The Promotion and Regulation of Online Gaming Act, 2025, is sending shock waves through India’s investment ecosystem, far beyond the online gaming sector. Parliament passed the new law with just a brief discussion, without adequate public or industry consultations. This sets a dangerous precedent that could derail business confidence across industries.
In imposing a blanket ban on all forms of “online money gaming” (commonly understood as real-money gaming) including its advertising and financial transactions, the government has moved away from a light-touch approach introduced through self-regulatory bodies in 2023. It ignored a judicially recognised distinction between games of skill and chance in the process. This move will kill a globally competitive sunrise sector in India, and drive bad actors and practices underground — a harm purportedly sought to be prevented by the Act in the first place.
A 2025 EY Media & Entertainment report states that more than 155 million of India’s 488 million gamers engage in the online money gaming segment, making it the single largest component of the country’s gaming economy. The sector registered about 10% year-on-year growth, it said. A joint letter by gaming companies written last month to the Prime Minister and the Home Minister estimated indirect and direct revenue loss to be close to ₹20,000 crore.
Beyond taxes and investments, Karnataka Information Technology Minister Priyank Kharge says the sector funnels a whopping ₹7,000 crore annually into advertising, data centres, sponsorships, and cybersecurity, all critical parts of India’s digital and creative economy. A FICCI-EY report attributed over ₹50,000 crore in indirect job creation to the sector across gaming, digital marketing, and event management. The spillover benefits are immense: empowering gaming companies to experiment, developing new intellectual property, and pivoting towards other creative game offerings, such as free-to-play, indie, and even AAA games.
The biggest casualty of the new law is trust. By rushing it through Parliament with minimal debate, without taking into account years worth of policy literature and ignoring calls from the industry for public consultations, the government has shown that overnight regulatory whiplash is now a risk every sector must account for. Even the Department of Consumer Affairs was reportedly not consulted before the Bill was introduced in Parliament. Congress MP Karti Chidambaram called out the “lack of industry consultation” as a knee-jerk reaction. The absence of process, rather than the ban itself, is what truly unsettles investors.
The ban is particularly striking because the government had actively championed the online gaming sector in the past. In 2022, the Ministry of Electronics and IT formally brought the industry within its ambit, recognising its potential as part of India’s digital economy road map. While doing so, it did not make a distinction between real money gaming and online social games. In 2023, the Ministry went one step ahead and came out with a light-touch regulatory framework for online gaming, working with self-regulatory bodies rather than enforcing prohibitions. The Ministry of Information & Broadcasting, in 2023, set up the Animation, Visual Effects, Gaming and Comics Promotion Task Force, which recommended creating a national AVGC-XR Mission, tax incentives, and a dedicated skill-building ecosystem. Start-up India hosted game-development challenges and hackathons to showcase innovation, while Digital India positioned gaming as a part of India’s broader innovation economy. In other words, this was not a fringe sector — it was one the government had seeded and nurtured.
These moves encouraged global investors who saw India as a market where government endorsement and regulation worked hand in hand to enable innovation while protecting consumers.
Belied hopes
Against this backdrop, the abrupt ban marks a stark policy U-turn. In 2023, the government amended the Information Technology Rules to bring online gaming under Central regulation, giving the industry hope after years of fragmented State actions. Now that assurance has been reversed. India has pulled the plug on an industry it once celebrated as part of the “sunrise economy”, raising doubts about the reliability of policy commitments in other sectors, whether drones, e-commerce, or AI. This will make it difficult for investors to trust commitments made in other sectors, be it drones, e-commerce, or AI. Newer, innovative, and unconventional sectors are at a higher risk. For investors, especially in high-risk, innovative industries, this uncertainty is the single-most chilling precedent.
Will investors even have the confidence to support legal games such as e-sports and online social gaming? The Act empowers the government to hear complaints on online games — which could be any online game — that are prejudicial to the interests of users. Social mores and harms could dictate the use of this power.
If the government is truly committed to letting online social games and e-sports grow, it needs to act now. The government needs to show the same level of alacrity that it displayed in changing the rules of the game for online money gaming, if it truly intends to drive e-sports and online social gaming.
Now that the law is here, what can the government do to control the spillovers? Many companies offer a mix of games including online money games. The government should release an FAQ and clarificatory statements on what games and game features are legal. This Act is not just about separating money from gaming. It is also about preventing companies and investors from “profiting off the distress” of Indians. Therefore, such FAQ and statements must come as swiftly as the Act did. Clarity translates to game mechanics and development decisions, investor confidence, and investment dollars.
Rebuilding confidence
The government can partner with online gaming industry bodies in India to organise online gaming showcases, summits, and investor events to connect local developers with global investors. These events can be of a scale and impetus similar to that of global investor summits such as Invest UP that the country has been hosting or even like the WAVES summit earlier this year in Mumbai. They must be government-backed at the highest levels to show the global and local investor community their seriousness to back these segments.
If India wants to retain its position as a hub for digital innovation, it must invest in rebuilding investor confidence — not just in gaming, but in its regulatory ethos. The credibility of the “India growth story” depends on it.
Nehaa Chaudhari and Rutuja Pol are partners at Ikigai law, a boutique legal and policy consultancy that focuses on innovation; Nehaa leads the public policy vertical and Rutuja leads the vertical on government affairs. Shambhavi Ravishankar, counsel, has provided research; views expressed are personal
Published – September 05, 2025 12:59 am IST