India’s Online Gaming Scene Needs Modern Laws to Grow, Fend Off Foreign Gambling Sites

Law consultancies specializing in online gaming, entertainment, and digital media break down the obsolete laws that cover real-money gaming in India.
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Law consultancies specializing in online gaming, entertainment, and digital media break down the obsolete laws that cover real-money gaming in India. The overall regulatory uncertainty leaves desi gaming operators without clear business perspectives but, most importantly, does not protect the domestic market from unlicensed offshore gambling sites.

Proper State Legislation Is Rare and Contrasting, Lawyers Say

In today’s mobile-first economy, online gaming for real money has reached over a billion users around the world, with an estimated 400 million gamers in India alone. Overviews of the legal climate reveal the Union market as largely unprepared for new-age digital gaming, leaving business prospects unpredictable and consumers unprotected.

The majority of the nation’s gaming laws exist from pre-internet times and the Public Gambling Act is a reflection of a colonial-era mindset (passed in 1867). Physical premises are the basis of almost all state regulations while only Sikkim, Meghalaya, and Nagaland have established licenses for certain online games like casinos, sports betting, and online roulette in India.

Several other states are at the other end of the spectrum, banning paid online gaming (including skill-based). High Courts have struck down blanket prohibitions in the likes of Kerala, Tamil Nadu, and Karnataka as being unconstitutional and excessive. Despite that, bans in Assam, Odisha, and Andhra Pradesh continue to challenge the apex courts’ view and insist on limiting skill games for money.

Legal battles on one hand and the absence of policy-making initiatives leave desi gaming studios and online platforms in limbo. Many are facing an uphill battle against increasing GST and other costs while others have to relocate their bases in states that do not ban gaming-related work. For those wishing to play by the rules, however, the biggest challenge is the foreign competition that is more or less free to do what it wants.

Uneven Playing Field

The fact of the matter is that almost no local state or national regulation provides sufficient coverage for all skill games, real-money platforms, and online casino India has a growing digital market needs. This is a particularly sensitive topic, however, when it comes to the authorities’ inability to monitor and control operators located abroad.

The application of rules and requirements outside national borders must be explicitly mentioned in national-level legislation. Such norms are not foreseen in existing regulations on gaming, lottery, or prize competitions, let alone covering offshore platforms and web services. Online media and entertainment, as a whole, refer back to state rules and may be accessible in one area but not another.

The IT, Foreign-Exchange Management (FEMA), Money-Laundering (PMLA) and Payment Systems (PSS) Acts do prohibit the use of funds for certain activities that are not regulated or are prohibited explicitly like online gambling. Yet they do not cover online gaming as a business and do not address extra-territorial competition.

All of the above acts do not provide even basic protection mechanisms for Indian players, let alone the desi gaming industry. Crucially, even if state or central regulations are soon added to combat the widespread access to unlicensed offshore gaming websites, there are no agencies or dedicated authorities able to monitor or block them. There is no designated Gaming Commission to issue requirements or impose sanctions, thus no fair balance can be achieved between law-abiding domestic and uncontrolled foreign operators.

The latter, besides not being liable to pay GST, income tax, and other license fees, are not subjected to consumer protection standards applicable to Indian firms. Sooner rather than later, experts conclude, lawmakers should think about regulating online games for real money on a national level. This is the only realistic way of having extra-territorial demands on foreign businesses and setting legitimate criteria for operating in the Union market.

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