New Delhi: From bringing the focus back on past attempts by different states to regulate online gaming to reigniting the game of chance versus game of skill debate, the new online gaming bill passed by Parliament promises to alter the landscape of the multi-billion-dollar online gaming industry.
The Promotion and Regulation of Online Gaming Bill, 2025, which was passed Wednesday in the Lok Sabha, completely prohibits “online money games”, including fantasy sports like Dream11, online betting and gambling activities, online casino games, including poker and blackjack, and online lotteries. However, it carves out an exception, allowing e-sports like Dota 2 or Counter-Strike, and online social games, like Candy Crush or Ludo, which are purely for recreational or educational purposes, and don’t involve money.
For the past few years, several states have brought in laws either expressly banning online gaming or gambling, or introducing regulatory regimes for licensing or legalising online gaming, subject to restrictions.
Sikkim, Nagaland and Meghalaya have put in place regulatory frameworks allowing online gaming for certain specific games, and subject to conditions such as licensing requirements. As against this, states like Telangana, Tamil Nadu, Andhra Pradesh and Karnataka have passed laws attempting to restrict the online gaming space.
On 12 August, the Supreme Court reserved its judgment on the legality of the government’s 2023 move to retrospectively impose a 28 percent GST on all online gaming companies—whether games of skill or games of chance. The GST was applied to not just the platform fees or the revenue for the companies, but the entire face value of the bets.
However, this central law now aims to override all these state attempts, and place a nationwide ban on all online games that are played for stakes or money— irrespective of whether the games are games of skill or games of chance. For instance, rummy and poker have been ruled to be games of skill, while games like roulette or lottery have been considered to be games of chance.
Traditionally, games of skill are not considered gambling and are permitted, even if they involve money, but the new bill does not make that distinction at all. In fact, high courts have struck down state laws barring all forms of online gaming involving money, precisely for this reason in the past—asserting that painting online games of chance or of skill with the same brush of prohibition does not stand the test of the Constitution.
The new law, therefore, raises complex legal questions over the Centre’s legislative power to make such a law, as well as the blanket ban that it imposes on all online games involving money.
Also Read: Blanket ban on online money games to e-sports push, how new Bill proposes to alter gaming space
The game of litigation
Online gaming platforms have often found themselves embroiled in the game of litigation at various courts, over the laws that states have attempted at bringing in, to reign in the online gaming industry. While the Centre is attempting to impose a blanket ban on all online gaming involving stakes, a similar attempt by the Karnataka government was thwarted by the Karnataka High Court in 2022.
The HC quashed certain provisions of the 2021 amendments to the Karnataka Police Act, 1963, which criminalised wagering, betting or risking money on the unknown result of an event, be it a game of chance or a game of skill.
The amendment, it ruled, had imposed an absolute embargo on all games of skill. This, it said, violated Article 14 of the Constitution (equality before law) since games of skill and games of chance were treated similarly by the amendment.
It noted that the amendment excluded a lottery or wagering or betting on horse-races, and such races have in the past been held to be a game of skill. The court, therefore, found it discriminatory that one game of skill was allowed, while others weren’t.
The high court also emphasised on the fact that games of skill have been considered to involve elements of expression, and are therefore protected under the freedom of speech and expression under Article 19(1)(a). Further, games of skill are also considered to have a business character and are therefore protected under Article 19(1)(g) (right to practice any profession, or to carry on any occupation, trade, or business) of the Constitution.
Similarly, Tamil Nadu had passed an amendment in 2021, prohibiting all forms of online games, including games of skill, if it is played for a wager, bet, money or other stake. The Madras High Court struck down this amendment, asserting that games of skill are protected under Article 19(1)(g) of the Constitution. Notably, this amendment had the effect of even barring physical games of skill, if they involved “wagering or betting”, terms that included even any cash prize. The court, therefore, observed that the amendment had failed to draw a line between a game of chance and game of skill.
This is one of the concerns that Mumbai-based technology and gaming lawyer Jay Sayta has with the Bill. Pointing to the fact that skill games have constitutional protection under Article 19(1)(g), Sayta, who has represented online gaming companies, told ThePrint, “Since games of skill enjoy constitutional protection, there is a problem with a sweeping ban. Even if I want to play chess with Rs 10, I cannot.”
Chances & skills
Not just amendments on online games generally, high courts have also been faced with the question of whether certain specific online games are games of chance or skill.
For instance, the Punjab and Haryana High Court held in 2017 that Dream11’s fantasy sports “basically arises out of users’ exercise, superior knowledge, judgment and attention,” and was, therefore, a game of skill. It ruled that it has the protection of Article 19(1)(g) of the Constitution. This judgment has since been upheld by the Supreme Court, and has been followed by various high courts as well.
