Government's Plan to Regulate Online Real-Money Gaming Companies
The Indian government is in the process of bringing online real-money gaming companies, such as Dream11, Games24x7, and Winzo, under the purview of anti-money laundering laws. This initiative aims to impose stricter obligations, including know-your-customer (KYC) requirements and monitoring for suspicious transactions.
Proposal Details
- The proposal is being led by the Ministry of Finance and involves inter-ministerial consultations.
- If approved, these gaming companies will be classified as “reporting entities” under the Prevention of Money Laundering Act (PMLA), 2002.
- As reporting entities, they would need to report client and transaction information to the Financial Intelligence Unit-India (FIU-IND) and adhere to anti-money laundering and counter-terrorism financing obligations.
- Similar actions were taken in 2023 when virtual digital assets were notified as reporting entities.
Background and Economic Impact
This move comes after the imposition of a 28% Goods and Service Tax (GST) on the full deposits made on such gaming apps in 2023. The sector regulations, previously notified by the IT Ministry, remain unenforced due to procedural challenges.
- According to a FICCI-EY report from March 2025, the revenue from online gaming companies in India was approximately $2.7 billion in 2024.
- Over 155 million Indians engaged with real-money gaming platforms, with a daily average of 110 million users in 2024.
Concerns and Challenges
There are concerns that offshore betting and gambling apps may not comply with these regulations. Industry estimates indicate $25 to $30 billion circulate on these platforms, mostly unaccounted for.
- The government has faced challenges in regulating offshore gaming platforms, despite efforts such as blocking over 1,400 online betting sites and links by the Directorate General of GST Intelligence (DGGI).
- Domestic companies have expressed compliance concerns regarding differential treatment compared to offshore platforms.
Regulatory Efforts
The IT Ministry's attempts to regulate the online gaming sector, including amendments to the Information Technology Rules, have not been successful. A proposal for self-regulatory bodies was not accepted due to potential conflicts of interest.
- In a submission to the Madras High Court, the IT Ministry stated that the rules remain "unenforceable" as no self-regulatory bodies have been designated.