Based on the above, the regulatory landscape of the online gaming sector in India is still evolving and at a nascent stage. The jurisprudence pertaining to games of skill v. games of chance remains the epicentral force in regulating this sector. As a matter of general business practice, when the participants deposit money mines game demo in their wallets, it includes two components – one component is used to pay a marginal ‘platform fee’ to the online gaming platforms. In contrast, the participants use the other amount to participate in the fantasy sport or game being offered on the platform. The Income-tax Act, 1961 inserted s.115BBJ vide the Finance Act, 2023 (‘FA2023’), which provides for taxation at 30%, excluding surcharge and cess on the net winnings from online gaming. 194BA, which provides that the person responsible for paying any person’s income by way of winnings from online games shall deduct income tax on the net winnings in the user account.

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The significant rise of online gaming in the Indian context has given rise to its own set of multifaceted regulatory impediments. This becomes especially relevant in the context of various formats and mechanisms pertaining to the operation of such online gaming platforms. Such games may be played for real money where the apprehensions pertaining to the nature of games being in the nature of betting, gambling, or wagering arise.

The jurisprudence pertaining to the same dates to RMD Chamarbaugwala v. Union of Indiai wherein the Supreme Court, while deliberating upon the same, held that a competition where success does not depend to a substantial degree upon the exercise of skill is to be recognised as gambling in nature. From thereon, the Supreme Court, in the catena of judicial pronouncements, has analysed the law relating to the same and held that despite there being an element of chance, if a game is preponderantly a game of skill, it would nevertheless be a game of mere skill. Accordingly, the expression ‘mere skill’ (used in the Public Gambling Act) would mean a substantial degree or preponderance of skill. The said rule, inter alia, provides that the value of supply in the case of online money gaming, including the supply of actionable claims involved in online money gaming, shall be the total amount paid or deposited by the user with the supplier.

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Furthermore, the Karnataka High Court in Gameskraft Technologies Private Limited v. DGGIv held that rummy, whether played with or without stakes, is a game of chance and does not constitute betting or gambling. It said that many gaming platforms require players to share personal details such as name, address, email and date of birth. When these gaming platforms are hacked, large volumes of personal data may be stolen, leading to identity theft, said the government. NEW DELHI – The government has told the Supreme Court that unchecked expansion of online money gaming has been linked to financial fraud, money laundering, tax evasion, and in some cases, the financing of terrorism, thereby posing threats to national security and public order. The Centre’s reply followed petitions challenging the “complete ban” on online money gaming in India. Further, online gaming operators/intermediaries need to implement and comply with the anti-money laundering laws and know your customers (KYC) measures to ensure player identification, transparency in payments, and prevention of money laundering.

Therefore, based on the above, it can be concluded that games of chance would fall within the ambit of betting and gambling, while games of skill played with or without stakes would not. Ltd., Clubroom 11 Sports and Entertainment and others, challenging the Promotion and Regulation of Online Gaming Act, 2025. The petitioners argued that the ban was against Article 19(1)(g) of the Constitution, which grants all citizens the fundamental right to practise any profession, occupation, trade, or business. The petitioners also argued that the ban on online money games was against the Right to Equality under Article 14, as it was being given discriminatory treatment, where similar physical format games were untouched.

These factors would affect the result of the game, thus making it a game of skill and excluding it from the ambit of gambling. Similar rulings have been made in other cases involving platforms like Dream11, where the courts have upheld that such fantasy sports are games of skill, not gambling. In the context of online gaming platforms, the applicable provisions of FEMA and its allied rules and regulations pertaining to acceptance of deposits from abroad and remittances abroad will have applicability.

• After discussing the classification and nature of these online gaming platforms, we now discuss their treatment under various laws.
• The jurisprudence pertaining to the same dates to RMD Chamarbaugwala v. Union of Indiai wherein the Supreme Court, while deliberating upon the same, held that a competition where success does not depend to a substantial degree upon the exercise of skill is to be recognised as gambling in nature.
• Therefore, based on the above, it can be concluded that games of chance would fall within the ambit of betting and gambling, while games of skill played with or without stakes would not.
• The company has not yet offered a detailed public rebuttal to the specific ED allegations around algorithms, global operations, and the ₹43 crore in unrefunded user balances.

Though the Intermediary Guidelines only provided for self-regulation of online games through MeitY, they were a first positive step toward regulating the sector and introducing the novel self-regulatory mechanism. Online gaming or fantasy sports platforms generally allow users to participate in various games. Many of these platforms offer the chance to win real money, raising several concerns about their operations, taxability, etc.