Abstract
This article focuses on the key concerns about the Promotion and Regulation of Online Gaming Act, 2025. It shows how the Act has changed the Supreme Court’s past decisions and brought up problems of federalism. It also looks over the draft Promotion and Regulation of Online Gaming Rules, 2025, and the creation of the Online Gaming Authority of India.
Introduction
The online gaming ecosystem in India is growing as the Internet makes it accessible to users. But India did not have a uniform law to govern online gaming, which led to the use of dishonest game designs, bots, a lack of user protection, and the ability to cause financial and mental harm. To address this problem in the online money gaming sector, the Government passed a landmark legislation. The Promotion and Regulation of Online Gaming Act, 2025 (PROG), is enacted to promote and regulate the online gaming sector, including e-sports, social gaming, and educational games. Bypassing state-level laws and the contradictions they cause, this legislation serves as a national legal framework. Prohibition on offering, operation, advertisement, and participation in online money games, and creation of a centralised Online Gaming Authority of India (OGAI), remain the two most striking features of the PROG Act. Following the passing of the PROG Act, the Government has released the draft of the Promotion and Regulation of Online Gaming Rules, 2025, which is open to feedback from the public.
Key Words – skill v. chance distinction, federalism, Online Gaming Authority, PORG Rules
The Promotion and Regulation of Online Gaming Act, 2025 (PROG): Key Features and Possible Complications
- Dissolution of the Distinction of Skill v. Chance
The Act prohibits offering online gaming services, their advertisement, and financial facilitation. The Act departs from the Supreme Court’s established stance, which distinguishes between skill-based and chance-based gaming, which is one of the main issues brought up by experts. This distinction is significant as the Public Gaming Act, 1867, along with other state legislations, allowed games of skill while outlawing games of chance. This entails that games in which success depends substantially on skill will not be considered gambling, even when there is an element of chance. For instance, online fantasy cricket league games on the Dream 11 website were held to be games of skill, and not gambling. The court ruled that such fantasy leagues involve a substantial degree of skill, like building a virtual team by analysing rules and strengths and weaknesses of players, which requires a user to have sound knowledge and judgment. Since these factors impact the likelihood of success, it does not fall under the aspect of gambling. This case was in line with the Supreme Court’s previous judgments on skill v. chance games. However, Section 5 read with Section 2(g) of the PROG Act seems to dissolve the skill v. chance distinction, making any online gaming service illegal on account of involvement of monetary consideration, irrespective of whether such a game is based on skill or chance. This step attempts to unsettle previous judicial pronouncements.
- Federalism in Danger?
Entry 34 of the State List gives states control to legislate on betting and gambling. For example, one of the first laws to prohibit gambling and bring regulation was the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016. Because it acknowledges games of skill, this Act supports the Supreme Court’s position. It upholds the distinction between games of skill and games of chance. So, any form of betting based on skill would be allowed. However, this Act, along with the power vested in states, would be rendered ineffective after the national-level framework provided under the PROG Act. The Union Government has relied on Entry 31(telecommunications) and Entry 97 (residuary powers) to justify the enactment of the PROG Act. Thus, the enactment of the Act raises the classic debate on legislative competence and (mis)use of the residuary powers under Entry 97.
The Online Gaming Authority of India (OGAI): Powers and Concerns
The PROG Rules, 2025, talk about the formation and powers of the OGAI. The OGAI will act as the central regulatory body to oversee the enforcement of the PROG Act. Rule 10 of the PROG Rules gives immense power to the OGAI. Some of these are the determination of the nature of the online games, maintenance of a National Online Social Games and E-Sports Registry, issuance of codes of practice to regulate online social games, and cancellation/suspension of registration of online games. Not only does it have regulatory and supervisory powers, but it is also vested with judicial powers, that is, powers of a civil court under Rule 10 (3). The Rules give the OGAI the authority to summon and compel anyone to appear, to receive evidence on affidavit, require the discovery of documents, inspection, and examination of witnesses or documents. Following Rule 10, Rule 11 ensures checks and balances by allowing the aggrieved party to appeal the OGAI’s order. Nonetheless, the OGAI’s composition raises questions. Most of the members would be bureaucrats who are already under a lot of work pressure, along with a lack of representation of experts in the said field. Evaluating the nature of games and deciding whether the money involved is in the nature of a stake or a mere subscription fee would require prior knowledge and experience. Hence, it is urged to increase the number of expert members to ensure consistent and sound decision-making.
The Draft PROG Rules, 2025: Ambiguities and the Need for Review
The Draft Rules were released in accordance with Section 19 of the PROG Act. Rule 3 allows the Ministry of Youth Affairs and Sports to recognise and promote e-sports, whereas Rule 4 allows the Ministry of Information and Broadcasting to promote online social games. The division of roles overlooks the diverse formats of games, such as e-sports that incorporate social elements, including chat features and friendly competitions. Creating specific roles for ministries might lead to ambiguous and conflicting situations where both assert their rights over overlapping games. The rule shows a lack of understanding of the nature of games. In view of this, it is recommended that the division of responsibilities be reviewed to prevent any potential conflicts.
Rule 13 highlights the parameters to determine if an online game is a money game. Rule 13 (1)(e) allows the Authority to consider “such other relevant factors” to conclude the nature of the game. This gives the Authority discretion to include any other factor to declare a game legal or illegal. While this flexibility is required, it can also provide space for uncertainty and ambiguous decisions. Only time will tell the way in which Rule 13 (1)(e) would be employed.
Conclusion
The PROG Act is being seen as a path-breaking legislation with the potential to change the way online gaming works in India. However, there exist technical and constitutional concerns as highlighted in this article. With respect to the Rules, it is recommended that the Government take feedback seriously and incorporate it. As to the constitutional concern, all eyes will be on the Supreme Court to see how it strikes a balance between the Centre and state powers.
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WRITTEN BY: Farzeen Zaman
