The Promotion and Regulation of Online Gaming Bill 2025, passed by Parliament on Thursday, seeks to protect people from addiction, financial loss, and fraud, according to its preamble. It aims to do so by prohibiting online money games, also known as real money games or RMGs, where users deposit funds in the hope of winnings. A ban is offered as a silver bullet.
However, plenty of evidence suggests that bans do not stop people from accessing harmful products or activities. Instead, they tend to push consumers into informal, unregulated, and unsafe markets. Consumers are likely to be redirected to offshore betting and gambling services. There, they will encounter heightened risks of financial fraud and cybersecurity threats, and will lack access to any meaningful grievance redressal mechanisms.
The gaming law also has significant economic consequences. Gaming businesses have created over 200,000 jobs and helped sustain the build-out of digital infrastructure. A blanket ban threatens to erode such gains.
The bill identifies real concerns such as the risk of addiction and financial loss, the prevalence of manipulative and fraudulent practices in the RMG market, and the use of digital networks for enabling financial crimes such as money laundering and terror financing. Let us consider the efficacy of an outright ban against each of these issues, in turn.
Also Read: Blanket ban on online money games to e-sports push, how new Bill proposes to alter gaming space
Addiction and prohibition
Prohibition has repeatedly proven ineffective against addictive consumer behaviours. The nature of activities that lead to addiction is such that demand for them does not disappear when legal supply is cut off.
Bihar’s alcohol ban, much like the online gaming ban, was introduced in 2016 to curb behavioural issues such as addiction and domestic violence. Since then, at least 190 people have died from consuming illicit liquor in the state—and studies suggest that between 2013 and 2019, the plight of women suffering domestic violence, the supposed reason for enacting the ban, did not change.
The new law also states that the economically disadvantaged are most vulnerable to online gaming-related harms. Yet blanket bans have consistently hurt these groups the most. Wealthier households continue to access banned products such as e-cigarettes and vapes through private networks, while poorer households rarely find safe substitutes and are instead exposed to dangerous, unregulated alternatives.
This same dynamic, where the poor and disadvantaged suffer the consequences of well-meaning legislative action, will likely apply to RMGs. These users also tend to have lower levels of digital literacy and, as seen in Telangana, are more likely to be driven toward fraudulent sites with no safeguards—where the risks of fraud, data theft, predatory lending, and unchecked gambling losses are far higher.
Experience from other shores
South Korea’s “Cinderella Law” banned under-16s from online games after midnight. The measure was rolled back a decade later, when policymakers realised that young users had simply migrated to unregulated platforms. The revised approach was to require greater parental controls, awareness campaigns, and moderation requirements.
The new law also cites the use of manipulative design features (like bots) which undermine platform fairness, and can even enable money laundering. But prohibition hands the entire market to offshore operators on a platter. The United States offers a cautionary tale. After the 2006 Unlawful Internet Gambling Enforcement Act barred payment providers from servicing gambling sites, legitimate operators exited the market. Americans turned to foreign banks and offshore platforms, heightening risks around fraud and money laundering.
By contrast, domestic gaming services, in a quest to seek legitimacy from the state, have voluntarily adopted industry codes of conduct, mandating measures such as platform integrity and anti-money laundering practices like robust Know Your Customer protocols. While such standards are not adopted uniformly in all segments of the RMG industry, they are a starting point for meaningful self-regulation and standard-setting, which can ensure greater accountability and transparency in any industry. Pushing consumers away from entities that were voluntarily walking this path makes little sense.
Also Read: India must rethink compensation for fraud & scam victims. Follow UK-Singapore model
From regulation to retreat
Gaming is also a driver of Digital India. In FY 2022-23, UPI transactions worth Rs 8,370 crore were processed via gaming platforms, with some handling over four billion micro-transactions a month—accounting for one in 300 transactions in the country. For one in five users, their first digital payment is inside a game.
None of this happened in a vacuum. Participants invested in the sector because the government signalled its intent to regulate RMGs. It amended the Information Technology Rules in 2023 to create a regulatory framework centred on self-regulation and a regulatory veto. A Goods and Services Tax regime amendment was also applied to RMGs in 2023. Pulling the rug now will dismantle an industry the state itself helped seed, which runs counter to the principle of legitimate expectations, requiring the state to act in a manner consistent with established practice.
Ideally, India should build on the regulatory architecture already in place by licensing operators, enforcing transparent grievance redressal, mandating responsible gaming standards, and enabling financial oversight through existing anti-money laundering laws. Such concrete steps can protect consumers without driving them into the shadows. If the aim is to reduce harm, not amplify it, the real choice is not between prohibition and inaction, but between regulation and chaos.
Vedika Pandey is a gaming sector expert in Koan Advisory Group, New Delhi. Views are personal.
This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here.
(Edited by Asavari Singh)