Policy Changes

Co-regulatory federal framework for online games shelved, proposed establishment of a government regulator for online games

In April 2023, certain amendments (“IT Rules Gaming Amendments”) to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (the “IT Rules”) sought to introduce a co-regulatory framework between the Ministry of Electronics and Information Technology (“MeitY”) and designated self-regulatory industry bodies (SRB) to regulate online gaming in India. The IT Rules Gaming Amendments sought to introduce specific regulations for permissible online real money games (PORMG) and online gaming intermediaries (OGI); ie, entities that enable their users to access one or more online games.

However, the IT Rules Gaming Amendments were never operationalised through the designation of SRBs. MeitY, the nodal Ministry for online gaming, has now reportedly rejected applications by SRBs, due to concerns over the SRBs being heavily dominated by certain industry operators. 

Given that the IT Rules Gaming Amendments were not brought into effect, the authors have not discussed their provisions in these chapters.

Introduction of 30% withholding tax on net winnings for OGIs

The Finance Act, 2023 overhauled the tax regime for income from online games and created a distinction between taxation of online and offline games. In this regard, Section 115BBJ was introduced in the Income Tax Act, 1961 (ITA) to provide for 30% tax on net winnings earned by players from an “online game”. An “online game” is defined as a game that is offered on the internet and is accessible by a user through a computer resource, including any telecommunications device. Hence, this tax is applicable to all types of online games; ie, games of skill or games of chance.

Section 194BA was also introduced in the ITA to impose a withholding tax obligation on persons responsible for paying any income by way of winnings from any online game during a financial year at the rates in force. Tax is required to be withheld on the “net winnings” amount, which is computed as per the manner prescribed by the Central Board of Direct Taxes (CBDT). These provisions have been effective from 1 April 2023. 

Introduction of 28% Goods and Services Tax for online gaming, casinos and horse racing

In August and September 2023, the central government amended the Central Goods and Services Tax Act, 2017 (the “CGST Amendment Act”) as well as the Central Goods and Services Tax (Third Amendment) Rules, 2023 (the “CGST Amendment Rules”) to implement goods and services tax (GST) at the rate of 28% on the full value of the amount paid, or payable to, or deposited with, the online gaming platform, starting 1 October 2023.

The tax amendments are addressed in greater detail in 12. Tax.

Developments in Animation, Visual Effects, Gaming and Comics, and Extended Reality

In September 2024, the Union Cabinet approved the establishment of a National Centre of Excellence for Animation, Visual Effects, Gaming, and Comics and Extended Reality (AVGC – XR) in Mumbai, Maharashtra, India.

This Centre is envisaged to promote skilling, education, industry development, research and innovation in the industry. It is also expected to act as an incubation centre for start-ups in the industry.

Additionally, the Ministry of Information and Broadcasting (MIB) has announced that a National AVGC-XR Policy will soon be implemented, along with the launch of a National AVGC-XR Mission. This will serve as a comprehensive framework to guide the sector’s development. It will also provide direction to individual states, enabling them to formulate their own AVGC policies.

Telecom Regulatory Authority of India Recommendations on the MIB’s National Broadcasting Policy

In April 2024, the MIB released a consultation paper seeking inputs for formulation of a draft National Broadcasting Policy. The consultation paper recognised the promising growth trajectory of the Indian online gaming industry, whilst seeking inputs on policy and regulatory aspects to (i) enhance the growth of the industry, (ii) enhance the growth of local game developers, and (iii) introduce measures to protect players.

The Telecom Regulatory Authority of India (TRAI) released its recommendations in response to the consultation paper in June 2024, recommending, amongst other things, promotion and facilitation of local Indian gaming content, incentives to attract skilled gamers, content creators and industry professionals to make India a “Gaming Content Hub”.

Introduction of New Criminal Laws

The criminal laws in India have been revamped with the introduction of three new criminal statutes by the central government including the Bharatiya Nyaya Sanhita, 2023 (BNS), with effect from 1 July 2024.

The BNS has expanded the definition of petty organised crime to include (i) unauthorised sale of tickets, and (ii) unauthorised betting or gambling by a member of a group or gang, either by themselves or jointly with others. This is punishable with imprisonment for a term not less than one year which may extend to seven years and a fine. Hence, persons engaging in unauthorised gambling as defined under the respective Gaming Enactments (as defined in 2.1 Online), as part of a group, could be liable under this provision.

Advertising Restrictions

State-specific changes

Certain state-level policy changes are expected. Currently, various states are in the process of introducing state laws to implement the newly introduced 28% GST for the gaming industry.

Tamil Nadu

The State of Tamil Nadu enacted the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2023 (TNOGA) effective on 10 April 2023.

The TNOGA (i) prescribes registration of local online games providers and (ii) prohibits offering, playing and advertising online gambling on games of chance with stakes. Poker and rummy were categorised as games of chance.

On 9 November 2023, the High Court of Madras struck down the prohibition on rummy and poker as unconstitutional, whilst upholding the constitutionality of other provisions of the TNOGA.

In August 2023, a five-member Tamil Nadu Online Gaming Authority was constituted to register online games and introduce regulations for such online games, including time limits, monetary limits, age restrictions, issue show-cause notices to defaulting online games providers, and suspending/revoking registrations in certain scenarios.

Pending Litigation

There are several cases pending before the Supreme Court and High Courts in India.

Supreme Court litigation

The Karnataka High Court struck down a GST “show-cause notice” issued by the tax authorities against Gameskraft Technologies Pvt. Ltd. (“Gameskraft”), a rummy operator, on the basis that the game was not “betting and gambling”, but a game of skill. On appeal by the tax department, the Supreme Court issued a temporary stay on the order, and the matter is still pending. Several other gaming operators have received similar show-cause notices, which the operators have challenged before the respective jurisdictional High Courts. These petitions pending before the High Courts have been transferred to the Supreme Court for a consolidated hearing with the Gameskraft matter.

