Constitutional Tightrope — Questionable Vires Of New Online Gaming Act
While the need to address the harms of online gaming is real, the method chosen must respect constitutional boundaries.
On August 22, 2025, the Indian Parliament enacted the Promotion and Regulation of Online Gaming Act, a landmark legislation aimed at regulating the rapidly growing online gaming industry.
While the Act seeks to curb the social harms of online money games — such as addiction, financial distress, and potential misuse for money laundering — it has sparked a serious constitutional debate. At the heart of the controversy lies a fundamental question: does the Parliament have the authority to legislate on online gaming, or has it encroached upon a domain reserved for the states?
Federal Framework, Legislative Boundaries
India’s Constitution clearly demarcates legislative powers between the Union and the States through the Seventh Schedule. “Betting and gambling” (Entry 34) and “sports and entertainments” (Entry 33) fall under the State List, giving States exclusive authority over these subjects. Historically, this has allowed States to adopt diverse approaches to gaming — some permitting lotteries and casinos, others banning them outright.
The new Act, however, imposes a nationwide ban on “online money games”, defined broadly to include any game involving financial stakes, regardless of whether it is based on skill or chance. This sweeping prohibition appears to directly intrude into the States’ legislative domain.
Judicial Doctrine, Core Of Law
To assess the constitutionality of such legislation, courts often apply the Doctrine of Pith and Substance — which examines the true nature of a law rather than its incidental effects. If the core subject of the Act falls within the Union’s legislative powers, it may be upheld even if it touches upon State matters.
However, in this case, the pith and substance of the Act is the regulation — and prohibition — of gambling and entertainment activities conducted online. The fact that these activities occur digitally does not change their essential character. As the Supreme Court held in the Asianet Satellite Communications case, “entertainment” must be interpreted broadly and technology-neutrally. Whether a game is played in a casino or on a smartphone, it remains a form of entertainment — and thus, a State subject.
The Union's Possible Defence
The Union government may argue that the Act is justified under broader Union List entries, such as:
National security and financial integrity, citing concerns over money laundering and terror financing.
Regulation of communication (Entry 31), since online gaming occurs over the internet.
Inter-State trade and commerce (Entry 42), given the cross-border nature of online platforms.
Residuary powers (Entry 97), claiming that online gaming is a novel subject not contemplated by the Constitution’s framers.
While these arguments reflect the complexities of regulating a digital economy, they may not withstand judicial scrutiny. Courts have consistently held that a legislature cannot bypass constitutional boundaries simply by focusing on the medium (online) rather than the activity (gaming/gambling).
A Case Of Colourable Legislation?
Critics argue that the Act is a colourable piece of legislation — a law that pretends to address one subject while actually targeting another outside the legislature’s jurisdiction. Despite its framing around “promotion and regulation", the Act’s primary function is to prohibit online money games, which squarely falls under "betting and gambling".
Moreover, by rendering the distinction between skill and chance irrelevant, the Act overrides decades of judicial interpretation that allowed games of skill to operate legally. This further strengthens the argument that the Act intrudes into the States’ exclusive domain.
Road Ahead: Judicial Review, Federal Balance
The Online Gaming Act, 2025, is almost certain to face legal challenges. The Supreme Court will be called upon to decide whether the Union’s desire for uniform regulation in a digital world can override the federal structure enshrined in the Constitution.
While the need to address the harms of online gaming is real, the method chosen must respect constitutional boundaries. If the court finds that the Act’s core subject is indeed "betting and gambling", it may well declare the law ultra vires — beyond the Parliament’s legislative competence.
The Online Gaming Act, 2025, is a bold attempt to regulate a fast-evolving sector. But in doing so, it raises critical questions about the limits of central authority in a federal democracy. As the judiciary weighs the competing interests of national regulation and State autonomy, the outcome will have far-reaching implications — not just for online gaming, but for the future of digital governance and federalism in India.
Rohit Jain is a managing partner at Singhania & Co
Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.
