Ban on on-line cash gaming has dented confidence in India’s funding ecosystem

The Promotion and Regulation of Online Gaming Act, 2025, is sending shock waves by way of India’s funding ecosystem, far past the web gaming sector. Parliament handed the brand new regulation with only a temporary dialogue, with out satisfactory public or trade consultations. This units a harmful precedent that would derail enterprise confidence throughout industries.

In imposing a blanket ban on all types of “online money gaming” (generally understood as real-money gaming) together with its promoting and monetary transactions, the federal government has moved away from a light-touch method launched by way of self-regulatory our bodies in 2023. It ignored a judicially recognised distinction between video games of talent and likelihood within the course of. This transfer will kill a globally aggressive dawn sector in India, and drive unhealthy actors and practices underground — a hurt purportedly sought to be prevented by the Act within the first place.

A 2025 EY Media & Entertainment report states that greater than 155 million of India’s 488 million players have interaction within the on-line cash gaming phase, making it the one largest element of the nation’s gaming economic system. The sector registered about 10% year-on-year progress, it stated. A joint letter by gaming corporations written final month to the Prime Minister and the Home Minister estimated oblique and direct income loss to be near ₹20,000 crore.

Beyond taxes and investments, Karnataka Information Technology Minister Priyank Kharge says the sector funnels a whopping ₹7,000 crore yearly into promoting, information centres, sponsorships, and cybersecurity, all important elements of India’s digital and inventive economic system. A FICCI-EY report attributed over ₹50,000 crore in oblique job creation to the sector throughout gaming, digital advertising and marketing, and occasion administration. The spillover advantages are immense: empowering gaming corporations to experiment, creating new mental property, and pivoting in direction of different artistic sport choices, resembling free-to-play, indie, and even AAA video games.

The largest casualty of the brand new regulation is belief. By dashing it by way of Parliament with minimal debate, with out considering years value of coverage literature and ignoring calls from the trade for public consultations, the federal government has proven that in a single day regulatory whiplash is now a danger each sector should account for. Even the Department of Consumer Affairs was reportedly not consulted earlier than the Bill was launched in Parliament. Congress MP Karti Chidambaram known as out the “lack of industry consultation” as a knee-jerk response. The absence of course of, reasonably than the ban itself, is what really unsettles buyers.

The ban is especially placing as a result of the federal government had actively championed the web gaming sector up to now. In 2022, the Ministry of Electronics and IT formally introduced the trade inside its ambit, recognising its potential as a part of India’s digital economic system street map. While doing so, it didn’t make a distinction between actual cash gaming and on-line social video games. In 2023, the Ministry went one step forward and got here out with a light-touch regulatory framework for on-line gaming, working with self-regulatory our bodies reasonably than imposing prohibitions. The Ministry of Information & Broadcasting, in 2023, arrange the Animation, Visual Effects, Gaming and Comics Promotion Task Force, which beneficial making a nationwide AVGC-XR Mission, tax incentives, and a devoted skill-building ecosystem. Start-up India hosted game-development challenges and hackathons to showcase innovation, whereas Digital India positioned gaming as part of India’s broader innovation economic system. In different phrases, this was not a fringe sector — it was one the federal government had seeded and nurtured.

These strikes inspired international buyers who noticed India as a market the place authorities endorsement and regulation labored hand in hand to allow innovation whereas defending shoppers.

Belied hopes

Against this backdrop, the abrupt ban marks a stark coverage U-turn. In 2023, the federal government amended the Information Technology Rules to deliver on-line gaming below Central regulation, giving the trade hope after years of fragmented State actions. Now that assurance has been reversed. India has pulled the plug on an trade it as soon as celebrated as a part of the “sunrise economy”, elevating doubts in regards to the reliability of coverage commitments in different sectors, whether or not drones, e-commerce, or AI. This will make it tough for buyers to belief commitments made in different sectors, be it drones, e-commerce, or AI. Newer, revolutionary, and unconventional sectors are at the next danger. For buyers, particularly in high-risk, revolutionary industries, this uncertainty is the single-most chilling precedent.

Will buyers even have the boldness to help authorized video games resembling e-sports and on-line social gaming? The Act empowers the federal government to listen to complaints on on-line video games — which could possibly be any on-line sport — which are prejudicial to the pursuits of customers. Social mores and harms may dictate using this energy.

If the federal government is really dedicated to letting on-line social video games and e-sports develop, it must act now. The authorities wants to indicate the identical degree of alacrity that it displayed in altering the principles of the sport for on-line cash gaming, if it really intends to drive e-sports and on-line social gaming.

Now that the regulation is right here, what can the federal government do to manage the spillovers? Many corporations supply a mixture of video games together with on-line cash video games. The authorities ought to launch an FAQ and clarificatory statements on what video games and sport options are authorized. This Act is not only about separating cash from gaming. It can also be about stopping corporations and buyers from “profiting off the distress” of Indians. Therefore, such FAQ and statements should come as swiftly because the Act did. Clarity interprets to sport mechanics and growth choices, investor confidence, and funding {dollars}.

Rebuilding confidence

The authorities can associate with on-line gaming trade our bodies in India to organise on-line gaming showcases, summits, and investor occasions to attach native builders with international buyers. These occasions might be of a scale and impetus much like that of world investor summits resembling Invest UP that the nation has been internet hosting and even just like the WAVES summit earlier this 12 months in Mumbai. They have to be government-backed on the highest ranges to indicate the worldwide and native investor neighborhood their seriousness to again these segments.

If India needs to retain its place as a hub for digital innovation, it should put money into rebuilding investor confidence — not simply in gaming, however in its regulatory ethos. The credibility of the “India growth story” will depend on it.

Nehaa Chaudhari and Rutuja Pol are companions at Ikigai regulation, a boutique authorized and coverage consultancy that focuses on innovation; Nehaa leads the general public coverage vertical and Rutuja leads the vertical on authorities affairs. Shambhavi Ravishankar, counsel, has offered analysis; views expressed are private

Published – September 05, 2025 12:59 am IST