India has enacted a groundbreaking law to prohibit online money games, raising concerns over their addictive nature and the financial distress they cause among users. The bills are a nationwide first and should serve as a model for a federal ban. It brings an extreme punishment for anybody providing or enabling access to these games, such as 3 years imprisonment and a fine of up to 10 million rupees.
Contrast this with 2023, when the federal government went to great lengths to prevent expanded online gaming. They mandated a 28% tax on all wagers in this vertical. This move came on the heels of increasing concerns regarding the negative impact that online gambling was having on billions of Indians. Federal IT Minister Ashwini Vaishnaw underscored alarming risks associated with online gaming and understood their disciplinary/reformist potential. He said the misery caused by these games has affected about 450 million Indians, causing over 200 billion rupees in financial losses and precipitating mental health crises such as depression and suicides.
Until now, rulings from a number of Indian high courts have deemed online cash games to be “games of skill,” thus permitting them to evade gambling legislation. The new law represents a seismic shift in this legal terrain. In 2022, India’s Supreme Court sustained a judgment of the Punjab and Haryana High Court. This decision was significant because it classified fantasy sports as games of skill, further muddying the waters in the still contentious debate regarding these platforms.
This unexpected and blunt approach has drawn the ire of industry stakeholders, who claim it ignores the realities of the economy. Smrita Singh Chandra, who previously managed policy communications at Dream11, criticized the legislation for being implemented “without transition, nuance, or consideration of economic realities.” At one point, Dream11 was even valued at $8 billion and used to take pride in sponsoring India’s national cricket team. The recent ban has cast a dark shadow over its future.
My11Circle, the second-most-prominent player in the $2.5 billion online gaming space, is facing an existential crisis. The platform was one of the official partners of the Indian Premier League (IPL), currently the richest cricket tournament on the planet. Prior to the ban, India was home to nearly 400 real-money gaming startups. Alone, together they created almost $2.3 billion in new annual tax revenues and over 200,000 new jobs.
Critics of the ban contend that it would backfire. Kartik Srinivas, a 26-year-old who lost more than 1.5 million rupees (about $17,000) due to his online money-game gambling addiction. Yet he is now crying crocodile tears about accountability in the gaming industry. He remarked, “At least with these apps there was some accountability—without them, things might get worse.”
Vishal Gondal, co-founder of nCore Games, even more deeply undermined the premise that online money games are skill games. He stated that such branding is misleading: “Games of skill is like branding alcohol as fermented juice.” His statement underscores the growing sentiment in the gaming world about how online gaming platforms are viewed and regulated.
The Indian cricket board took a strong stance when it terminated its sponsorship with Dream11. This recent federal decision is a reminder of how the new law is already disrupting the status quo for legacy players in the industry. Odisha, Assam, Andhra Pradesh and Telangana all enacted their own bans on online money games before the federal law had a chance to go into effect. It illustrates the increasing trend toward stricter regulation around the country.
As India continues to grapple with this challenging balancing act, the effects of the new law will play out in a number of different ways. Our federal government still has a fundamental responsibility to protect citizens from the worst impacts of online money games. Stakeholders are concerned about the immediate loss of their jobs and the economic impact of this abrupt policy change.