The question of whether sports betting is a game of skill is pending before the Supreme Court in the case of Geeta Rani v Union of India & Others (the “Geeta Rani Case”). If the judgment concludes that it is a game of skill, sports betting will be exempt from prohibitions under most Gaming Enactments (as defined in 2.1 Online) and may be offered in most Indian states.

The Supreme Court has also stayed the operation of a Bombay High Court order that held that fantasy sports games are games of skill. Accordingly, the Supreme Court may take up the question of whether fantasy sports qualify as games of skill. Notably, several other High Courts in the country have recognised fantasy sports games as games of skill. The Supreme Court has also dismissed several petitions seeking permission to appeal against these orders.

The state of Karnataka sought to introduce legislation to prohibit all online games for stakes, including games of skill. These bans were struck down as unconstitutional before the respective states’ High Courts. These appeals are pending before the Supreme Court.

State litigation

GST matters in Bombay, Gujarat, Sikkim, Delhi, Rajasthan, Punjab and Haryana

Several skill gaming operators have filed petitions in the High Courts of Bombay and Gujarat, challenging show-cause notices issued by tax authorities seeking to impose 28% GST on the entire buy-in amount. Majority High Courts have granted stays on the enforcement of the notices or orders. These petitions have now been consolidated with the Gameskraft case and are pending adjudication before the Supreme Court.

Maharashtra

A public interest litigation has been filed in Maharashtra seeking a ban on offering and advertising online rummy, claiming that it amounts to gambling. Various Indian courts have previously recognised rummy as a game of skill.

Delhi

A non-government organisation has challenged the constitutional and legislative validity of the IT Rules Gaming Amendments in a petition before the Delhi High Court. Per reports, it has been alleged in the petition that the IT Rules Gaming Enactments go beyond the rule-making powers of the Information Technology Act, 2000 (the “IT Act”). The petition further reportedly alleges that the Centre has issued the amendments by usurping the state’s exclusive legislative competence to regulate online gaming.

A suit was filed by a gaming operator against an app store in the High Court of Delhi, alleging that the app store discriminated against the operator by displaying a warning to users when downloading the game. The suit is currently pending final adjudication before the Delhi High Court. 

Andhra Pradesh

The Andhra Pradesh Gaming Act, 1974 was amended to prohibit all online gaming activities for stakes (including games of skill). The amendments were challenged before the High Court of Andhra Pradesh, where the High Court directed the state government to form a committee to assess whether rummy, which has been held to be a game of skill, is still a game of skill in online form. The state of Andhra Pradesh appealed against the High Court’s direction to appoint a committee in the Supreme Court. The Supreme Court dismissed the state’s challenge to this direction and directed the High Court of Andhra Pradesh to proceed to assess the matter. There have also been certain restrictions introduced on misleading gaming advertisements and surrogate advertisements for gambling products, which are covered in 9.4 Restrictions on Advertising.

Indian gaming laws operate at a state and a central level. There are specific Gaming Enactments (as defined below) to regulate gaming/gambling activities in each relevant state. 

State Gaming Enactments

Betting and gambling are state matters under the Constitution of India, so each state has the exclusive legislative competence to enact laws relating to betting and gambling within the state. The Public Gambling Act 1867 (PGA) has been adopted by certain states in India, whereas other states have enacted their own pieces of legislation to regulate betting and gambling activities within the state (the “State Enactments”) (the PGA and State Enactments are collectively referred to as “Gaming Enactments”).

Most Gaming Enactments were enacted prior to the advent of virtual/online gambling and therefore primarily prohibit gambling activities within physical premises (defined as a “common gaming house”). Different states have taken different approaches with respect to whether these prohibitions apply to online operators.

Central Gaming Amendments

As discussed in 1.1 Current Outlook and Recent Changes, the IT Rules Gaming Amendments have been shelved and the central government is considering appointing a federal (central) regulator for permitting and certifying online games instead.

Betting

Betting on games of chance is prohibited under most Gaming Enactments. The treatment of betting on sports and horse races under Indian law is discussed below.

Betting on horse races

In the case of Dr KR Lakshmanan v State of Tamil Nadu (the “Lakshmanan Case”), the Supreme Court held that betting on horse racing is a game of skill. Accordingly, it is exempt from the prohibitions under most Gaming Enactments.

Most Gaming Enactments have carved out an exception for “wagering or betting upon a horse race” from the definition of gaming/gambling (the “Horse Racing Exemption”). However, the Horse Racing Exemption is subject to certain conditions under the Gaming Enactments – for example, wagering or betting must take place on the day on which the horse has run and in an enclosure that has been sanctioned by the state government. In the case of online horse racing betting, it would be difficult for these conditions to be met. However, one could argue that a horse racing bet is a game of skill independent of the Horse Racing Exemption.

During the COVID-19 pandemic, two Indian horse racing clubs (the Mumbai, and Calcutta Turf Clubs) received permission from the state governments of Maharashtra and West Bengal respectively to offer online betting on the horse races conducted in these clubs. The Hyderabad Race Club (“HRC”) also started accepting bets online with the club’s totalisator.

The state of Karnataka refused to grant a licence to the Bangalore Turf Club to conduct horse races and betting on horse races in June 2024, which has been challenged by the Bangalore Turf Club before the state High Court. The matter is still pending.

Sports Betting

The question of whether sports betting is a game of skill is pending before the Supreme Court in the Geeta Rani Case.

It can be argued that sports betting is also a game of skill based on the principles laid down in the Lakshmanan Case. However, the view held by most enforcement authorities in India is that sports betting is a gambling activity and is thus prohibited. Further, in the recent years, there has been heightened scrutiny and enforcement action against remote gambling operators offering and advertising sports betting products in India.

