Online Gaming Law: IT Rules 2023 Framework and the 2025 Act

Online gaming law has moved through three regimes in three years: the 2023 amendment to the IT Rules, which built a self-regulatory verification framework that never became operational; the State law battles over bans on skill based games; and the Promotion and Regulation of Online Gaming Act, 2025, which abandons verification for prohibition, banning online money games outright while promoting e-sports and social gaming. This note covers the definitions, the 2023 framework and its due diligence, the 2025 Act and its interface with the Rules, the State gambling backdrop, and the skill and chance doctrine whose fate now sits with the Supreme Court.

1. The Definitions of the 2023 Amendment

Figure 1: The defined terms

• Online game. A game offered on the internet and accessible by a user through a computer resource or an intermediary, the widest term, taking in everything from chess apps to fantasy leagues.
• Online gaming intermediary. Any intermediary that enables the users of its computer resource to access one or more online games: the platform, store or portal serving the game.
• Online real money game. An online game where the user makes a deposit in cash or kind with the expectation of earning winnings on that deposit; the deposit and the expectation, not skill or chance, mark the category.
• Permissible online game; permissible online real money game. A permissible online game is a permissible online real money game or any online game that is not a real money game; a permissible online real money game is one verified by an online gaming self-regulatory body, the pivot on which the 2023 scheme turned.

2. The 2023 Framework

Figure 2: The self-regulatory scheme as designed

• The amendment. The IT Amendment Rules of April 2023 grafted the gaming scheme onto the 2021 Rules: definitions in Rule 2, gaming entries in the Rule 3 content categories, and the verification framework.
• Online gaming self-regulatory bodies. MeitY was to designate SRBs, industry constituted bodies with independent oversight boards including expertise in child protection, public health and law, to receive applications and verify online real money games.
• Verification of online games. Verification required that the game involve no wagering on any outcome and that the intermediary comply with the Rules, including safeguards against user harm and self-harm, parental controls, age ratings and responsible play measures; a verified game carried the SRB's visible registration mark.
• Additional due diligence for gaming intermediaries. Beyond Rule 3: display of the verification mark; informing users of the policy for deposits, winnings, refunds and withdrawals; KYC identification of users on the lines of RBI customer identification norms before accepting the first deposit; a grievance officer and the compliance establishment where thresholds were met; and a physical contact address in India.
• Financing and credit restrictions. The gaming intermediary was barred from itself financing users or extending credit for play, and from enabling third parties to do so, the anti-debt spiral provision.
• Advertising. No person, and no intermediary carrying advertisements, could advertise, including by surrogate advertisement, an online real money game that was not permissible.
• The framework's fate. Despite applications from industry bodies, no SRB was ever designated; the verification scheme never operated, taxation moved separately to 28 percent GST on deposits, and the Government turned from co-regulation to legislation.

3. The Promotion and Regulation of Online Gaming Act, 2025

Figure 3: The 2025 Act in structure

• The turn to prohibition. Enacted in August 2025 and brought into force in 2026, the Act divides the field in three: e-sports, recognised and promoted as legitimate competitive sport; online social and casual games, encouraged and registrable; and online money games, any game played on a deposit in expectation of winnings, prohibited outright, and expressly whether based on skill, chance or both.
• The prohibitions. Offering, aiding or facilitating an online money gaming service; advertising such services in any media; and processing or facilitating financial transactions toward them, with banks and payment intermediaries barred from servicing money gaming.
• Sanctions and the Authority. Offering a money gaming service and processing its funds carry imprisonment and corporate scale fines, with enhanced punishment for repetition, and advertising carries its own imprisonment and fine; a central online gaming authority registers and categorises games, decides whether a game is a money game, and enforces the Act.
• IT Rules vs the later legislation. The Act, as the later special statute, occupies the money gaming field: the 2023 verification framework is spent, and what survives of the Rules for gaming is the general intermediary layer, gaming platforms remain intermediaries under the 2021 Rules for due diligence, takedown and grievances, while the permissibility of the game itself is now the Act's question. Blocking of offshore money gaming sites continues through s.69A (Topic 68)

4. State Gambling Laws and the Skill Doctrine

Figure 4: The skill and chance line of authority

• The State backdrop. Betting and gambling is a State List field: the Public Gambling Act, 1867 and its State successors penalise gaming houses while excepting games of mere skill, and States from Tamil Nadu to Nagaland wrote their own online gaming statutes, prohibitory or licensing.
• Games of skill vs games of chance. The doctrine: competitions where success depends on a substantial degree of skill are not gambling (Chamarbaugwala), the test being preponderance, so rummy (Satyanarayana), horse racing (Lakshmanan) and, per the High Courts, fantasy sports are skill; three card games like teen patti sit on the chance side.
• The online battles. When Tamil Nadu and Karnataka banned online games for stakes wholesale, the High Courts struck the bans down as disproportionate invasions of the trade in skill gaming (Junglee Games, 2021; All India Gaming Federation, 2022), forcing the narrower re-enactments that followed.
• The 2025 Act's break. For online money games the Act deliberately abandons the distinction, prohibiting deposit based play regardless of skill, on legislative findings of addiction, financial ruin and fraud. Whether Parliament may do what the High Courts stopped the States from doing, given Chamarbaugwala's protection of skill based trade, is the question in the industry challenges now transferred to the Supreme Court, together with the federal question of Union competence over a betting and gambling field.

Figure 5: The field's development in one line

5. Frequently Asked Questions

What was the 2023 IT Rules framework for online gaming and did it operate?

The April 2023 amendment defined online games and real money games, and made a real money game permissible only if verified by a MeitY designated online gaming self-regulatory body as involving no wagering, with due diligence including KYC before the first deposit, disclosure of deposit and winnings policies, a bar on financing users, and a prohibition on advertising non-permissible games. No self-regulatory body was ever designated, so the verification framework never became operational, and the field passed to the Promotion and Regulation of Online Gaming Act, 2025.

6. Related Topics

• Topic 73: IT Rules 2021 Framework. The 2023 amendment in the framework's evolution.
• Topic 68: Blocking Rules 2009. The route against offshore money gaming sites.