous and detailed process that requires insight from industry experts and the uniform application of accepted standards of skill. The SRBs were an important measure in this regard; even if they are not implemented as proposed, a neutral assessment body that includes both industry and non-industry perspectives would be essential.
Player Safeguards
On Feb. 7, 2025, the Tamil Nadu government introduced new regulations for online real money games. These new measures include: a prohibition on playing online real money games between 12 a.m. and 5 a.m.; a complete ban on minors from participating; and a requirement to display periodic cautionary pop-up reminders for users engaged in continuous gameplay. Users can also set spending limits, which they are reminded of upon each deposit.
These new requirements have been challenged in court, but there is a clear need for both regulators and gaming companies to consider reasonable protective measures that balance player welfare with the legitimate interests of the industry. Implementing measures like voluntary spending limits and player awareness programmes would help assuage concerns about potential addiction and financial repercussions for players, while still allowing them to engage in skill-based gaming as a legitimate activity.
Betting and gambling are addictive activities and a genuine public welfare concern, and it is understandable that states have sought to control and restrict them. Games of skill, however, are a fundamentally different proposition, which Indian courts have repeatedly recognised.
The need of the hour is a centralised set of rules that help legitimate operators identify and host games of skill in a responsible manner, protecting the financial interests of players while also encouraging growth and investment in the sector.
Aniruddha Basu is a partner and Krishnadithya Bhaskar is an associate at Khaitan & Co. Views of the authors are personal and do not constitute legal/professional advice of Khaitan & Co.
Disclaimer: The views expressed here are those of the authors and do not necessarily represent the views of NDTV Profit or its editorial team.
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