Representatives in the Indian government have proposed an all-out ban on real-money gaming businesses and have tried to disrupt their work even further. This major new policy advance would help mitigate the “user harm” caused by these practices. This groundbreaking proposal is included in the House Democrats’ Moving Forward Act legislative stimulus. It follows a period during which amendments were made to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2023. This draft law will be introduced into parliament shortly. Its purpose is to have states begin to regulate the hugely expanding online gaming industry that has seen massive accelerated growth as of late.
Specifications in the draft legislation would tightly restrict any operators of real-money gaming. Individual offenders could be imprisoned for three years and fined up to ₹10 million (about $115,000). This extreme measure is designed to prevent the spread of all such real-money games, either skill-based or chance-based. The Indian federal government can now move to create an independent regulatory authority. As this new, independent body will be responsible for implementing and enforcing these new rules,
The real-money gaming sector has quickly evolved into a huge economic driver for the country. The country is home to more real-money gaming startups than any other nation. In fact, it’s even better than the United States and the United Kingdom! The Indian real-money gaming industry alone brought in about $2.4 billion in revenue during the financial year of 2023-24. Holy cow, real-money gaming makes up more than 85% of the revenue for just about every publicly traded Indian gaming corporation.
Specifically, celebrities endorsing real-money games on TV, social media, and in print would be liable under this proposed law. Those who do could find themselves imprisoned for up to two years. They may be slapped with a fine of ₹5 million (~$57,000), raising alarms over the fate of celebrity endorsements in this profitable sector.
The Indian Cabinet has already approved the draft legislation. This clearance opens up auspicious prospects for its introduction in the lower house of parliament, indicating a high level of governmental support for the initiative. Industry observers point out that quelling this backlash seems to be part of a larger trend of increased government oversight over the online gaming space.
The new rules outline tangible consequences for gaming companies and their endorsers. What they do have is an incredible opportunity to completely change the economic environment of the gaming industry. In 2023, the national government of India has placed a 28% national Goods and Services Tax on online gaming. This rate is set to increase to 40% thanks to legislation passed last year. Industry leaders are worried about the impact these tax hikes and possible bans would have on their ability to operate.
An investor in Indian real-money gaming startups commented on the potential fallout from this legislation:
“All unicorns in this sector are going to be significantly impacted due to the move if it comes true.”
The founder of a leading Indian real-money gaming startup echoed similar sentiments, emphasizing the drastic consequences for businesses:
“Businesses will shut if the legislation comes into force.”
Though the industry has its hurdles, the Indian online gaming industry is booming. It pulled in $3.8 billion in revenue in FY 2023-24, a staggering 23% jump over last year. This sector is exploding and drawing billions of dollars in investment. It has catalyzed the billions of dollars raised and millions of new users to many platforms.
The introduction of this new legislation is a huge step forward and a truly historic time for the Indian gaming industry. As stakeholders brace for debate in parliament, many are left wondering how these sweeping changes will reshape one of the world’s most dynamic gaming markets.
