August 28, 2025 — The Modi government’s newly enacted Promotion and Regulation of Online Gaming Act, 2025, which bans all forms of online real-money gaming, is facing its first legal challenge. Head Digital Works, the parent company of online gaming platform A23, has filed a petition in the Karnataka High Court, arguing that the law unfairly criminalizes legitimate skill-based games like rummy and poker. The court is set to hear the plea, alongside challenges from other gaming firms like Games24x7 and Junglee Rummy, on August 30, 2025, marking a pivotal moment for India’s $3.6 billion online gaming industry.
The New Law and Its Impact
Passed by Parliament on August 22, 2025, and receiving presidential assent the following day, the Promotion and Regulation of Online Gaming Act, 2025, imposes a blanket ban on online real-money games, equating them to betting and gambling. The legislation prohibits offering, promoting, or aiding such games, with penalties including up to ₹1 crore in fines and three years’ imprisonment for facilitators and advertisers. It also bars financial institutions from processing transactions for these platforms, effectively halting real-money gaming operations across India.
The government justifies the ban as a response to rising concerns over addiction, money laundering, and financial fraud linked to online money games. Union Minister for Electronics and Information Technology Ashwini Vaishnaw stated in the Rajya Sabha that “at least 4.5 million people are negatively affected by online money games and faced a loss of more than ₹20,000 crore.” The law aims to close legal loopholes and protect citizens from what the government calls “social evils,” while promoting e-sports and free-to-play online social games.
The impact has been immediate and severe. Major platforms like Dream11, My11Circle, WinZO, Zupee, and PokerBaazi have suspended their real-money offerings, shifting focus to free-to-play models. The industry, backed by venture capital giants like Tiger Global and Peak XV Partners, faces an uncertain future, with estimates suggesting a potential loss of ₹31,000 crore in annual revenues, over 2 lakh jobs, and ₹20,000 crore in tax contributions.
A23’s Legal Challenge
A23, a Hyderabad-based platform with over 70 million registered users, argues that the law is unconstitutional when applied to skill-based games. In its filing, the company contends that the Act “criminalises the legitimate business of playing online games of skill, which would result in the closure of various gaming companies overnight.” Represented by senior advocates C. Aryama Sundaram and Dhyan Chinnappa, A23’s petition claims the legislation violates fundamental rights under Article 19(1)(g) (right to conduct lawful trade) and Article 14 (equality before the law).
The petition highlights that the Supreme Court, in cases like R.M.D. Chamarbaugwala v. Union of India (1957), has consistently distinguished skill-based games from gambling, granting them constitutional protection as legitimate business activities. A23 argues that the Act collapses this distinction, overriding judicial precedent through blanket legislation. It also criticizes the law’s discriminatory treatment, noting that physical formats of similar games remain untouched, and accuses the government of acting arbitrarily without stakeholder consultation or empirical data.
A23 further contends that a complete ban fails constitutional tests of proportionality, proposing alternatives like licensing, KYC verification, and spending caps to address concerns about addiction and fraud. The company warns that the ban could push users to unregulated offshore platforms, exacerbating the very issues the law seeks to curb.
Industry Response and Economic Fallout
While A23 has taken a bold stand, other major players like Dream11, Gameskraft, and Zupee have chosen not to challenge the law. Dream11’s CEO Harsh Jain told CNBC TV18 that “95% of our group’s revenues have disappeared overnight,” but the company is focusing on building a “great Indian sports company” driven by AI and the creator economy. Gameskraft, which operates RummyCulture, issued a statement affirming its commitment to comply with the law and redirect its focus to free-to-play models. “We fully respect the legislative process,” a Gameskraft spokesperson said, emphasizing responsible innovation and regulatory alignment.
The economic implications are stark. India’s real-money gaming sector, projected to reach $3.6 billion by 2029, supports millions of jobs, particularly in tech hubs like Bengaluru and Hyderabad. The ban threatens to disrupt this growth, with small and medium enterprises in the gaming ecosystem facing immediate financial strain. Critics also argue that the law contradicts earlier regulatory frameworks, such as NITI Aayog’s Draft Guiding Principles and MeitY’s IT Gaming Rules, which advocated for regulated skill-based gaming.
Broader Context and What’s Next
The Karnataka High Court’s hearing on August 30, 2025, will be closely watched, as it could set a precedent for the future of online gaming in India. The challenge comes at a time when the Modi government is aligning India with global markets like the United States and the United Kingdom, where regulators have drawn clearer lines between gambling and skill-based gaming. However, A23’s petition argues that the reliance on the World Health Organization’s “Gaming Disorder” classification is misplaced, as it pertains to recreational video gaming, not skill-based money games.
As the legal battle unfolds, the industry faces a critical juncture. A favorable ruling for A23 could restore skill-based gaming platforms, while an upheld ban may push the sector toward free-to-play models or unregulated offshore markets. For now, the Karnataka High Court’s decision will shape the trajectory of an industry that has become a cornerstone of India’s digital economy.