iGaming Expert welcomes a two-part series exploring the regulatory prospects of gambling in India in 2025 and beyond, co-analysed by 4H Agency CEO Ilya Machavariani and market expert Divya Negi.
An in-depth analysis examines recent developments in the state of Karnataka, whose efforts to implement a whitelist-based framework for online skill games may act as a catalyst for broader regulatory adoption across India.
The stakes are high in a market where over $100 billion in annual payment transactions are linked to unlicensed operators, and where state-level governance efforts are increasingly at odds with outdated federal laws and conflicting definitions of games of chance, skill, and real-money activity.
In 2025 the state of Karnataka has emerged as a pivotal force in reshaping the regulatory trajectory of India’s gambling industry.
In April of 2025, the government initiated stakeholder consultations with industry associations, including the All-India Gaming Federation, the Federation of India’s Fantasy Sports, and the E-Gaming Federation, to draft a comprehensive regulatory framework for online skill games.
Among the most significant innovations under consideration is the introduction of a “whitelist mechanism” for legitimate RMG operators, providing formal recognition, legal protection, and operational clarity. Proposed regulations include mandatory Aadhaar-based age verification, dispute resolution mechanisms, and player protection features – signalling the state’s commitment to both industry development and consumer safeguards.
Karnataka’s strategic repositioning has catalysed legislative and policy momentum in other major India’s states. Its decision to legitimise previously closed industry has served as a reference point and proof of concept for jurisdictions grappling with similar regulatory and fiscal pressures.
Maharashtra has launched consultations across its IT, home affairs, and revenue departments to develop a licensing framework for online skill games. Officials have confirmed plans for fee structures and enforcement mechanisms, with explicit aims to formalise the sector.
Haryana enacted the Prevention of Public Gaming Bill, 2025, which repeals colonial-era law and modernizes enforcement through expanded definitions of “common gaming houses”, now including online. Crucially, the bill excludes skill games from the scope of “gambling,” paving the way for licensing and regulation.
Andhra Pradesh has circulated proposals to legalise state lotteries and online skill gaming as part of a broader revenue strategy. The Chief Minister is expected to greenlight the reforms shortly, after inter-departmental feedback.
Uttarakhand is preparing a new Gaming Act that explicitly separates games of skill from games of chance. The proposed law, under legal vetting, is expected to support real-money skill gaming while retaining prohibitions on traditional betting.
Uttar Pradesh, India’s most populous state, has been ordered by the Allahabad High Court to form a high-level committee and draft modern legislation for online betting and gaming. The court emphasised the obsolescence of colonial laws and the need to regulate fantasy sports, poker, and e-sports under a coherent digital framework.
As outlined above, the regulatory developments primarily focus on games of skill rather than games of chance. According to local experts, this approach reflects a necessary and logical step toward broader regulation of the gambling industry, given the long and complex history of gambling in India. Karnataka’s policy maturity and consultative approach have helped lend legitimacy and urgency to parallel efforts in other states. The shift is further underscored by the Supreme Court’s anticipated rulings on the legality of online skill gaming and GST applicability – rulings that will likely embolden reform-minded states.
But why did Karnataka choose to lead this shift – and why now? After years of restrictive and even punitive approaches, the state has dramatically reversed course, positioning itself as a frontrunner in shaping the future of India’s real-money gaming sector. Its transformation is not occurring in isolation but is influencing a wider policy reawakening across India.
And now, before we delve deeper into Karnataka’s motivations and trajectory, it’s crucial to step back and examine the broader regulatory environment it operates within. India’s gambling laws are fragmented, defined by a mix of outdated central statutes and evolving state-level initiatives.
Understanding this dual-layered system is essential to grasp the significance of Karnataka’s role, and we will explore this broader context in the following sections.
India does not have a unified national gambling law. Instead, gambling, especially in its online form, is governed indirectly through a mix of digital content regulations, foreign exchange controls, and tax laws. While these frameworks do not explicitly prohibit or legalise gambling nationwide, they create a restrictive and often ambiguous environment. This fragmented approach has led to enforcement challenges, regulatory loopholes, and the proliferation of illegal operations.
At present, the following key legislative instruments highlight the fragmented and complex nature of the federal approach to gambling regulation in India.
The Public Gambling Act, 1867, is one of India’s earliest gambling laws, which remains technically in force but is outdated and largely ineffective in addressing online activity. Originally designed to prohibit physical gaming houses, the Act has limited relevance in the digital era. Following constitutional reforms, regulatory authority over gambling was delegated to individual states, leading to a patchwork of regional laws and inconsistent enforcement.
