Online Gaming, Security, and Regulation in India: Analysing the New Act

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In August 2025, the Government of India handed the Promotion and Regulation of Online Gaming Act 2025 to manage on-line gaming extra successfully, significantly as regards to problems with safety, monetary integrity, and shopper safety. The Act proposes to ban Real Money Games (RMG) and promote and regulate the web gaming sector, together with e-sports, academic video games, and social gaming.

The rationale behind the Act is to manage the varied gaming trade and defend the residents from a number of monetary and well being implications, equivalent to lack of cash in betting, addictive algorithms, in addition to platforms the place terrorist organisations recruit, radicalise, coordinate, and communicate their group actions.

The Act proposes to ban Real Money Games (RMG) and promote and regulate the web gaming sector, together with e-sports, academic video games, and social gaming.

This evaluation examines the intersection between India’s on-line gaming sector and nationwide safety challenges, drawing upon current instances, empirical knowledge, and enforcement data. The new Act argues that regulation isn’t solely a obligatory corrective but in addition a step in direction of formalising a sector whose unchecked growth carries profound dangers. The dialogue illustrates how the Act represents a important intervention to stability financial alternative with nationwide safety imperatives.

The range of customers is equally notable. Platforms entice city millennials, college students, gig financial system staff, and more and more, semi-urban youth with inexpensive web entry. The monetisation of gaming via real-money platforms, in-game purchases, and digital wallets has generated sizeable monetary flows, estimated at INR 31,000 crore as of 2025. However, such progress has created alternatives for exploitation by felony networks and extremist teams.

The on-line gaming trade in India has witnessed unprecedented progress over the previous decade, reworking from a marginal to a multi-action-rupee ecosystem with hundreds of thousands of customers. Given the push within the tech and innovation industries, in addition to the creation and engagement of Internet Protocol (IP), it’s anticipated that the gaming trade will develop to a projected market measurement of US$9 billion and is predicted to drive investor worth by US$63 billion by 2029.

The monetisation of gaming via real-money platforms, in-game purchases, and digital wallets has generated sizeable monetary flows, estimated at INR 31,000 crore as of 2025.

According to a report, India at present homes round 591 million gamers, which is sort of 20 p.c of the worldwide gamer inhabitants. The variety of recreation downloads in India elevated from 5.65 billion in 2019 to 9.5 billion in 2023, capturing 16 p.c of world recreation downloads. The cell gaming sector dominates the market, contributing to 90 percent of the total gaming market in India, pushed by fast technological developments and increasing demand for gaming.

Image 1: Number of Gamers in India Prediction till 2028.

Source: India Brand Equity Foundation (IBEF) Blog

This growth has been augmented by web penetration from cities to metropolitan cities, the supply of inexpensive smartphones, and a younger demographic with a desire for digital leisure. However, alongside this progress, issues have deepened in regards to the misuse of gaming platforms for illicit functions, starting from cash laundering and tax evasion to radicalisation and terror financing.

The financial and safety prices of leaving the sector unregulated are equally stark. Estimates counsel that India lost over INR25,000 crore between 2022 and 2024 attributable to scams, laundering, and associated tax evasion via gaming platforms. These losses characterize not solely financial leakage but in addition injury to shopper belief, investor confidence, and India’s international fame as a digital financial system.

Security Risks: Money Laundering and Financial Crimes

The most urgent concern is using gaming platforms as conduits for cash laundering. The Mahadev App case has been symbolic on this regard. The Enforcement Directorate uncovered a laundering network of over INR6,000 crore linked to the app, involving hawala operators, benami accounts, and cross-border monetary flows. The Hyderabad Chinese app scam revealed one other dimension, with almost INR903 crore siphoned off in 2022–23 via fraudulent mortgage and gaming functions with hyperlinks to China. Similarly, the E-Nuggets scam in Kolkata demonstrated how seemingly innocuous gaming apps had been used to dupe traders, leading to over INR90 crore in losses.

Estimates counsel that India misplaced over INR25,000 crore between 2022 and 2024 attributable to scams, laundering, and associated tax evasion via gaming platforms.

Empirical data underline the systemic scale of the issue. The Financial Intelligence Unit–India (FIU-IND) traced INR4,000 crore in suspicious gaming-related transactions in 2023; whereas recurring shopper losses and tax leakages are estimated to price the exchequer and citizens INR20,000 crore per annum through online real-money gaming. This regular leakage of cash via illicit gaming operations not solely weakens monetary stability but in addition creates avenues for gray cash to enter legit markets.

The Act straight addresses these vulnerabilities by putting gaming corporations underneath a clearer compliance regime. By mandating registration, monetary audits, and alignment with anti-money laundering (AML) requirements, the regulation seeks to shut loopholes that beforehand allowed digital platforms to function with restricted scrutiny. This method is in step with worldwide apply, the place jurisdictions such because the European Union (EU) and Singapore have strengthened monetary surveillance of on-line gaming to pre-empt its abuse by felony syndicates.

