Online gaming survived the GST blow; new Bill seeks to shut industry

With the introduction of the online gaming Bill, all forms of gaming would face a ban across India

Published: Aug 20, 2025 10:35:46 AM IST

Updated: Aug 20, 2025 10:40:07 AM IST

The Bill doesn’t distinguish between games of skill and chance, a crucial distinction that has allowed online poker, rummy and fantasy sports to be accessible to users. Image: Shutterstock

In a move that is likely to shut down India’s online gaming industry, the government has proposed to prohibit any gaming activity that involves payment of fees with the expectation of winning.

Christened the Promotion and Regulation of Online Gaming Bill, 2025, the regulation is expected to apply nationwide and also regulates entities that operate from outside India but offer services within. The Bill is expected to be introduced in the Lok Sabha on August 20.

The government’s move comes at a time the Supreme Court is set to decide on the retrospective application of the Goods and Services Tax (GST) on online gaming companies. That ruling is expected soon as the court completed final arguments in July. While many in the industry had braced for an adverse ruling, the latest legislation is unlikely to allow them to offer gaming services at all.

Importantly, the Bill doesn’t distinguish between games of skill and chance, a crucial distinction that has allowed online poker, rummy and fantasy sports to be accessible to users.

“The Bill is extremely problematic, prime facie unconstitutional and not sustainable in law. 'Betting and gambling' as well as 'amusements and entertainments' are squarely state subjects and Parliament has no legislative competence to enact laws on the subject; except under Article 252 of the Constitution where two or more state legislatures expressly pass a resolution and allow parliament to enact a law on the subject,” says Jay Sayta, a technology and gaming lawyer.

Still, the government's intent is clear by fact that the Bill says it aims to check unlawful activities, including money laundering, tax evasion, financial fraud as well as the financing of terrorism. It also aims to create a central authority under the Ministry of Electronics and Information Technology.

The gaming industry, which has been caught by surprise is almost certainly expected to challenge this in court, according to two sources. The Supreme Court is in the process of examining issues related to the industry, including whether online gaming is a state or Central subject and whether online skill-based games played for stakes amounts to gambling and betting or not. Judgment is pending in a matter relating to Gameskraft and it remains to be seen how it examines that case in light of the current legislation.