The Karnataka High Court is set to hear a significant case on August 30, 2025, regarding the newly enacted Promotion and Regulation of Online Gaming Act, 2025. Leading online gaming company A23 has filed a petition challenging the law, which imposes a complete ban on all forms of online money gaming in India.
This case has attracted nationwide attention as it touches upon the future of India’s online gaming industry, the rights of businesses, and the limits of government regulation. The High Court’s decision could shape the landscape of gaming, digital entrepreneurship, and financial regulation in the country.
Background of the Case
On August 22, 2025, the Promotion and Regulation of Online Gaming Bill, 2025, received President Droupadi Murmu’s assent, officially becoming law. The Bill was passed in the Lok Sabha on August 20 and in the Rajya Sabha on August 21.
The law makes a sweeping change in India’s approach to online gaming by banning all money-based games, regardless of whether they are based on skill or chance. Earlier, the judiciary had consistently distinguished between the two — “games of skill” like rummy and fantasy sports were considered legal, while “games of chance” like lotteries were treated as gambling and were largely prohibited.
However, under the new law, this distinction no longer exists. Any online game involving monetary stakes is now illegal across India.
The Petition by A23
Online gaming platform A23 has approached the Karnataka High Court, challenging the constitutionality of the new law. The petition was mentioned for an urgent hearing by Senior Advocates C Aryama Sundaram and Dhyan Chinnappa on August 28, 2025.
The plea argues that the new law is arbitrary, unconstitutional, and violates fundamental rights guaranteed under Article 14 (Right to Equality), Article 19(1)(g) (Right to Trade and Profession), and Article 21 (Right to Life and Livelihood).
A23 claims that the online gaming industry, which employs thousands and generates significant revenue for the government, is now at risk of collapse due to the sudden shift from regulation to criminalisation.
Key Provisions of the Promotion and Regulation of Online Gaming Act, 2025
The law introduces strict measures to control online money gaming across India. Here are its major highlights:
1. Cognisable and Non-Bailable Offences
Running online money games or processing related financial transactions is now considered a serious offence.
Police can arrest without a warrant.
Authorities can conduct searches without prior approval.
2. Heavy Penalties
First-time offenders face up to 3 years in prison and fines of up to ₹1 crore.
Repeat offenders face harsher punishment, with minimum mandatory sentences and fines up to ₹2 crore.
3. Ban on Financial Facilitation
Banks, payment providers, and intermediaries are prohibited from processing any transactions related to online money games.
4. Creation of a National Regulatory Authority
A new statutory body will be set up to:
Register and classify games
Oversee compliance
Issue guidelines and directions
5. Recognition of E-Sports and Social Games
The law differentiates between online money games and e-sports, allowing the latter to thrive.
Social and educational games without monetary stakes are also exempted and will be promoted.
Government’s Justification for the Ban
The Central Government has defended the law, citing public health, financial safety, and national security. According to the Statement of Objects and Reasons, the ban aims to address several concerns:
Addictive and manipulative design of money-based games, leading to uncontrolled spending.
Financial ruin and indebtedness, particularly among youth and low-income groups.
Mental health issues, including depression and stress, caused by online gaming losses.
Links to money laundering and terrorism financing through illegal gaming platforms.
The failure of state-level bans to regulate offshore operators, necessitating a uniform national law.
The government argues that regulating online money games would be difficult and ineffective, hence a complete prohibition is the “most practical” solution to protect public interest.
The Legal Debate – Skill vs. Chance
For decades, Indian courts have maintained a clear distinction between games of skill and games of chance:
Games of skill — like chess, rummy, and fantasy sports — involve strategic decision-making and were previously considered legally permissible.
Games of chance — like lotteries or roulette — depend on luck and are classified as gambling, which is restricted under most state laws.
The new Act removes this distinction entirely, banning all games involving money, regardless of skill.
Legal experts like Senior Advocate Abhishek Malhotra have criticized this move, stating that it undermines established jurisprudence and violates Article 14 by treating fundamentally different activities the same way.
Impact on the Online Gaming Industry
India’s online gaming sector has been one of the fastest-growing digital industries, employing thousands and contributing significantly to tax revenues. With this ban:
Popular platforms like A23, Dream11, MPL, and RummyCircle may face massive business losses.
Startups in the online gaming ecosystem could shut down due to legal uncertainty.
The government, which previously earned GST revenue from these companies, will lose a significant source of income.
Industry bodies estimate that the sector, which was expected to cross ₹30,000 crore in annual revenue by 2027, now faces a severe downturn.
Arguments by the Petitioners
The petitioners, represented by Advocates Pradeep Nayak and Sankeerth Vittal from Keystone Partners, have challenged the law on several grounds:
Violation of Fundamental Rights
The Act imposes an absolute prohibition instead of reasonable regulation.
Businesses and professionals are deprived of their right to trade under Article 19(1)(g).
Arbitrary and Excessive Criminalisation
Making offences cognisable and non-bailable for online gaming is seen as excessively harsh.
Policy Inconsistency
Until recently, the government taxed online skill games under a lower GST slab, implicitly recognising them as legal.
The sudden shift from taxation and regulation to criminalisation is viewed as inconsistent and damaging.
E-Sports and Social Games Exempted
Interestingly, the Act does not ban e-sports or educational games that do not involve monetary stakes. Competitive gaming governed by sporting rules will continue to be supported and integrated into India’s digital policy framework.
This exemption, however, raises further questions about policy clarity, since many online skill-based games operate under tournament-style formats similar to e-sports.
Public Reactions and Concerns
The law has sparked mixed reactions across India:
Supporters argue that the ban will protect vulnerable individuals from addiction, financial exploitation, and mental health issues.
Opponents claim it will kill innovation, destroy businesses, and push gaming enthusiasts towards illegal offshore platforms.
There are also concerns that excessive restrictions could drive the industry underground, making regulation even more difficult.
What Happens Next?
The Karnataka High Court hearing on August 30, 2025, will be a crucial turning point. The court could:
Uphold the ban entirely.
Strike down specific provisions that are unconstitutional.
Recommend a balanced regulatory framework instead of a complete prohibition.
Depending on the outcome, the case may ultimately reach the Supreme Court of India, given its nationwide impact.
Conclusion
The Promotion and Regulation of Online Gaming Act, 2025 marks a dramatic shift in India’s digital policy, replacing regulation with outright prohibition. While the government argues it is necessary for public welfare and financial safety, critics claim it violates constitutional rights, threatens the growing online gaming industry, and ignores the skill-based gaming distinction established by Indian courts.
With billions of rupees, thousands of jobs, and individual freedoms at stake, the Karnataka High Court’s verdict on August 30 will be closely watched by gamers, businesses, and policymakers alike. This decision could redefine the future of online gaming in India.
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