The Promotion and Regulation of Online Gaming Act, 2025, which received Presidential assent on August 20, marks a turning point in how India regulates online gaming. For the first time, the Central Government has introduced a comprehensive national framework that seeks to promote e-sports and social games, while at the same time imposing a blanket prohibition on all forms of online money gaming.
This Act is significant because it discards a principle that Indian courts have upheld for decades—the distinction between games of skill and games of chance. Under this new regime, the difference no longer matters: any game involving money stakes is banned. The law uses exceptionally broad definitions to describe what constitutes an “online money game,” “online money gaming service,” “online social games,” and even “other stakes.”
This breadth creates a legal grey zone, especially for businesses that are not traditionally part of the gaming industry. Many digital services—from payment apps to e-commerce platforms and food delivery apps—use promotional campaigns to engage users. These often take the form of loyalty games, cashback contests, or “scratch and win” offers. The concern is that such features, though not intended as gambling, may fall foul of the new regime, along with traditional online money games.
To see why this grey zone exists, it is important to unpack how the Act defines different categories.
An “online money game” is any online game, whether based on skill or chance, in which:
- a user pays a fee, deposits money, or places “other stakes”;
- the expectation is to win something of monetary or non-monetary value;
- and the reward results in monetary or other enrichment.
The term “other stakes” is particularly expansive. It includes not only real money but also credits, coins, tokens, or any virtual equivalent—so long as they are purchased with money, directly or indirectly.
By contrast, “online social games” are permitted. These are entertainment-oriented games that may require a subscription or one-time fee, but importantly, they do not involve staking money or providing monetary rewards.
The Act also makes a clear exception for e-sports, which are considered competitive and skill-oriented digital sports events.
Chapter III of the Act imposes a blanket ban on the offering, promotion, or financial facilitation of online money games. Even banks and payment providers are explicitly barred from processing transactions linked to such games.
The penalties are severe. Operators who violate the law can face up to three years’ imprisonment and fines of ₹1 crore, with harsher punishments for repeat offenders.
To handle classification disputes, Section 8 empowers the Central Government to set up an Authority. This body will have the power to decide whether a particular game falls into the prohibited or permitted category.
The tricky question is how this law impacts non-gaming apps that use gamified promotions. Consider a common example:
- A customer orders food on a delivery app or pays a bill on a digital wallet.
- Upon successful payment, the app offers a virtual scratch card.
- Scratching reveals a reward: cashback, a discount voucher, or a free trial.
Here, the primary transaction is for food or a financial service, not for gaming. But the scratch card is conditional on payment, meaning there is an indirect consideration. Because rewards like cashbacks or vouchers qualify as “monetary or other enrichment”, the promotion could be treated as an online money game under the Act.
The same reasoning applies to mini games on apps that offer partner discounts, redeemable rewards, or bonus coins. Even if such games are designed as marketing campaigns, the law’s broad language makes little distinction. What matters is whether there is a stake and the possibility of winning something of value.
This is where the Act creates real uncertainty. Businesses may argue that promotional games are simply marketing schemes meant to boost sales, not gambling or online money games. But the Act’s blanket ban on any online money game makes such arguments less persuasive.
By removing the distinction between games of skill and chance, the law captures activities that have historically been treated as harmless. Loyalty programs, gamified scratch cards, or spin-the-wheel offers could suddenly be under scrutiny.
The consequences of this ambiguity are far-reaching:
- Regulatory Risk – Companies running promotional campaigns may unintentionally violate the Act and expose themselves to severe penalties.
- Chilling Effect on Innovation – Businesses may abandon gamified engagement strategies, fearing that regulators will categorise them as illegal.
- Dependence on Clarifications – Until the new Authority issues official guidelines, businesses have no legal certainty on whether their promotions are permissible.
For digital platforms, this means walking a tightrope. What was once a harmless way to engage customers may now be a potential compliance minefield.
The Promotion and Regulation of Online Gaming Act, 2025 is a bold step in attempting to regulate the fast-growing online gaming industry. By drawing a hard line between permitted social games and banned money games, the government has simplified enforcement but created unintended challenges.
Promotions like scratch cards, cashback games, and discount-driven mini games—commonly found on apps that have nothing to do with gaming—could now fall into the same prohibited category as online poker or rummy.
Until the Authority clarifies how it will interpret the Act, non-gaming platforms offering such promotions remain vulnerable. Businesses will need to be cautious, possibly rethink engagement models, and prepare for regulatory scrutiny.
In short, the Act closes one door—curbing online money gaming—but risks opening another: pulling ordinary digital promotions into a legal grey zone that India’s digital economy can ill afford.
(The author is a sports and gaming lawyer. He is also managing partner, Krida Legal)
