India Comes Hard On Online Gaming, Killing Fantasy Sports, Rummy, Poker And Ludo

The government will introduce The Promotion and Regulation of Online Gaming Bill, 2025 in the Parliament which, while promoting online sports, will serve as a lethal blow to around 1,700 startups — many of whom are in the real money gaming segment.

The proposed legislation will promote e-sports, and create regulatory body to perform any functions related to online games and online social games. The Bill envisages prohibiting real money gaming i.e., wherein a user makes a deposit using banking channel, in cash or any digital currency, with the expectation of monetary rewards on that deposit. And in doing so, it prevents any person to use financial channels to transfer funds by a bank or financial entity to make payment for any online money games.

The Bill also moves the monitoring of online gaming away from self-regulatory bodies to a more formal regulatory structure.

What does it mean?

Fantasy sports that are played to bet and played via real money transfers, or games like online rummy, poker or ludo that involves payment of money, will not be allowed any longer. You can play these games only if it is for free or have subscription models or in-app purchases. But that requires change in revenue and business model for the companies involved in the real money games industry.

It also means if any games have one time subscription model or have in-app purchases like in games like FIFA, BGMI, multi-player games, PubG, Candy Crush, then they will be allowed. This category comes under the social or casual gaming and revenue model includes revenue generated via online games that feature in-app advertising, in-app purchases like purchase of virtual items within the game or through subscription services.

The Bill also allows e-sports that are recognised by any sporting bodies.

This now means RMG games will have to change their revenue model to subscription or in-app advertisements for revenue generation in order to survive or else perish.

It is estimated by PwC that India is home to 45 crore gamers including 18 lakh e-sport players with the total size of the Indian gaming market estimated at Rs 33,000 crore in 2023. The gaming industry also employs over 2 lakh skilled personnel in developing the games.

Of this, the India real money gaming market accounted for a staggering Rs 16,500 crore in revenue during 2023. This led to foreign direct investment of nearly Rs 23,000 crore in the last five years. But these investments have dried after the imposition of 28% GST on the sector.

Online gaming contributed an estimated Rs 7,200 crore in GST during the period FY20–23, but since the imposition of the 28% GST rate, revenues from the online gaming sector have quadrupled, with GST collections now averaging Rs 1,100–1,300 crore per month. Revenue from GST from online gaming rose by 412% to Rs 6,909 crore from October 2023 to March 2024, compared to Rs 1,349 crore in the previous six months.

One of the biggest issues faced by the government is with respect to offshore based online gaming sites. These sites offer use Indian payment gateways including UPI for payments. The government has been taking strict action against many of these offshore gaming companies which are not registered in India and are involved in money laundering and illegal activities. This has resulted in the government issuing blocking directions against 1,524 related to online betting/gambling/gaming websites and mobile applications between 2022 till June 2025, it disclosed to the Lok Sabha in July 2025.

It was estimated based on industry calculations that the RMG segment of online gaming alone could cumulatively generate GST revenues to the tune of Rs 80,000–85,000 crore and TDS cumulatively amounting to Rs 6,500–7,000 crore between 2025-2029, according to PwC. The rapid growth of 25% per annum for the RMG before imposition of GST in 2023 drastically reduced to around 10%. In addition, 71 online gaming companies have been issued show cause notices with a cumulative tax demand exceeding Rs 1.12 lakh crore for the period prior to Oct 1, 2023, according to information presented to the Parliament.

While the Bill brings in regulations and rules for regulation of online gaming, it will also require the states to implement as “betting and gambling” is an entry in the State List of the Seventh Schedule in the Constitution of India. Therefore, State Legislatures have exclusive power to legislate on matters related to betting and gambling.