Bingo

Depending upon the format, bingo may fall within the definition of a “lottery” or under the general definition of betting/gambling under most Gaming Enactments. It is a game of chance and prohibited in most Indian states. The Bharatiya Nyaya Sanhita, 2023 (BNS), which replaced the erstwhile Indian Penal Code, 1860, specifically prohibits private lotteries by prescribing that whoever keeps any office or place for the purpose of drawing any lottery, not being a state lottery or a lottery organised by the state government, will be punishable with imprisonments or fines. Accordingly, lottery products cannot be offered in most parts of India.

Only the Sikkim Online Gaming (Regulation) Act 2008 (the “Sikkim Online Act”) introduces a licensing regime for punto banco and bingo through the state-wide intranet.

Casino Games

Casino games are predominantly chance based. As such, they are treated as betting and gambling activities and are therefore prohibited under most Gaming Enactments.

The states/union territories of Goa, Daman and Diu, and Sikkim prescribe a licence regime for land-based casinos. The Sikkim Online Act covers certain casino games (eg, roulette, casino brag and blackjack) that may be offered through the state-wide intranet within Sikkim only.

Lotteries

Under the Lotteries (Regulation) Act 1998 and the Lotteries (Regulation) Rules 2010 (collectively, the “Lottery Laws”), state governments have the power to organise, conduct and promote lotteries, subject to certain conditions.

The Lottery Laws empower state governments to appoint individual or corporate entities as “distributors” or “selling agents” to market and sell lotteries on behalf of the organising state.

Some states permit and regulate state-run physical lotteries, whereas all types of lotteries have been banned in certain other states.

The BNS specifically prohibits private lotteries as stated above.

Fantasy Sports

It can be argued that certain versions of fantasy sports games are preponderantly skill-based games. Accordingly, such games can be treated as exempt under most Gaming Enactments.

The High Courts of Punjab, Haryana, and Rajasthan have held the Dream 11 format of fantasy sports to be a game of skill and the Supreme Court has also dismissed several petitions seeking permission to appeal against such High Court orders.

The High Court of Bombay has also recognised it as a game of skill. However, at the time of writing (October 2024), there has been a stay order imposed on the judgment of the High Court of Bombay by the Supreme Court. Accordingly, the Supreme Court may examine this issue now. 

The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act 2015 (the “Nagaland Act”) expressly recognises virtual team selection games and virtual sports fantasy league games as games of skill. If such games are to be offered online in Nagaland, a licence would be required.

Social Gaming

Social gaming refers to those games in which players don’t pay money to participate, and no real-money prize in terms of money or equivalent worth is offered to the winner.

Depending on the format and content of such games, certain other issues may need to be considered, such as:

• whether the game amounts to a “prize competition” and is therefore subject to regulation under the Prize Competitions Act 1995;
• whether the content of the game would trigger any laws prohibiting certain types of content;
• advertising regulations applicable to in-app advertisements displayed in the game; and
• applicable data protection laws if Indian users’ data is being collected, processed and/or transferred to a foreign entity.

The MeitY blocked several social gaming apps with Chinese ties after the Ministry of Home Affairs raised security concerns over Indian user data. 

PUBG was one of the apps initially blocked in September 2020. However, thereafter, MeitY permitted Krafton to conditionally re-launch a new app in June 2021, Battlegrounds Mobile India (BGMI), subject to quarterly assessments. The ban was later completely revoked in August 2023 after BGMI complied with the conditions set by the government. This may set a precedent for additional blocked apps to be re-launched in India.

Poker

Arguably, certain variations of poker are games of skill for the purpose of most Gaming Enactments. Accordingly, offering such games should be permitted in most Indian states that have an exemption for games of skill.

Furthermore, the Gaming Enactments/courts in certain Indian states have specifically recognised poker as a game of skill in the following instances:

• West Bengal has specifically excluded poker from the definition of “gambling” under the West Bengal Gambling and Prize Competitions Act 1957; 
• the Nagaland Act has specifically categorised poker as a game of skill;
• the Karnataka High Court has also held that a licence is not required under the Karnataka Act when poker is played as a game of skill; and
• in the Tamil Nadu TNOGA Order, the High Court of Madras has read down the TNOGA to the extent it sought to prohibit Poker, by holding that Poker is a game of skill, and hence any prohibition on Poker would be unconstitutional. 

The High Court of Gujarat held that poker is a game of chance and a gambling activity. An appeal has been filed against this order and has been pending before the Gujarat High Court since 2018.

Betting

As discussed in 2.1 Online, the Supreme Court held in the Lakshmanan Case that betting on horse racing is a game of skill and therefore exempt from the prohibitions under most Gaming Enactments.

In the case of betting on real (physical) horse races, the conditions prescribed under the Horse Racing Exemption would need to be met. Turf clubs regulate betting on physical horse races within their premises.

Poker/Bingo/Gaming Machines/Lotteries

Please see 2.1 Online, which also applies to physical versions of these games.

Casino Games

Only the States of Goa, Daman and Diu, and Sikkim regulate casino games in land-based form. The casinos in Goa and Daman and Diu are regulated under the Goa, Daman and Diu Public Gambling Act 1976 (the “GDD Act”), which prescribes a licensing regime for:

• “games of electronic amusement/slot machines” in five-star hotels; and
• table games and gaming on board offshore vessels under the terms of a licence in Goa and Daman and Diu.

The casinos in Sikkim are regulated under the Sikkim Casinos (Control and Tax) Act 2002 and the Sikkim Casino Games Commencement (Control and Tax) Rules 2007 (collectively, “Sikkim Casino Laws”), which prescribe a licensing regime for casino games in five-star hotels in Sikkim.

Please see 2.1 Online for an overview of the PGA and Gaming Enactments.

In addition to the laws discussed in 2.1 Online, several other laws regulate the Indian gaming industry.

