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Informist, Wednesday, Nov. 26, 2025

 

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.

 

An analysis of the data from suspicious transaction reports and cross-border wire transfer reports revealed that online money gaming companies were registered in small island countries where user accounts were registered with Indian banks in the name of proxy persons. The money collected from users has been remitted out of India by mis-declaring purposes of remittances. According to the reports, there has been a sharp increase in outward remittances, especially in FY24, where outflows had exceeded INR 57 billion, the government said. "Certain jurisdictions receiving remittances are known for weak oversight, raising concerns about layering and cross-border laundering. Domestic companies show very high outward remittances, suggesting payments that warrant closer regulatory scrutiny," it said.

 

Once users deposit money into illegal online money gaming applications, the funds are routed through multiple bank accounts belonging to shell entities, the government said. The software used by such platforms is designed to offer small initial winnings but ultimately causes large losses, after which the platform abruptly shuts down, said the government. The funds collected are moved through cryptocurrency and hawala channels and taken offshore, it added.

 

Justifying its move to ban the online gaming sector, the government said that according to the Enforcement Directorate's probes, dummy Indian directors are often used to incorporate the gaming companies, after which foreign nationals travel to India and assume control. Local individuals are recruited to open mule accounts and create trade accounts with different payment aggregators, said the government. Weak due-diligence practices and non-reporting of suspicious transactions by these intermediaries have helped such companies move funds without detection, the government added.

 

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. "Gaming companies collect extensive data, including players' IP(internet protocol) addresses, gameplay habits and financial behaviour. While this data is used to create customer profiles, it also increases privacy risks if exposed. Mobile users face greater vulnerability because their devices store sensitive financial and personal information," the government said in an affidavit.

 

The Centre opposed the petitioners' interim relief to seek a stay on the operation of The Promotion and Regulation of Online Gaming Act, 2025. While considering an application for staying the operation of a piece of legislation, the courts must bear in mind that unless a provision is "manifestly unjust" or "glaringly unconstitutional", they must show judicial restraint in staying the applicability of this, said the government.

 

The court was hearing petitions by Head Digital Works Pvt. Ltd., which operates India's marquee gaming brand 'A23', Bagheera Carrom (OPC) Pvt. 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. The petitioner said that the ban would lead to a potential loss of over 200,000 jobs, INR 310 billion in annual revenue, and over INR 200 billion in tax contributions.  

 

The complete ban on online money games through the 2025 Act applies to games of chance, games of skill, and those that combine both. The Act prohibits advertising and promotion of such games and financial transactions related to these platforms cannot be processed by banks or payment systems. Authorities will also be empowered to block access to unlawful platforms under the Information Technology Act, 2000.

 

Under the Act, strict punishments have been introduced, such as imprisonment of up to three years and a fine of up to INR 10 million for offering or facilitating online money games. Further, financial transactions linked to these games are also punishable with similar penalties. Advertising such games can attract a jail term of up to two years and a fine of up to INR 5 million under the Act. Repeat offenders face harsher punishments, including imprisonment of up to five years and fines of up to INR 20 million. Offences under key provisions will be cognisable and non-bailable, which means police can arrest without a warrant and bail is not a right.  End

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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