The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, amended in 2023, form the core of India’s federal digital oversight. These rules impose obligations on online gaming platforms to monitor content and protect users from harm.
Although enforcement is delegated to platforms and industry bodies, these rules position the central government as a gatekeeper against unauthorised online gambling. However, in the absence of a federal licensing regime, these rules contribute to legal uncertainty and inconsistent compliance across jurisdictions.
The Foreign Exchange Management Act (FEMA), 1999, restricts cross-border gambling payments.
Enforcement agencies like the Reserve Bank of India (RBI) and the Directorate of Enforcement (ED) have been actively tracking transactions linked to offshore gambling sites, many of which operate from low-tax jurisdictions using layered intermediaries and digital currencies to conceal their activities.
India’s Goods and Services Tax (GST) regime adds another layer to federal oversight.
The Integrated GST Act, 2017 applies to Online Information and Database Access or Retrieval (OIDAR) services, including online gaming provided by foreign operators. Such providers must register in India and comply with tax obligations, either directly or through appointed representatives.
Despite this, compliance remains low. Many offshore gambling platforms avoid registration by using opaque ownership structures, leaving significant tax revenue uncollected and weakening federal oversight.
As was touched upon above, India’s gambling regulation is predominantly state-driven, and legal approaches vary widely across jurisdictions. While most states follow a general prohibition model, a few have adopted licensing frameworks for specific types of gambling – either land-based, online, or both. The regulatory clarity is most pronounced in states like Sikkim, Nagaland, and Goa, whereas states such as Chhattisgarh have recently enacted comprehensive prohibitory legislation. The following provides a state-by-state summary of key legal instruments and current status.
In Goa, gambling is governed by the Goa, Daman and Diu Public Gambling Act, 1976. While the Act prohibits general gambling activities, it also provides the state government with the authority to authorize certain forms of gaming by notification. These include:
The licensing scheme includes a fixed application fee (historically ₹2,500 per machine), annual license fees (e.g., ₹6,000 per machine), and security deposits. Casino operations are restricted to high-end venues, aligning gambling with the state’s tourism strategy.
Goa has become a prominent destination for legalized gambling. As of 2023-2024, the state government reportedly earned ₹606 crore from onshore and offshore casinos, reflecting a 70% increase from the previous year. Gambling is officially framed as part of the entertainment infrastructure to attract foreign and high-spending domestic tourists. Casino licenses are subject to conditions imposed by the Department of Home Affairs and may be granted, renewed, or suspended based on compliance.
Sikkim has enacted two primary pieces of legislation for regulating gambling:
The 2002 Casino Act governs the licensing of land-based casinos in hotels with infrastructure matching five-star standards. Licenses are issued for a five-year term, with options for provisional licenses (6 months) to establish infrastructure. Fees include ₹5,000 for trade licenses, ₹1 lakh for provisional licenses, and ₹5 crore for full five-year operational licenses. Casinos may operate 24/7, subject to several restrictions.
Separately, the 2008 Online Gaming Act regulates games of chance and mixed-skill games played online for money, including poker, roulette, blackjack, keno, bingo, and sports betting. The Act mandates: license fees and annual levies, compliance with age restrictions and responsible gaming protocols, oversight by a designated State Gaming Authority, etc.
This framework enables the legal provision of both online and land-based gambling within Sikkim territory under state supervision.
In 2022 state enacted the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, which prohibits online gambling but simultaneously establishes a regulatory regime for non-gambling online games.
Key provisions include:
In 2025, new regulations were introduced under this Act to enhance enforcement. Key requirements include:
While the Act imposes a strict ban on online gambling, it allows licensing and supervision of local online games that do not fall under the definition of gambling.
Nagaland pioneered a model of regulation that draws a clear legal line between “games of skill” and “games of chance” through the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2015.
Under this Act: Games of skill are explicitly legal and licensable, even when played for real money; Games of chance are classified as gambling and prohibited.
Nagaland’s gambling regulation also includes lists of approved skill games, which are:
Licensed operators may offer these games to players located in jurisdictions where such games are not considered gambling. This extraterritorial approach positions Nagaland as a favorable regulatory base for online platforms serving a national or international audience. The Act also mandates license fees, ongoing record maintenance and government audits, and etc.
The Meghalaya state was originally operated under the Meghalaya Prevention of Gambling Act, 1970, prohibiting games of chance while exempting games of skill, but in 2021 authorities passed the Regulation of Gaming Act to create a licensing regime for both games of chance and skill involving wagering.
The 2021 law introduced the Meghalaya Gaming Commission, licensing for casinos and online betting, and regulatory obligations such as royalty payments, account keeping, and penalties for unlicensed operators.