Laws on Foreign Direct Investment

Under Indian exchange control law, being the Foreign Exchange Management (“Non-Debt Instruments”) Rules 2019 (the “Non-Debt Rules”), FDI is prohibited in the following sectors:

• lottery business (including state or private lotteries and online lotteries); and
• gambling and betting (including casinos).

For violating the Non-Debt Rules, one may have to pay a penalty of:

• up to three times the sum involved where such amount is quantifiable; or
• up to INR200,000 (approximately USD2,378) where the amount is not quantifiable.

Where the violation is ongoing, a further penalty may extend to INR5,000 (approximately USD59) for every day on which the contravention continues.

In January 2023, the Bombay High Court held that foreign investments in entities offering games with no real-money rewards does not amount to gambling under the Non-Debt Rules.

In an effort to stimulate growth and provide clarity given the existing regulatory ambiguity in the sector, the Indian government is considering a proposal to explicitly clarify 100% FDI in real money games of skill entities through the automatic route; ie, where no permission is required. In pursuance of the same, the DPIIT has sought clarity on the distinction between games of skill and games of chance from various ministries, to draft a policy permitting 100% FDI in online gaming. Discussions are reportedly underway at various levels of the government regarding the DPIIT proposal.

Exchange Control Laws

The FEMA, read with the Foreign Exchange Management (Current Account Transaction) Rules 2000, prohibits remittances from India towards the following transactions:

• remittance of lottery winnings;
• remittance of income from racing, riding or any other hobby; and
• remittance for the purchase of lottery tickets, banned/prescribed magazines, football pools, sweepstakes, etc.

The IT Act

If a game, or the manner in which it is offered, is unlawful, a court or authorised government body (such as the MeitY) may direct an intermediary platform ‒ such as the app store (in the case of a mobile app) or (in case of a browser-based app) the internet service provider (ISP), telecommunications service provider (TSP) ‒ to block the app or a specific game.

As per recent news reports, MeitY has directed certain Indian TSPs to block access to several offshore sports betting and gambling platforms offered remotely in India. News reports suggest that GST violations raised by GST authorities and violations of exchange control regulations raised by the Enforcement Directorate of India (ED) were contributing factors in MeitY’s decision to issue the blocking order.

As such, MeitY may have issued the order holistically in response to issues raised by several different central government ministries.

The Consumer Protection Act

The Consumer Protection Act 2019 (CPA) forms the basis of consumer protection law in India. The CPA imposes stringent measures on all service providers (including gaming operators) in order to prohibit unfair and restrictive trade practices, unfair contracts, deficient services and misleading advertisements. In addition, the Consumer Protection (E-Commerce) Rules impose obligations on “e-commerce entities”, which may include real-money online gaming platforms.

The Prize Competition Act

The Prize Competition Act (PCA) may also apply to certain game formats. The PCA was enacted to regulate certain types of competitions. The Supreme Court has held that the PCA would only apply to prize competitions that were of a gambling nature. However, because the types of games covered under the PCA (eg, crossword prize competitions) appear to be games of skill and not gambling, there is an anomaly in the types of games covered by the PCA.

The Digital Personal Data Protection Act

The Digital Personal Data Protection Act, 2023 (DPDPA) was enacted in August 2023 in India. However, its provisions have not been brought into effect as yet. The DPDPA introduces several compliances for collection and processing of personal data in India, as well as outside of India, if it is in connection with offering goods and services in India. The rules under the DPDPA, which will prescribe most implementation measures, are expected to be released for public consultation in the next month.

“Gambling” or “gaming”, as per most Gaming Enactments, is understood to mean “the act of wagering or betting” for money or money’s worth. Gaming/gambling has been judicially interpreted by Indian courts to mean betting or wagering on games of chance. Typically, under most Gaming Enactments, “gambling” or “gaming” does not include:

• wagering or betting upon a horse race/dog race if such wagering or betting takes place in certain circumstances;
• games of “mere skill”; and
• lotteries.

Please refer to 3.2 Definition of Gambling.

Only the states of Nagaland, Andhra Pradesh, Sikkim, Chhattisgarh, Tamil Nadu and Telangana have specifically extended their state enactments to the online medium (“Online States”).

The TNOGA defines “online gambling” as online wagering or betting and this includes playing any online game of chance for money (or other stakes) in any manner. “Wagering or betting” has been defined widely as including collection or solicitation of bets, receipt or distribution of winnings or prizes, and any act intended to aid or facilitate wagering or betting.

Under the Gaming Enactments, most offences and prohibitions are in relation to a “gaming house” or a “common gaming house”. These offences include (i) keeping charge of the common gaming house, being found in a common gaming house, having “care or management” of the gaming house, amongst others.

In states such as Assam and Orissa, the activity of gaming ‒ irrespective of the medium or location in which it is offered – may be a punishable offence. Certain states’ laws specifically prohibit online gaming.

The Online States have specific other prohibitions and penalties.

The BNS has prohibited petty organised crime which includes (i) unauthorised sale of tickets, and (ii) unauthorised betting or gambling by a member of a group or gang, either by themselves or jointly with others.

Although the Gaming Enactments more or less prescribe fines and/or imprisonment, the amount of the fine or period of imprisonment may differ from state to state.

The PGA imposes a penalty of INR200 (approximately USD2.38) or up to three months in prison for owning, keeping or having charge of a gaming house, and an INR100 (approximately USD1.19) fine or one month in prison for being found in a gaming house.

The state-wise gaming laws also impose a punishment and imprisonment for offenders. Such punishment ranges from an imprisonment from three months to three years, and a fine that may be as high as INR2 million (approximately USD23,785) in some states.

The penalty for petty organised crime under the BNS is imprisonment for a term not less than one year which may extend to seven years and a fine.

Please see 1.1 Current Outlook and Recent Changes.

There are only a small number of states in India that allow operators to conduct gambling or skill-gaming activities under a licensing regime. The regulatory authorities for issuance of licences in these states are as follows.

