Why in the News?

The Parliament has passed the Promotion and Regulation of Online Gaming Act, 2025 effectively banning online money games while promoting and regulating other kinds of online games.

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• Act aims to establish a robust legal framework and regulate, promote and encourage the online gaming sector for innovation and economic growth and ensure a developed, safe and responsible digital environment for all citizens.
• It was introduced in the House as a Finance bill under Article 117(1) and 117(3) of the Constitution of India with the due recommendation of the President.

Why was the Act needed?

• Addiction and financial ruin: Online money games encourage compulsive playing and create an illusion of quick profits. This leads to addiction, pushing families into debt and distress. 
  • According to Union Minister for Electronics and Information Technology, online money gaming has negatively affected 45 crore people who faced a loss of more than ₹20,000 crores.
• Mental Health: World Health Organization classifies gaming disorder as a health condition in its International Classification of Diseases. 
  • Gaming disorder is a pattern of play marked by loss of control, neglect of other daily activities, and persistence despite harmful consequences. 
• Closing Legal Loopholes: Gambling and betting are already restricted under laws such as the Bharatiya Nyaya Sanhita, 2023, and by various state legislations. But the online domain remained largely unregulated.
  • Many gaming platforms operate from offshore jurisdictions presented challenges in terms of extra-territorial jurisdiction and inter-state inconsistencies.
• Threat to National Security: Investigations have shown that some gaming platforms were being used for terror financing, illegal messaging, and money laundering effectively compromising the country's security.
• Encouraging e-sports: The Act promotes positive digital engagement and boosts creative economy and innovation in the e-sports sector.

Key Provisions of the Act

• Key Definitions:
  • Online Games: Any game, which is played on an electronic or a digital device and is managed and operated as a software through the internet or any other kind of technology facilitating electronic communication.
• Categorization of the Online Games
  • E-Sport: Competitive digital sports where teams or individuals participate in organised tournaments, requiring strategy, coordination, and advanced decision-making skills.
    • E.g., Ved "Beelzeboy" Bamb became the first Indian player to win the Pokémon GO World Championship 2025. 
  • Online Social Games: Games that form part of everyday recreation, primarily skill-based and designed for entertainment, learning, or social interaction. E.g., Wordle online word game, Kahoot!, etc.
  • Online Money Games: Online games, whether based on chance, skill, or both, where financial stakes are involved. Financial stakes include paying fees or depositing money for playing in expectation of winning linked to monetary or other gains. E.g. Dream11, Rummy, Poker, WinZO, etc.
• Applicability: It will apply to the whole of India and to online money gaming service offered within the territory of India or operated from outside the territory of India.
• Absolute prohibition of online money games: Online money games, also called real money games and related services to be prohibited.
  • Further, advertisements and financial transactions by banks or financial institutions towards payment for any online money gaming service are also prohibited. 
  • Authorities have also been empowered to block access to unlawful platforms under the Information Technology Act, 2000.
• Promotion of E-Sports: Recognized as a "legitimate competitive sport." The Ministry of Youth Affairs and Sports will develop guidelines, and infrastructure like training academies and research centers will be established.
• Promotion of Social and Educational Games: Union Government empowered to recognise and register social games that are safe and age-appropriate with dedicated platforms for content distribution.
• Online Gaming Authority: Establishment of a national-level regulatory authority to categorize and register games, determine if a game is a "money game," and address grievances.
• Offences and Penalties: Offences under key provisions are cognisable and non-bailable.
  • Imprisonment of up to 3 years and a fine of up to 1 crore rupees for offering online money games. Advertising such games shall attract imprisonment up to 2 years and a fine of up to 50 lakh rupees.
• Corporate and Institutional Liability: Companies and their officers can be held accountable, with specific safeguards for independent and non-executive directors who act with due diligence.
• Investigation and Enforcement Powers: Central Government can authorize officers for investigation, search, and seizure, including arrests without a warrant in certain cases.

While the Act offers several advantages in terms of promoting e-sports and safeguarding citizens in the digital era, it also raises concerns about policy volatility and uncertainty. The abrupt ban on the rapidly growing online money gaming sector risks creating a perception of policy inconsistency. It can undermine industry and investor confidence, particularly affecting the inflow of foreign investment into India.

Conclusion

The Promotion and Regulation of Online Gaming Act, 2025 represents a significant milestone in shaping India's digital landscape. It seeks to safeguard citizens from the exploitative practices of the online money-gaming industry while simultaneously encouraging the growth of legitimate e-sports and social gaming. In doing so, it aims to strengthen the country's creative economy, foster innovation, and, above all, ensure that technology becomes a tool for societal good rather than harm.