However, this law was repealed by the Meghalaya Regulation of Gaming (Repeal) Act, 2023. The repeal restores the 1970 framework but includes a savings clause:
As of mid-2025, gambling involving chance is again prohibited unless it falls within the limited scope of exemptions under the 1970 Act (e.g., horse race betting, lotteries, and games of skill).
Industry is regulated through the Chhattisgarh Gambling (Prohibition) Act, 2022 imposes a broad and modern ban on all forms of gambling, including online platforms, mobile apps, and financial systems supporting gambling operations.
Key provisions include:
The Act criminalises not only direct participation in gambling but also acts such as fund transfers, advertising, account provision, and publishing game-related data. It represents one of the most comprehensive state-level prohibitions in India.
There, the principal legislation is the West Bengal Gambling and Prize Competitions Act, 1957, which is outdated and does not account for digital gaming. Online gambling is not explicitly regulated or prohibited under the Act, creating a legal grey area.
Notably, in India’s Poker Association v. State of West Bengal, the Calcutta High Court observed that poker is not, by itself, covered under the 1957 Act and cannot be treated as gambling unless accompanied by illegal conduct. As a result:
This legal vacuum allows users to access gambling services online without violating state law but also exposes them to risks due to the absence of consumer protections, taxation, or accountability mechanisms.
India presents a highly complex regulatory environment for gambling, marked by significant structural weaknesses at both the federal and state levels. These deficiencies undermine effective oversight, disrupt market stability, and limit consumer protection. The resulting legal and regulatory gaps have allowed offshore gambling operations to flourish, created uncertainty for compliant businesses, and left key public risks insufficiently addressed.
Federal-Level Inefficiencies: At the national level, enforcement and oversight mechanisms remain largely reactive, fragmented, and outdated. Despite several legal instruments, ranging from the Information Technology Rules to the Foreign Exchange Management Act and GST legislation, the regulatory environment fails to keep pace with the complexities of the online gambling market.
The unregulated offshore market continues to expand rapidly, with estimated annual transactions exceeding $100 billion. These flows remain outside the formal economy, enabling large-scale tax evasion, illicit capital movement, and systemic criminal misuse. Investigations by the Parliamentary Standing Committee on Finance and the Financial Intelligence Unit (FIU) have exposed online gambling platforms as key channels for money laundering and terror financing, often operating through shell companies and cryptocurrency.
Meanwhile, enforcement suffers from fundamental limitations. Offshore platforms benefit from anonymity and jurisdictional distance, making prosecution under existing laws nearly impossible. The application of a flat 28% GST on total bets, along with retrospective tax demands, has only added to the operational strain for legitimate actors – forcing many toward informal markets. Legal uncertainty persists nationwide due to the absence of a harmonized definition of gambling, skill games, or regulatory scope, leaving critical gaps in policy implementation and compliance.
Fragmentation at the state level: State-level regulation introduces its own layer of complexity. While some states, such as Goa, Sikkim, and Nagaland, have built structured licensing systems for specific gambling formats, others like Chhattisgarh and Tamil Nadu have adopted blanket prohibitions. In states like West Bengal, legislation remains outdated and silent on digital gaming, creating a de facto legal vacuum.
The result is a patchwork system in which legality, compliance standards, and enforcement intensity vary dramatically across jurisdictions. Definitions of “games of skill” versus “games of chance” are inconsistent, licensing procedures are non-standardised, and consumer protection policies differ widely. States frequently shift policy direction (exemplified by Meghalaya’s reversal of its 2021 licensing regime) contributing to regulatory unpredictability and discouraging long-term investment.
In practice, this fragmentation allows offshore and unlicensed operators to exploit loopholes, operate across state boundaries, and avoid detection or accountability. Users face uneven levels of protection, and regulators are unable to effectively control cross-border digital activity or address the broader consequences of offshore gambling.
Crucially, there is little alignment between federal and state regulatory approaches. The absence of coordination not only complicates compliance for legal businesses but also undermines enforcement. Operators navigating this disconnected landscape face overlapping obligations, unclear liabilities, and constant legal ambiguity. Consumers, meanwhile, are left vulnerable to fraud, addiction, and data misuse.
Overall, India’s current regulatory regime, both at the federal and state levels, lacks the consistency, cohesion, and adaptability required to govern the fast-evolving online gambling sector. The systemic inefficiencies, outdated laws, and jurisdictional gaps have collectively fostered an environment where illegal operations flourish, state revenues are lost, and public welfare remains exposed to growing risks.
Welcome to Gambling Consulting Authority (GCA) - Your Strategic Partner in Gambling Industry Advancement