• Goa – the Home Department of Goa.
• Daman and Diu – the Director of the Tourism Department (for casinos, games of electronic amusement and slot machines).
• West Bengal – the Commissioner of Police.
• Nagaland – the Finance Commissioner.
• Sikkim – the authorised officer of the Finance, Revenue and Expenditure Department.
• Tamil Nadu – the TN Online Gaming Authority constituted under the TNOGA.

Most of the Gaming Enactments are prescriptive in as much as most of the states prohibit betting/wagering involving stakes as a gambling activity, but carve out an exception for games of skill. Hence, should a game qualify as a game of skill, the prohibitions under most Gaming Enactments would not apply.

See 1.1 Current Outlook and Recent Changes.

Game Registration Requirements

Casinos

Casino games, being games of chance, are prohibited in most Indian States. Licences for offering casino products in five-star hotels in Goa, Daman and Diu, and in Sikkim (through the intranet) are available under the GDD Act and the Sikkim Casino Laws respectively.

Poker

Operators in India may offer skilled versions of poker without a licence in most Indian States. In Sikkim, Nagaland, and Tamil Nadu, operators may need to obtain a licence.

Sports/horse race betting

For conducting betting on physical horse races in India, a licence would be required. This is covered in 2.1 Online. 

As stated in 1.1 Current Outlook and Recent Changes, the question of whether sports betting is a game of skill is pending before the Supreme Court in the Geeta Rani Case. The state of Sikkim offers a licence to offer sports betting through the intranet within Sikkim only.

Fantasy betting

If the fantasy sports game qualifies as a game of skill, no licence is required for offering such products under most Gaming Enactments. However, a licence must be obtained in Nagaland and Tamil Nadu.

Lotteries

Private lotteries are prohibited in most Indian States under the BNS. Under the Lottery Laws, for state-run lotteries, state governments may appoint an individual or a corporate body as a “distributor or selling agent” through an agreement to market and sell lotteries on behalf of the organising state.

Social gaming

If such games amount to prize competitions, a licence under the PCA may be required.

Skill games

Games of skill are exempted from prohibitions under most Gaming Enactments. Licences are required in certain states like Nagaland and Tamil Nadu.

There is no limit/cap on the number of licences that may be offered, although there are restrictions ‒ for example, Goa restricts the number of slot machines that can operate under a single licence.

The duration of the available licences is as follows.

• Nagaland – five years, and will be deemed renewed every year thereafter as long as the licence fee is paid.
• Sikkim – five years, unless cancelled or surrendered, and may be renewed via application.
• Tamil Nadu – the certificate of registration under the TNOGA is valid for three years, unless suspended or revoked.
• Goa and Daman and Diu – five years.
• West Bengal – permits are issued for specific events.

Some of the key application requirements as per State Enactments are set out below.

Nagaland

The licensee:

• must be an entity that is incorporated in India, has a substantial holding stake in India, and has no criminal history;
• must not have any interest in online or offline gambling activities in India or abroad;
• must have controlling stake in India, and the executive decision-making powers of licensees are required to be performed from within the territorial boundaries of India; and
• must host their technology support (hosting of the website, management of the website, location of servers, etc) within India only.

Sikkim Casino Laws

Only a body corporate registered under the provisions of the Registration of Companies Act (Sikkim) 1961 may apply for a licence. 

Sikkim Online Laws

The licensee must be a person/company/partnership firm incorporated in India.

Goa and Daman and Diu

Only land-based operators require licences in Goa and Daman and Diu.

Applicants, including individuals and persons holding key managerial positions (in case of body corporates/firms), must not have been convicted of any criminal offence with two or more years of imprisonment. Licences are cancelled if convictions occur post-approval.

Applicants are also required to submit a declaration of compliance with state Anti-money Laundering and Countering the Finance of Terrorism Regulations (“AML/CFT Regulations”). 

The AML/CFT Regulations are discussed in 8. Anti-money Laundering (AML).

Tamil Nadu

The local online games provider may apply for a certificate of registration with the TN Gaming Authority; ie, entities whose central management and control of the service is in the State of Tamil Nadu, or whose service is hosted in the state. Out of state entities are not required to apply. The applicant must ensure that they do not provide any online gambling service.

The process and timeline for licensing applications is as follows.

Nagaland

Applicants should submit their application to the licensing authority (ie, the Finance Commissioner or the “Nagaland Authority”) identifying the game and accompanied with details about promoter credentials, audited financials, software platform, business plan, and financial projections. If deemed satisfactory, a letter of intent is issued, and the application is reviewed by empanelled firms comprising of experts, who provide recommendations within 30 days. The Finance Commissioner may also consult ad hoc or expert committees for further review, with recommendations due within 14 days. Licences are typically issued within 14 days of final recommendations. Some operators have received their licence within a month or two, but in practice there is no strict timeline that is followed.

Sikkim – Casino

A licence application must be made by an Indian entity to the state government, which will examine the application.

Once it has made any necessary enquiries, the state government can grant a six-month provisional licence to set up necessary infrastructure.

When the applicant has fully complied with the terms and conditions of the licence, the state government can grant a regular licence.

Sikkim – Online Games

The licensee must make an application in the form specified by the Sikkim Online Act, along with the application fees. The state government will then conduct an inquiry (if it deems it appropriate) before issuing or rejecting the licence.

Goa, Daman and Diu

An application may be made by an individual/firm/body corporate to the Director of the Tourism Department. The Director appoints an inspection officer to assess the licensed premises. If satisfied, the Director recommends approval to the Administrator of Daman and Diu, who then grants or rejects the licence.

There is no guidance on timelines for grant of licence. 

Tamil Nadu

Local online game service providers can apply for a certificate of registration from the TN Gaming Authority. The acceptance/rejection of the application must be decided within 15 days, ensuring the applicant is heard before any rejection.