Similarly, after the Madras HC struck down the 2021 amendment passed by the Tamil Nadu Assembly, the state government appointed a committee for formulating a fresh law on online games. This law, Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, was again challenged in the high court.
This new 2022 law bans online games of chance played for money or other stakes. Online games of chance were defined to include rummy and poker. While the high court upheld this amendment, it set aside the inclusion of rummy and poker as games of chance.
In its judgment, the court questioned that if games of rummy and poker were considered games of skill when played physically, would they be considered games of chance just because they were being played online. It observed that “in online games of rummy and poker also, the same brain activity would be involved as required for offline games of rummy and poker,” and asserted that online versions would also be games of skill.
However, determination of the difference between the two often leaves even courts baffled.
For instance, the Andhra Pradesh High Court, in January 2023, constituted a panel to look into the manner in which online rummy is played, to ascertain whether it is a game of chance or a game of skill. The question remains open before it.
A broad brush
The latest law does not make this distinction between online games of chance and games of skill, and according to critics, that is where the flaw lies.
“This Bill does not accept the traditional meaning of betting and gambling, which is to say that betting and gambling covers games of chance, but not games of skill. A classic example of this is that a game of rummy, played for small stakes, is not considered to be betting and gambling, and therefore is not regulated as harmful for the society,” L. Badri Narayanan, executive partner at law firm Lakshmikumaran & Sridharan, told ThePrint.
On similar lines, Akash Karmakar, partner at law firm Panag & Babu, points out that while this new law makes an exception for online sports and social games, it casts “an over broad prohibition on real money games of all other classes”.
The criteria of this distinction, he says, is “based on unintelligible differentiation”.
“If the intent is to stop the public from accessing such games, then this overturns years of judicial precedent, which develops into the intricate distinction between games of skill and games of chance,” he asserts. Karmakar, who has represented online gaming companies, also points out that the real money games that have been prohibited now have been taxed for several years in the “sin tax” category. This policy position, he says, is now being inverted, by reclassifying these games as being illegal and adverse to societal interest.
Narayanan, who has represented several online gaming operators, points out that the law does not differentiate between legitimate businesses and illegitimate businesses which prey on vulnerable people.
“So you are characterising the entire industry, including legitimate businesses, with a broad brush, as one which is not good for the society. Because you don’t have the ability, supposedly, for the purpose of being able to stop the illegitimate businesses, that you attack everybody,” he asserts.
He gives examples of industries in which illegal businesses don’t lead to legitimate businesses also being banned.
“For example, the gutka industry, mining industry, the cigarette industry, the timber industry … for example, if there is illegal cutting of timber in the forest, the entire furniture industry isn’t stopped. You cannot say that mining is happening illegally, therefore now I will stop all mining operations, because I do not know how to stop the illegal mines.
“So I think the broad manner in which this (step) has been taken about is something which is a bit worrisome from a legal perspective,” Narayanan explains.
Who makes the law
Currently several states have their own laws on online games, because ‘betting and gambling’ is a part of the State List (Entry 34) under the Seventh Schedule of the Constitution, which means states have exclusive authority to make laws on the subject.
In March, when DMK MP Dayanidhi Maran questioned the Centre for increasing GST on online gaming, and asked how long it would take the Ministry of Electronics and Information Technology (MeitY) to ban all online gaming sites, Union Minister Ashwini Vaishnaw emphasised on the “federal structure”, pointing towards Entry 34 of the Seventh Schedule.
“I request the honourable member to respect the federal structure of the country and save the Constitution,” Vaishnaw was quoted as saying.
Sayta asserts that the law violates the federal structure enshrined in the Constitution.
“Even assuming that some of these games are not gambling and betting, they are still amusements or entertainment or eSports, so these also fall under the State List, both entry 33 and 34. So it’s clearly an encroachment on the State powers, and the federal structure is being violated,” he told ThePrint.
Sayta points out that the central government can make laws on subjects under the State List only under Article 252 of the Constitution, which requires two or more state legislatures passing resolutions authorising Parliament to pass such laws.
“Parliament cannot impose it on all the states. Now, Sikkim, Nagaland have their own laws, these states license it, allow it, so why would the Centre want to encroach and the Centre itself said multiple times it’s a state subject? They can have a model law, which can be opted by the states if they want,” he asserts. The lawyer also points out that the Supreme Court had extensively heard arguments over a period of 31 days, hearing arguments on games of skill, games of chance and legislative competence.
“So when this issue is pending, when the Supreme Court is going to deliver a judgment shortly, they should have waited until that to bring in this law.”
(Edited by Tony Rai)