Online video games involving actual cash linked to terror financing, Centre tells SC

The Union authorities on Tuesday advised the Supreme Court that unregulated real-money on-line gaming has demonstrable hyperlinks to terror financing and cash laundering, providing to share labeled materials exhibiting the particular nature of those connections because it mounted a vigorous defence of Parliament’s determination to ban such video games solely.

In an in depth affidavit responding to switch petitions filed by gaming corporations, together with Head Digital Works Pvt Ltd, the Centre described the net real-money gaming ecosystem as a “menace” that has enabled systematic prison exercise involving tax evasion, mule accounts, crypto-routed fund diversion, hawala operations and offshore shell entities.

“There is enough material and data that indicates that the unregulated online gaming sector have links with terror financing and money laundering,” the affidavit acknowledged. “Should this Hon’ble Court direct, the respondent is also willing to place the data pertaining to money laundering and terror financing links to online money games in a sealed cover for the perusal of this Hon’ble Court.”

The authorities cited inputs verified throughout a number of ministries and enforcement companies, together with analyses of Suspicious Transaction Reports (STR) and Cross Border Wire Transfer Reports. It stated on-line gaming platforms current high-risk channels for laundering proceeds from drug trafficking, fraud, human trafficking and weapons smuggling.

Investigations revealed using entrance individuals reminiscent of college students, homemakers and retired people whose financial institution accounts function identification shields for prison organisations, the affidavit stated. It famous widespread recruitment of cash mules by social media and messaging apps.

The Centre highlighted a “dramatic and exponential escalation” in suspicious gaming-related transactions, from one STR enquiry in 2019-20 to 239 in 2023-24, involving 7,056 accounts and reflecting 20-fold will increase in each credit and debits. Outward remittances by real-money gaming channels exceeded ₹5,700 crore in FY 2023-24, with a number of Indian entities sending giant sums to international jurisdictions recognized for weak monetary oversight.

“In several years, outward remittances significantly exceeded inward remittances, indicating dominant capital flight rather than foreign investment or winnings coming into India,” it contended. “These movement patterns raise concerns of mis-declared remittances, layering through foreign entities, and movement of user deposits out of India under misleading descriptions.”

The affidavit argued that the real-money gaming ecosystem has severely harmed public well being, brought about widespread habit, pushed weak younger folks into debt traps and pushed dozens to suicide. “There can be no right to profession or trade at the cost of human lives which online money gaming is known to take, month after month, across the country,” it acknowledged.

Citing state-verified knowledge, the federal government famous 32 suicide instances in Karnataka between January 2023 and July 2025, 20 instances in Telangana final yr alone together with seven deaths in a single month just lately, and over 30 suicides in Tamil Nadu in recent times that prompted the Justice Chandru Committee’s suggestions and subsequent state laws.

The authorities estimated that ₹20,000 crore is misplaced yearly by customers to real-money gaming corporations and that roughly 45 crore Indians have been affected by such on-line video games.

Invoking Entries 31 and 97 of List I of the Constitution, the Union asserted that regulation of the digital sphere, together with on-line gaming, falls squarely inside Parliament’s area. It warned that state-wise makes an attempt to manage the sector had produced “regulatory chaos”, with conflicting approaches resulting in raids, FIRs and litigation throughout jurisdictions. The 2023 IT Gaming Rules have been enacted exactly to keep away from such overlap, it stated.

The affidavit criticised gaming corporations for “blowing hot and cold” by arguing earlier than excessive courts that solely the Centre might regulate on-line cash video games, however earlier than the Supreme Court that the Union lacked competence as effectively. “It appears that the online money gaming platforms neither wish to be regulated by the states nor by the Union,” it added.

Rejecting the business’s reliance on Article 19(1)(g), which ensures the proper to practise any career or stick with it any occupation, commerce or enterprise, the Centre argued that providing real-money gaming platforms is “res extra commercium” — outdoors the scope of constitutionally protected commerce. Even in any other case, it stated, affordable restrictions could embrace prohibition, notably when nationwide safety, public order and public well being are straight threatened.

“There can be no right to trade at the cost of human lives,” the Centre stated, including that the business’s declare of job losses and funding impression can not outweigh the grave societal hurt posed by on-line cash gaming.

On the businesses’ assertion about depriving the rights of customers, the Centre maintained: “It is quite shocking that the Petitioner has contended that the impugned Act violates the rights under Article 21 of all its end consumers i.e. the players. In a welfare state, the Union Government has an obligation to serve the larger public interest and when the very lives of the end consumers are at stake and is widely reported to have been subject matters of several hundreds of suicides, the only reasonable measure is a complete prohibition of offering and facilitating of online money games.”

Clarifying that the regulation doesn’t ban all on-line gaming, the Centre stated the prohibition is proscribed to on-line cash video games. E-sports and different non-money on-line video games stay absolutely permitted. “All that the Petitioner has to do is to realign its business model” to adapt to the statutory definition of permissible on-line video games, it added.

A bench led by justice JB Pardiwala had in September transferred all related instances from varied excessive courts to the Supreme Court. The authorities’s affidavit units the stage for a constitutional battle over competence, federalism, digital regulation and the way forward for India’s on-line gaming business.