West Bengal

An application for a permit to host games of skill in a public place must be made to the Commissioner of Police (if the permit is sought in Kolkata) or to the district magistrate or sub-divisional magistrate if the permit is sought elsewhere in the state.

Nagaland

A non-refundable application fee of INR50,000 (approximately USD594).

Sikkim

The casino fee is INR5,000 (approximately USD59) and the online fee is INR500 (approximately USD6).

For online gaming, a provisional fee of INR100,000 (approximately USD1,189) must be made, and once the application is approved, a licence fee of INR10 million (approximately USD118,939) has to be paid.

Tamil Nadu

The local online games providers must pay INR100,000 (approximately USD1,189) as the registration fee. 

Goa, Daman and Diu

The cost of a licence is INR5 million (approximately USD59,468) for onshore and offshore casinos, regardless of the number of tables or machines installed in the licensed premises.

Nagaland

For the first three years, the annual licence fee per game is INR1 million (approximately USD11893) (or INR2.5 million (approximately USD29,733) for a range of games).

For the next two years, the annual licence fee is INR2 million (approximately USD23,786) (or INR5 million (approximately USD 59467) for a range of games). In addition, licensees are required to pay 0.5% of the gross revenue generated as a royalty.

Sikkim

For casinos, the licensee must pay gaming fees to the state government at a rate of 10% of the gross gaming yield (or INR10 million (approximately USD 11,8937), whichever is higher) for the first year. Thereafter, fees will increase incrementally by 15% per year with regard to the minimum assured revenue for each of the remaining four years.

For online gaming, an annual fee of INR10,000 (approximately USD118) and an online gaming levy of 1% of the gross gaming yield must be paid to the state government under the Sikkim Online Act.

Goa, Daman and Diu

The fee varies based on the size of the casino, and whether it is an onshore or offshore casino, and the seating capacity of the vessel. 

Please refer to 4.7 Application Requirements. The states of Sikkim, Goa, and Daman and Diu provide for premises licensing.

There are no specific contemplated changes.

Nagaland

As per the Nagaland Act, licences are issued for offering a variety of games of skill on online platforms.

Sikkim

The Sikkim Online Act allows for licences to be granted to offer a variety of intranet games (within Sikkim).

Tamil Nadu

Under the TNOGA, local online games providers may apply for registration to offer their online games.

Please refer to 4.7 Application Requirements for more details.

There are no B2B licences to be obtained. The RBI requires payment processors to obtain licences under the Payment and Settlement Systems Act 2007; however, payment gateways do not need such licences. 

Apart from contractual restrictions that may be explored, there are no measures in place to regulate the use of affiliates.

There are no licensing/regulatory requirements that apply to the use of white-label providers.

Websites that offer games of a gambling nature (ie, real-money products that are games of chance) may be blocked under certain provisions of the IT Act and the IT Rules.

All the proposed policy changes/pending litigation outlined in 1.1 Current Outlook and Recent Changes would impact the online gaming sector.

Most Gaming Enactments prohibit gambling activities and permit games of skill; they do not prescribe any social responsibility requirements for skill gaming operators. The Nagaland Rules prescribe some requirements for licensed operators in the state, such as:

• ensuring that games are not offered to minors;
• taking payments through recognised payment modes;
• implementing fraud prevention mechanisms; and
• publishing a responsible gaming charter on websites/apps.

Reportedly, the TN Gaming Authority is considering introducing certain controls on online gaming in the state, such as limits on number of hours, and cash limits.

Self-regulatory gaming associations have introduced self-regulatory standards for responsible gaming, including player protection measures, self-exclusion standards, and advertising standards amongst others.

There are no gambling management tools or requirements prescribed under Indian law.

Certain self-regulatory bodies have introduced measures for responsible gaming, as discussed in 7.1 RG Requirements.

Please see 1.1 Current Outlook and Recent Changes.

The Prevention of Money Laundering Act 2002 (PMLA) prohibits money-laundering activities. Entities carrying out “activities for playing games for cash or kind (including casinos)” are classified as “reporting entities” and are subject to certain reporting obligations (eg, verifying the identity of clients, maintaining records and reporting suspicious transactions).

In September 2024, certain news reports suggested that online skill gaming operators would be brought within the framework of the anti-money laundering laws, as elaborated upon in 8.2 AML Requirements.

As per news reports in September 2024, the Indian government has commenced internal consultations to include online gaming entities within the ambit of the PMLA, and to introduce Know-Your-Customer (KYC) obligations and mandatory reporting of suspicious activities by such entities. These reports also suggest that India is planning to present these issues at the meeting of the global Financial Action Task Force (FATF) in the wake of several issues of money laundering to foreign jurisdictions through online gambling apps.

The state government of Goa has introduced state AML/CFT Regulations. Entities seeking a casino licence in the state are required to comply with the conditions set out, which include reporting obligations for certain entities.

Please see 8.1 AML Legislation.

The MIB has been vested with the jurisdiction over online advertisements, which may include gaming advertisements. Thus far, there have been no regulations introduced by MIB.

The Advertising Standards Council of India (ASCI) is a self-regulatory industry body whose Code has been made applicable for the regulation of advertisements on television/broadcasting media.

The Central Consumer Protection Authority (CCPA) regulates violations of consumer rights, unfair trade practices, and false advertising under the CPA. It can initiate proceedings, investigate offences, refer cases to other regulators, and impose penalties on violators.

State police and judicial authorities enforce the Gaming Enactments and the BNS prohibitions.

The specific regulatory authorities in states where licences are issued have been covered in 4.1 Regulatory Authority.

The CPA defines an advertisement as “any audio or visual publicity, representation, endorsement or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet or website and including any notice, circular, label, wrapper, invoice or such other documents.”

Please see 9.4 Restrictions on Advertising for general restrictions and prohibitions on advertising. There are specific restrictions on licensees in Sikkim, Nagaland and Tamil Nadu.