Radicalisation, Laundering and Extremist Exploitation

Beyond monetary misuse, on-line gaming platforms have more and more drawn scrutiny for his or her potential position in facilitating radicalisation. While the variety of confirmed instances stays restricted, the development is disquieting. Intelligence companies suspect that extremists may use the chatrooms for recruitment or ideological grooming, much like what has been noticed in Kashmir, the place PUBG is being used for communication. These platforms—usually outfitted with chat rooms, multiplayer voice communication, and anonymous digital identities—present fertile floor for radical components to attach with an impressionable youth. In India’s case, the demographic profile of younger, digitally lively customers makes gaming platforms a pure goal for extremist narratives.

Likewise, laundering and radicalisation are problems with terror financing. While the size is smaller in comparison with narcotics or conventional hawala networks, proof factors to the rising use of gaming platforms to maneuver funds for extremist teams. Reports from regulation enforcement companies estimate that a big sum of cash has been misplaced in scams via gaming-related fee techniques to finance extremist activity. By necessitating Know Your Customer (KYC) compliance for customers, tightening the management of digital wallets, and mandating reporting of suspicious transactions, the Act goals to chop off and minimise the avenues of economic misuse.

These platforms—usually outfitted with chat rooms, multiplayer voice communication, and nameless digital identities—present fertile floor for radical components to attach with an impressionable youth.

The Act’s features, together with obligatory monitoring of content material, traceability of in-game communication, and stricter data-sharing necessities with regulation enforcement, provide a obligatory safeguard. Although such measures elevate issues about privateness and surveillance, prioritising nationwide safety can’t be dismissed. However, it’s important to have a stability between defending freedoms and stopping extremist misuse.

Dimensions of the New Act

Against this backdrop, the Act represents a obligatory and well timed intervention. Its provisions usually are not merely reactive; they chart a forward-looking agenda that integrates safety with financial governance.

1. By formalising the registration of gaming platforms, the regulation will improve transparency and accountability. This creates a stage enjoying discipline for legit corporations whereas discouraging fly-by-night operators.
2. The Act strengthens the buyer safety framework, safeguarding hundreds of thousands of bizarre customers from predatory practices, fraud, and psychological hurt related to unregulated gaming.
3. The integration of financial compliance standards ensures that gaming platforms contribute to tax revenues fairly than erode them. By closing loopholes, the federal government can redirect sources into public welfare whereas guaranteeing investor assurance in India’s digital financial system.
4. Furthermore, the regulation tackles the nationwide safety dimension. By mandating nearer cooperation between gaming corporations and enforcement companies, it positions India to pre-empt threats of laundering, radicalisation, and terror financing. While regulation can’t get rid of misuse, it considerably reduces the dangers and will increase the prices for malicious actors.
5. Finally, the Act situates India inside international finest practices. Countries throughout Europe, East Asia, and North America have introduced comparable regulations, recognising that gaming is now not a trivial pastime however a strategic digital area. By positioning its laws with such requirements, India indicators to home customers and worldwide traders that its gaming sector is secure, credible, and forward-looking.

The Indian Act makes an attempt to strike this stability by emphasising compliance with out shutting the door on innovation.

Balancing Regulation and Growth

Critics could argue that extreme regulation may stifle innovation or drive customers to unregulated offshore platforms. These are legit issues, however they have to be weighed towards the demonstrable dangers. The Indian Act makes an attempt to strike this stability by emphasising compliance with out shutting the door on innovation. By nurturing a trusted setting, regulation is predicted to speed up the sector’s progress by attracting accountable funding and reassuring customers.

Conclusion

The on-line gaming sector embodies each the promise and peril of India’s digital age. Its fast growth has created financial alternatives, cultural shifts, and new types of leisure. Nevertheless, the very options that make gaming enticing—its scale, accessibility, and monetary integration—additionally make it susceptible to manipulation by felony and extremist actors. The misuse of gaming platforms for laundering, radicalisation, and terror financing has already been documented.

The  Act is subsequently not merely a coverage selection however a nationwide necessity. Far from being restrictive, such regulation holds the potential to strengthen India’s digital financial system, improve consumer belief, and align the nation with international finest practices.

Although the anxieties concerning hundreds of individuals shedding their jobs are legitimate, these dangers might be addressed if gaming corporations proactively take part with the federal government.

Although the anxieties concerning hundreds of individuals shedding their jobs are legitimate, these dangers might be addressed if gaming corporations proactively take part with the federal government. Instead of viewing regulation as a limitation, app builders and platforms may search help via incubation schemes, talent improvement programmes, or transitional tax aid to cushion the short-term disruptions.

The Act displays a recognition that digital transformation can’t proceed with out safety, and that safety itself have to be adaptive to the evolving technological panorama. The regulation of on-line gaming, then, isn’t about limiting freedom however about enabling secure innovation, which is an crucial for a rustic navigating the complexities of digital and cyber safety.

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Soumya Awasthi is a Fellow on the Centre for Security, Strategy and Technology, Observer Research Foundation.

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