The Indian government is planning a nationwide ban on online games that involve real money, citing concerns about addiction and potential financial harm to citizens. This move is expected to have a significant impact on the burgeoning online gaming industry in India, which has been estimated to generate billions of dollars in revenue annually.

The proposed law, known as 'The Promotion and Regulation of Online Gaming Bill, 2025', has reportedly received Cabinet approval and is expected to be presented in Parliament. The bill aims to prohibit any person from offering online games where users deposit money with the hope of winning more, potentially leading to imprisonment for up to three years and a fine of ₹1 crore for violators. Furthermore, individuals promoting such platforms, including social media influencers, could face imprisonment of up to two years and a penalty of ₹50 lakh. The government may also prevent banks and financial institutions from facilitating transactions for these platforms.

The government's decision is motivated by concerns over money laundering, national security, and the potential for these platforms to be used for illicit activities. There are worries that digital wallets and cryptocurrencies used in online gaming could facilitate money laundering and terror financing. The government is also concerned about offshore entities evading Indian tax and legal obligations through these platforms.

This proposed ban marks a significant shift from the government's stance in April 2023, when the IT Ministry introduced rules for online gaming that were considered industry-friendly. The new bill reflects growing concerns about the harmful societal impact and the potential for financial fraud associated with real-money gaming.

The bill differentiates between online money games and eSports or online social games, with a focus on promoting eSports and online social games. The government recognizes that formal recognition of eSports could spur innovation, create opportunities for the Indian startup ecosystem, and position India as a global hub for game development.

While the central government aims for a blanket ban, gambling regulations in India are primarily governed by state laws. Some states have banned online gambling, while others operate in a legal grey area. States like Goa and Sikkim allow licensed gambling in designated physical locations or via regulated online platforms. Karnataka is also drafting new legislation to regulate online gaming and betting, distinguishing between games of skill and chance.

The Supreme Court has acknowledged the severity of the issue, issuing notices to the central government regarding the need for online betting regulation in India. A Public Interest Litigation (PIL) highlighted the severe social and psychological impacts of online gambling, including suicide cases.

The proposed ban has raised concerns within the online gaming industry, with many fearing the impact on revenue and job creation. Industry bodies have proposed a code of ethics for member platforms to promote user safety and responsible gaming. The government, however, seems firm in its resolve to protect citizens from the potential risks associated with online games played with money. The bill does not criminalize those playing online money games, treating them as victims rather than perpetrators, focusing instead on cracking down on those promoting and facilitating such activities.