Most State Enactments prohibit the printing, publishing, selling, distributing or circulating in any manner of any newspaper, news sheet or other document, or any news or information with the intention of aiding or facilitating gambling. These restrictions, however, do not apply to skill games in most states. Some state-level restrictions are covered in 9.3 Key Legal, Regulatory and Licensing Provisions.

Under the IT Rules, intermediary platforms (including social media platforms) are required to inform users not to publish any content relating to or encouraging money laundering or gambling, which is an online game that causes user harm, is harmful to a child, or which violates any law for the time being in force, which includes the Gaming Enactments.

Advertisements of games of skill are regulated by the CPA and the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022 (the “Misleading Ads Guidelines”) introduced by the CCPA. The CPA read with Misleading Ads Guidelines prohibits misleading advertisements, surrogate advertisements, and unfair trade practices through certain types of promotional activities.

Recently, direct and surrogate advertising of foreign sports betting platforms in India has come under significant scrutiny by the MIB and the Department of Consumer Affairs. News reports suggest that the CCPA invoked provisions under the CPA to issue show-cause notices to six online betting apps for violating advertising norms by misleading consumers through surrogate advertisements. The CCPA has recently issued an advisory directed towards the entire spectrum of entities involved in advertisements (manufacturers, advertisers, publishers, intermediaries, celebrities, influences and any other relevant stakeholders) advising them against directly or indirectly or through surrogate advertisements, promoting, endorsing or advertising unlawful betting or gambling activities.

Between June 2022 and March 2024, the MIB issued five advisories, in consultation with the Department of Consumer Affairs, warning media and influencers against promoting or endorsing online sports betting platforms and surrogate ads targeting Indian audiences. The Press Council of India also issued a warning in April 2024 for print media to follow CCPA guidelines on prohibiting unlawful activity promotions. Additionally, sporting bodies like the BCCI have banned associations with betting platforms.

TCCPR Regulations

Advertisements through SMS or voice-based communication is regulated by the Telecom Commercial Communications Customer Preference Regulations 2018 (TCCCPR).

The ASCI Code and ASCI Gaming Guidelines

The ASCI Code restricts advertisements for banned products, including gaming/gambling items, and prohibits surrogate advertisements. However, legitimate brand extensions are exempt. The ASCI released the Gaming Guidelines for Online Games with Real Money Winnings. The guidelines prohibit, amongst others, ads showing minors playing for real-money winnings and require disclaimers about financial risks. ASCI focuses on regulating the content of these ads, not the legality of the games themselves.

Content-Related Restrictions

Advertising content may also be subject to content-related restrictions under the BNS, the IT Act and other legislation, which prohibit obscene content, content that hurts religious sentiments, amongst others.

Advertising of Gambling

Please see 9.4 Restrictions on Advertising for the restrictions on advertising. The TCCCPR prohibits unsolicited commercial communications to persons who have opted out of receiving them. Both telemarketers (to which the sending of commercial communications is outsourced) and senders (the entity promoting the goods/services) are required to register as detailed under the TCCCPR in order to send commercial communications.

Under the ASCI Code, ASCI may direct members to modify their advertisement. 

ASCI has partnered with CCPA to forward non-compliant ads that may violate the ASCI Code or the CPA and its guidelines.

For violations under the CPA, fines of up to INR1 million may be imposed. Every subsequent offence may be punished with up to five years in prison and a fine of up to INR5 million. The CCPA may direct misleading or surrogate advertisements to be removed.

There are no legislative changes contemplated with regard to gaming advertisements.

In the event that the transaction involves a listed company, certain regulatory disclosures (including stock exchange disclosures) will need to be made depending upon the nature of the transaction. 

There are specific disclosure requirements for acquisitions and changes of control of gaming/gambling companies under State Enactments that contain a licensing regime. 

Under the Nagaland Act and the licence terms and conditions, the licence will be suspended in case of:

• change in shareholding pattern;
• change in directorship; or
• the licensee being acquired.

The licensee must approach the state licensing authority within 30 days and state the reasons for such change. Thereafter, the authority has the right to decide whether to resume the licence or suspend it.

Please refer to 10.1 Disclosure Requirements.

There are no specific requirements for passive investors in acquisitions or changes of control under Indian law.

There are no recent or further changes that have been reported.

As covered in 3.6 Penalties for Unlawful Gambling, regulatory bodies (the police/judicial bodies) may impose fines or imprisonment under the Gaming Enactments.

Some recent cases of enforcement in this industry are as follows.

• According to the latest annual report from the Directorate General of GST Intelligence (DGGI), 658 offshore online money gaming entities have been identified by DGGI to be non-registered or non-compliant, prompting investigations against them. Additionally, the DGGI has also recommended 167 URLs/websites for blocking.

The ED has raided multiple states, including Goa, Maharashtra, and Punjab, investigating FEMA violations by offshore betting companies and illegal online casinos. State police have also arrested individuals linked to these online betting platforms.

• The central government as well as state governments have been blocking offshore online betting and casino platforms following investigations conducted by the ED and raids.
• The ED has arrested persons, and seized monies in connection with carrying out unlawful betting/gambling and routing proceeds of unlawful gambling offshore under the PMLA.

Personal Sanctions

With regard to personal liability, only a few states in India contain express provisions imposing vicarious liability upon those in charge of the company for its business (including its directors or officers).

Under Indian law, vicarious liability cannot be imposed on the directors unless:

• the statute expressly provides for it; or
• it is shown that the individual had an “active role with criminal intent”.

There are certain other offences (eg, criminal conspiracy) for which individuals in the company could be held liable under general criminal laws, such as the BNS.

Please refer to 11.1 Powers.

An inter-departmental committee with representatives from various government ministries may be constituted to develop comprehensive strategies to combat unlawful gambling.

