India’s fast-growing online gaming sector risks being driven underground by blanket bans and high taxation, Vidushpat Singhania, Managing Partner at Krida Legal, says in an exclusive interview with Yogonet. He argues that prohibiting all online money gaming, regardless of whether it is skill- or chance-based, has fuelled a black market where users lack adequate protection.
Singhania calls for a technology-neutral, co-regulatory framework that codifies the “predominance of skill” doctrine, mandates age verification and KYC safeguards, and creates a central authority to certify permissible games. Regulatory fragmentation between state laws and the Promotion and Regulation of Online Gaming Act, 2025 (PROGA), coupled with a 40% GST, risks pushing users toward unregulated offshore platforms.
India’s online gaming market is expanding rapidly. In your view, how can policymakers design safeguards that protect players without stifling innovation and entrepreneurship?
The current regulatory approach adopted by the Central Government is that of banning all forms of online money gaming, regardless of whether it is skill-based or chance-based. However, outright banning has led to the proliferation of an online gaming black market, where players get little to no protection.
In order to protect players without stifling India’s gaming ecosystem, policymakers should adopt a co-regulatory model that replaces blanket prohibitions with clear, technology-neutral standards. This involves codifying the “predominance of skill” doctrine into a central statute to provide legal certainty for developers while mandating technical safeguards like age-gating, robust KYC, and transparent matchmaking audits.
By establishing a central gaming authority to certify permissible skill-based games, the government can ensure rapid innovation remains aligned with consumer protection. Ultimately, focus should shift from restricting market entry to aggressively targeting unlicensed offshore operators, ensuring domestic startups can scale within a safe, regulated environment.
What are the biggest regulatory gaps today that expose users to risk in the online gaming ecosystem?
“Betting and gambling” is a subject matter that is vested with the state legislatures under the Constitution. This led to the creation of a fragmented regulatory landscape, with each state deciding how it would want to regulate betting and gambling activities within its territorial boundaries. This further resulted in legal ambiguity regarding operations and inconsistent consumer protection, especially in respect of online gaming.
Pertinent to note also is the fact that the promulgation of the Promotion and Regulation of Online Gaming Act, 2025 (“PROGA”) in August 2025 does not mean that the state laws are repealed – a fact that is clear from the provisions of PROGA itself. While the issue of constitutional validity of the PROGA is pending adjudication before the Hon’ble Supreme Court, there are still significant regulatory gaps which expose online gaming users to risks.
There is a lack of a robust, unified central framework to address manipulative mechanics like “loot boxes” and “microtransactions,” which often lead to financial distress and addiction. Furthermore, the strict prohibition on online money gaming sought to be enforced through the PROGA, combined with a high rate of “sin tax” being imposed by way of 40% GST on online gaming, risks driving users toward unregulated offshore platforms that lack grievance redressal and expose players to fraud or data breaches.
Finally, there are insufficient safeguards to prevent the misuse of gaming chatrooms, cryptos and digital wallets for illicit activities like money laundering, radicalisation, online bullying, and harassment.
How can responsible gaming measures such as self-exclusion, age verification, and spending limits be implemented without creating excessive compliance burdens for legitimate operators?
Legitimate gaming operators could explore reducing their excessive, individual compliance costs and burdens by exploring the use of standardised, interoperable systems for Aadhaar-based age verification and unified self-exclusion registers, while ensuring player safety. Mandatory spending limits and “cooling-off” periods can be integrated via automated in-game triggers, moving away from manual monitoring to seamless algorithmic oversight.
This framework was supported by the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 and shifted the burden from constant government policing to industry-led accountability, allowing startups to focus on innovation within a “whitelisted,” safe financial environment. Ultimately, a centralised registry for high-risk players would prevent “platform hopping,” ensuring that safety measures are effective across the entire ecosystem without stifling growth.
What role should state governments versus the central government play in regulating online gaming, especially given India’s federal structure? How does fragmentation between state-level laws, court rulings, and central decisions affect operators, investors, and consumers?
