Banning gambling backfired on several Indian states because courts struck down their online gaming bans and players moved to offshore sites that paid no tax. States such as Tamil Nadu, Kerala and Karnataka tried bans, Karnataka as recently as 2021. In 2025, Parliament replaced the patchwork with a national law banning online money games, in force from 1 May 2026.
This article was first written in 2021, when Karnataka became the latest state to ban online games played for money. Much has changed since. Below is a clear explainer of what the states tried, why critics said the bans backfired, and where the law stands in October 2026.
Quick facts: online gaming law in India
| Point | Status |
|---|---|
| Old central law | Public Gambling Act, 1867 |
| Who regulated earlier | States, since gambling is a state subject |
| New central law | Promotion and Regulation of Online Gaming Act, 2025 |
| Passed by Parliament | Lok Sabha on 20 August 2025, Rajya Sabha on 21 August 2025 |
| President’s assent | 22 August 2025 |
| In force | 1 May 2026, with the Online Gaming Rules, 2026 |
| What is banned | Online money games, whether based on skill or chance |
| What is allowed | E-sports and online social games |
Why states banned online gambling
Gambling is a state subject, so each state wrote its own rules. The only central law for years was the Public Gambling Act of 1867, which targets physical gambling houses and carries small fines of Rs 200 or up to three months in jail for running one. It was written long before the internet.
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During the Covid-19 lockdowns, online rummy, poker and fantasy sports apps grew quickly. Without regulation, people could lose large sums or fall for scam sites, and states saw this as a public safety issue. Telangana cited the safety of citizens when it introduced its prohibition. Tamil Nadu, Kerala, Andhra Pradesh and, in 2021, Karnataka followed with bans or restrictions of their own.
How banning gambling backfired on the states
1. Courts struck the bans down
The biggest problem was legal. In 2021, the Madras High Court struck down Tamil Nadu’s ban on online rummy and poker played for stakes, holding that games involving skill are not the same as gambling. The Kerala High Court followed by lifting the state’s ban on online rummy.
These rulings showed that a blanket state ban on skill games was hard to defend in court, and states had to go back and draft new laws.
2. Players moved to offshore sites
Critics argued that bans did not stop people from playing. Users downloaded apps from outside official app stores or used foreign betting sites, which are harder to monitor and offer no Indian consumer protection.
When a country or state blocks local operators, players tend to shift to sites licensed in places such as Malta or Gibraltar, where Indian authorities have little reach.
3. States lost tax revenue
Licensed Indian platforms paid taxes and employed people. Industry groups argued that bans pushed money towards unregulated offshore operators instead, so the state lost revenue while the activity carried on.
At the time, the All India Gaming Federation, led by CEO Roland Landers, argued that skill games are different from gambling and that a ban was not the answer, pointing to responsible gaming safeguards on licensed platforms.
4. Regulation was the alternative
The other model, followed by many European countries including Sweden, is to license and regulate operators. Regulators can check fairness, block scam sites, require fraud and money laundering checks, limit advertising and make operators offer help for addiction.
In 2021, many observers expected India to move towards this model. It did not.
What changed: the Online Gaming Act, 2025
In August 2025, Parliament passed the Promotion and Regulation of Online Gaming Act, 2025. Instead of licensing real money games, it bans them nationwide. The ban covers online games where users stake money in the hope of winning more, whether the game is based on skill or chance, and it extends to advertising and promoting such platforms. Poker, rummy and paid fantasy sports are among the formats affected.
At the same time, the Act supports e-sports and online social games that do not involve staking money. A central authority, the Online Gaming Authority of India under the Ministry of Electronics and Information Technology, handles game classification, registration, complaints and enforcement. Registered platforms must verify age, offer parental controls and usage limits, and set up grievance systems.
The Act and the Promotion and Regulation of Online Gaming Rules, 2026 came into force on 1 May 2026. Running an unlicensed money gaming platform can lead to fines and imprisonment of up to three years.
Court challenges
Gaming companies challenged the Act in the Karnataka, Delhi and Madhya Pradesh High Courts. At the Centre’s request, the Supreme Court transferred these cases to itself in September 2025 and began hearing them from November 2025. Readers should follow official updates for the final outcome.
What it means for users
- Real money gaming apps: offering or promoting them in India is now illegal under the central Act.
- E-sports and free games: remain legal and are meant to be promoted.
- Offshore betting sites: using them carries legal and financial risk, with no protection if money is lost.
- Help: anyone struggling with gaming losses should speak to a counsellor or doctor.
Read more explainers in our finance section, technology section and infotainment section.
Further reading: Adgully.com.
Frequently asked questions
Is online gambling legal in India in 2026?
No. Online money games, including skill-based ones played for stakes, are banned nationwide under the Promotion and Regulation of Online Gaming Act, 2025, in force from 1 May 2026.
Why did state gambling bans fail?
Courts struck down some state bans on skill games, players shifted to offshore sites, and states lost tax revenue while the activity continued.
Are fantasy sports and rummy apps banned?
Versions played for money are covered by the ban. Free-to-play versions and e-sports remain allowed.
Who regulates online gaming in India now?
The Online Gaming Authority of India, under the Ministry of Electronics and Information Technology, classifies games and enforces the rules.
Sources: Wikipedia: Online Gaming Act, 2025, Wikipedia: Gambling in India, Ministry of Electronics and Information Technology, Inc42: Kerala High Court lifts online rummy ban.