Income Tax

As per Indian income tax laws, winnings from any crossword puzzle, card game horse races or other game are taxable at the rate of 30% (plus applicable cess and surcharge) without allowance for any deductions or expenses. A similar manner of taxation is provided for income by way of winnings from online games.

Withholding tax obligations with respect to online and offline games have been separated with effect from 1 April 2023. While withholding tax for offline games continues to be 30% (plus applicable cess and surcharge) on the winnings amount exceeding INR10,000 (approximately USD118) in the financial year, withholding tax obligations for online games is now 30% (plus applicable cess and surcharge) on “net winnings” without the INR10,000 (approximately USD118) limit. Further, the Central Board of Direct Taxes has provided guidelines and clarifications on the manner of computing such “net winnings”.

If winnings are in kind (or partly in kind), the payer must ensure tax is paid before releasing the full prize, especially if the cash component is insufficient to cover the withholding tax.

Equalisation Levy

Offshore e-commerce operators were earlier subject to an Equalisation Levy (EL) at the rate of 2% on the consideration received or receivable from “e-commerce supply or services” made or provided or facilitated by such operators to a person resident in India. However, the Finance Act 2024 brought in amendments to abolish the applicability of EL with effect from 1 August 2024. Accordingly, the issue of whether offshore online gaming operators should be subject to EL is now redundant.

Goods and Services Tax

There have been several developments in the GST regime for the gaming industry with effect from 1 October 2023.

A new concept of “online money gaming” has been introduced, covering all online games where players pay or deposit an amount with the expectation of winning rewards, regardless of whether the outcome depends on skill or chance, or if the game is legally permissible. Further, valuation rules have been introduced, inter alia, providing that the value of supply of online gaming, including supply of actionable claims involved in online money gaming, shall be the total amount paid or payable to or deposited with the supplier by way of money or money’s worth, including virtual digital assets, by or on behalf of the player. The above amendments are brought in to levy GST at the rate of 28% on the total amount deposited by a player with an online gaming operator by way of money or money’s worth regardless of the nature of such game.

Online money gaming has been excluded from the ambit of Online Information and Data Access or Retrieval services. However, the amendments require offshore online money gaming operators to obtain mandatory GST registration. In the case of failure to obtain such registration, the GST department may block any information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such offshore online money gaming operator.

Offline games involving betting and gambling continue to be taxed at the rate of 28% on the entire bet amount.

On the judicial front, the Karnataka High Court recently quashed a GST demand of INR21,000 crores (around USD25 million) against Gameskraft, ruling that the buy-in amount for a skill-based game like rummy should not be subject to GST. The tax department appealed this decision to the Supreme Court of India, which granted a temporary stay on the High Court's order. As a result, the GST department has started opening assessments for operators for periods before 1 October 2023, which are being challenged in various high courts. Most of these courts have issued notices and granted stays on the proceedings. Due to a transfer petition filed by the tax department, these cases are now being consolidated for hearing alongside the Gameskraft matter in the Supreme Court.

A provision has been inserted in the GST laws empowering the government, upon the GST Council’s recommendation, to identify and waive GST on supplies where GST was not levied or short-levied because of a generally prevalent practice. The government may issue notifications to identify such supplies and waive the entire GST amount, or any excess above the short levy of GST, as the case may be. However, no such notification has been issued to date.

This amendment could potentially relieve online gaming operators of past GST demands. However, no notification has been issued as yet.

Authorisations and Licences Applicable to Individuals

As mentioned in 4.4 Types of Licences, licences may be required based on the state in which the product is offered, type of product and the medium through which the product is offered. While in some states, arguably individuals can apply for such licences, in practice, licences are not issued to individuals in their personal capacity.

Casinos (Physical)

In Sikkim, there are no independent/individual licences issued for casinos. In Goa, Daman and Diu, licences may be issued to individuals for offering casino products.

Poker

In Sikkim, the licence can be given to a “person”, which may technically include natural persons or corporate entities. However, in practice, individuals may not be contemplated as licensees. 

Similarly, in Nagaland, an individual may not be eligible for licences. None of the 12 licences issued have been given to individuals. 

In West Bengal, an “organiser” may apply for a permit for providing a game of skill. It is not clear whether an entity or a natural person may apply.

Sports/Horse Race Betting

In Karnataka and Maharashtra, the licence for operating a horse racing course may be granted to the owner, lessee or occupier of a race course by the state government. The language of the provision is unclear as to whether the licences are issued in the name of the individual (owner, lessee or occupier) or the race course. However, in practice, licences are issued to Turfs Clubs.

Fantasy Betting

As mentioned in 4.4 Types of Licences, fantasy sports that qualify as games of skill do not require licences under most Gaming Enactments, apart from in Tamil Nadu and Nagaland (see the discussion on poker above).

Lotteries

As per the Lottery Laws, an individual may be appointed as a “distributor or selling agent” through an agreement for the lotteries conducted by the state.

Social Gaming

If a social game amounts to a prize competition, then a licence under the PCA may be required to promote/conduct it. Individuals may obtain this licence.

Skill Games

Please see the discussion on poker above.

Availability of Licences

There is no explicit limits/cap on the number of licences that may be offered. There is no distinction between licences that may be issued to individuals and to companies/firms under the GDD Act. Please see 4.5 Availability of Licences.

Duration of Licences

See 4.6 Duration of Licences.

There is no distinction between the licences issued to individuals and to companies/firms in terms of the application requirements, timeline for such applications and the fees associated. Please see 4.7 Application Requirements, 4.8 Application Timing and 4.9 Application Fees above.

Applicable annual fees to the licences mentioned in 13.1 Types of Authorisations and Licences have been discussed in 4.10 Ongoing Annual Fees.

The general licence conditions discussed in 4.7 Application Requirements would apply.

Please see 11.1 Powers.

There have been no major changes.