Editorial: Drawing the line on online games

The passing of the Promotion and Regulation of Online Gaming Bill, 2025, in the Parliament comes after a few states have tried to curb online gambling or gaming with stakes either through new laws or by amending the existing laws. Online gaming evolved without any regulation or oversight, as over 400 startup jumped on the bandwagon, or more appropriately, the gravy train. Funded by venture capitalists and others to the tune of Rs 25,000 crore, their business grew thick and fast as smartphone penetration increased, and with it the nearly insatiable appetite of people for digital entertainment.

Then began to come anecdotal evidence, followed by grim news stories of how gullible people across age groups are getting addicted and slipping into gambling with real money stakes. Many of them were losing hard-earned money, and some even ended their lives as their lifetime savings were wiped out and they ended up in a quagmire of crushing indebtedness. It is a game of big bucks in which common people lose about Rs 20,000 crore a year, while the government earned an equivalent amount in tax revenues and companies raked in the moolah.

Online gaming became big business, and the spoils entered the mainstream business and sports through advertising and sponsorships. For instance, one of the country’s biggest fantasy sports gaming companies became the lead sponsor of BCCI’s Team India. The cricket board is yet to reveal its decision, but for now it says it will comply with the law. Given the Board’s money power and political clout, it is not difficult for them to find a “solution” – be it a loophole, a way to circumvent the law, or even an official amendment. Dream 11’s official statement that it would discontinue "cash games and contests” is indicative of which way things could move. And therein lies the rub.

The major issue was the blurring of the line between online gaming and online gambling; That is, games involve skills, which gambling is all about chance. Unscrupulous entities began to use some games or formats that appear to have an element of skill, but with money, it becomes more like a gambling activity. A section of judicial opinion tended to support the burgeoning online gaming/gambling industry while the powers that be turned a blind eye.

To understand it, one needs to recall Tamil Nadu’s battle to regulate online gaming. It appointed a committee, headed by Justice K Chandru, to conduct an in-depth study and make recommendations. The committee came to the conclusion that a new law banning online gambling games needs to be enacted. The state government followed it up by enacting the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022. It also set up an Online Gaming Authority. The state government had to fight court battles, and an appeal is pending before the Supreme Court.

The proposed legislation brings some much-needed clarity as it differentiates between online games played with real money stakes and skill-based eSports and social gaming and it bans the former and promises to promote the latter. The chips are down for the burgeoning online gaming industry, which will try lobbying and even legal options. There is a grain of truth in their arguments that outright banning would push gamers into illegal networks and unregulated operators, which will become a bigger problem.