The regulation of online gaming in India requires a balanced and cooperative federalism approach to resolve current legal ambiguity and instability. While ideally the activity should be regulated and licensed at the Central level, considering the current scenario, the Centre is best positioned to establish uniform technical standards, national security protocols, and cross-border enforcement.
State governments should be allowed to retain power to regulate the activity and have a say over local enforcement, and ensure compliance with the standards set. This division of powers would allow for a “floor” of national safety standards while permitting states to implement stricter responsible gaming measures tailored to local demographics.
Currently, the fragmentation between conflicting state bans and the overarching PROGA creates a regulatory double bind, which has left operators facing criminal liability, leading to deterrence in long-term investment due to a lack of regulatory finality and leaving consumers vulnerable as they migrate toward unregulated offshore platforms.
How can clarity in taxation, licensing, and compliance requirements help curb offshore and illegal platforms?
Clarity in licensing, taxation and compliance helps curb illegal and offshore platforms by defining who is legitimate and holding them accountable for their actions. Such clarity makes it harder for unregistered operators to evade oversight or exploit tax gaps.
A clear tax regime forces domestic and foreign suppliers to register and pay due taxes; failure in respect of which would trigger blocking and enforcement actions. Defined licensing standards allow authorities to distinguish compliant platforms from illegal ones, which limits user access to unlicensed services.
Predictability in compliance standards and ease therein also reduces instances that drive users’ traffic towards unregulated offshore operators. Enforcement actions against non-compliant sites (freezing accounts, blocking URLs) become easier with clear legal grounds. Overall, this clarity strengthens market integrity and levels the playing field for regulated operators, both Indian and foreign, while protecting consumers.
How can regulatory reform ensure youth participation in skill-based gaming and eSports while safeguarding against exploitation and harm?
Regulatory reform can ensure that youths participate in skill-based gaming and esports while being safeguarded against harm and exploitation by creating clear, enforceable standards that balance protection with opportunity.
A robust regime mandates identity checks, age verification, and parental consent so that minors are prevented from entering harmful environments and only allowed appropriate access. Reliable age-verification systems also support age-appropriate feature registration and content labelling, limiting high-risk activities like gambling-style mechanics that are banned or closely regulated in many jurisdictions.
Moreover, industry-mandated rules can enforce parental control and responsible design mechanisms that let families manage how young players engage online. Platforms may be required to implement transparent reporting and grievance redressal systems, so that exploitation or abuse is swiftly addressed.
Finally, aligning regulation with youth development goals helps foster healthy competitive pathways structured in esports and skill-based gaming without unnecessary legal ambiguity or risk.
You have been involved in drafting key sports and governance legislation. Why should online gaming regulation be treated as a digital governance issue rather than merely an entertainment concern?
Online gaming touches key digital governance areas like data privacy, consumer protection, cybersecurity and age-verification, rather than being mere leisure, requiring rule-based oversight to mitigate harms. It blurs the boundaries which exist between entertainment and financial transactions, demanding regulation similar to digital financial services. Moreover, risks to users such as exposure to fraud, addiction, financial loss and money laundering involve broader economic and societal concerns.
Fragmented or archaic approaches have created legal ambiguities that harm investment and trust in the digital economy. Treating gaming as a digital governance issue enables clear classification, safeguards, and accountability mechanisms that align with public interest. A digital governance lens integrates industry growth with data protection, public welfare, and consumer rights.
How can a stable regulatory regime contribute to job creation and formalisation within the gaming and esports ecosystem?
A stable regulatory regime would provide legal clarity, which attracts investment into gaming and esports companies, event management, support services, broadcasting and enabling new jobs in development. Clarity in the applicable rules and regulations would also encourage international partnerships and tournaments, which expand professional opportunities.
A stable regulatory regime would help formalise employment standards (contracts, labour protections, etc.) that make careers sustainable and recognized. Formal regulation reduces the uncertainty and promotes industry growth by aligning global norms and domestic markets. It supports infrastructure expansion and skills development by legitimising training and career pathways.
Overall, a stable regulatory regime would foster confidence that fuels job creation and formalisation in the ecosystem.
