From Prohibition to Precision: India’s Online Gaming Policy After PROGA

The Promotion and Regulation of Online Gaming Act (PROGA), 2025, sought to address genuine concerns around addiction, financial harm, and illicit money flows in India’s rapidly expanding digital gaming ecosystem. Yet early evidence suggests that its blanket prohibition of real-money online gaming may be undermining these very objectives, writes Tridib Raman

SNAPSHOTS

• Mass migration to offshore “shadow” platforms increased unregulated participation from 68 to 82 percent
• Dismantling the domestic ecosystem costs India an estimated ₹20,000 crore in annual tax revenue
• Offshore evasion persists via surrogate ads, influencers, and crypto, outmaneuvering ineffective government blocks
• Losing two lakh jobs across developers and support staff cripples youth employment in growth sectors

BORN of an unimpeachable public purpose, the Promotion and Regulation of Online Gaming Act (PROGA), 2025, enacted in August 2025, sought to address the psychological and financial harms associated with unregulated real-money gaming, while curbing money laundering. Its intent was clear; its instrument was blunt. By imposing a blanket prohibition on all Real-Money Gaming (RMG), deliberately collapsing the distinction between skill and chance, the Act
attempted to respond to rising concerns around addiction and exploitation through a single, sweeping prohibition.

In the months since its implementation, however, the limitations of this approach have become increasingly evident. Rather than reducing participation or mitigating harm, prohibition appears to have displaced user activity toward unregulated offshore platforms operating beyond India’s effective enforcement reach. This shift weakens consumer protection and financial transparency, and critically, strips the state of its ability to distinguish between compliant
domestic operators and exploitative offshore entities; raising a fundamental question about whether blanket bans are a fit-for-purpose tool in governing digitally mobile activities.

EARLY EVIDENCE OF REGULATORY DISPLACEMENT

Early indicators following the enactment of PROGA suggest that prohibition has altered the location and intensity of participation rather than its underlying demand. Preliminary behavioural data point to a pattern of regulatory displacement, in which user activity migrates from domestically visible and partially regulated platforms to offshore environments that operate without effective oversight. This shift has important implications for consumer protection, financial traceability, and enforcement capacity, warranting close attention from policymakers. Survey-based evidence reinforces this trend. A recent study by CUTS International, covering 1,000 respondents in the Delhi–NCR region, offers an early snapshot of user behaviour in the post-PROGA environment. Even though the law’s full enforcement is ongoing, these trends are telling and need to be analyzed deeply.

MIGRATION TO OFFSHORE PLATFORMS

Surging Offshore Usage: Participation in offshore platforms jumped from 68.3% pre-ban to 82% post-ban, representing a 20% relative increase. This migration includes 24.7% of respondents who were new to offshore sites, drawn by the vacuum left by domestic shutdowns. Only 11% of users reported quitting altogether, underscoring that demand persists but is now funneled into unregulated spaces.

Intensity of Play: Daily offshore users skyrocketed from a mere 3.4% to a staggering 42.3%, with 38.3% engaging in more than five sessions per day. Average session lengths have ballooned, with 44% exceeding two hours, up from just 3.4% pre-ban.

Higher Stakes: High-value monthly spending (above ₹10,000) was virtually absent before the ban but is now reported by 13.5% of users on offshore sites, with categories like ₹5,000-9,999 and ₹10,000-24,999 seeing sharp rises.
Access remains frictionless, with Telegram and WhatsApp groups emerging as primary discovery channels, and 93.7% rating deposits/withdrawals as easy. Payments via UPI to merchant accounts and crypto bypass enforcement, highlighting how offshore operators adapt swiftly with mirror sites and VPN-friendly designs.

These shifts are not isolated; they reflect a broader pattern where prohibition fails to address root causes. Users cite ease of access, peer influence, and attractive bonuses as reasons for continuance, with 61% perceiving increased vulnerability to fraud post-ban. Offshore Platforms like Aviator, Stake, and Parimatch thrive, offering rigged odds and untraceable transactions that exacerbate addiction and losses.

LESSONS WE LEARN FROM NEIGHBOURS

While we grapple with the consequences of the ban under PROGA, some of our neighbours, facing similar concerns about harm, money laundering, and consumer protection, have chosen a more considered path. In the south, Sri Lanka has passed the Gambling Regulatory Authority Act, 2025, establishing a dedicated body to license and oversee online gaming, ensuring player protections while capturing tax revenues annually from regulated entities. This prevents citizens from falling prey to illegal offshore platforms by providing safe, local alternatives.

In the west, the UAE has introduced the General Commercial Gaming Regulatory Authority (GCGRA), which began issuing licenses for online gaming in late 2025, incorporating stringent anti-money laundering checks and focusing on controlled operations to safeguard users and boost economic inflows.

In the east, the Philippines parliament rejected proposals to ban online gaming outright, opting instead to tighten regulations through the Philippine Amusement and Gaming Corporation (PAGCOR). This includes higher taxes, license reforms, and targeted enforcement against illicit operators, preserving a multi-billion-dollar industry that contributes significantly to government coffers while minimizing harms. Taken together, these experiences point to a common conclusion: when digital activities are easy to access and hard to contain, regulation consistently outperforms prohibition. By retaining visibility and control, governments can
protect citizens, secure public revenues, and deny offshore operators the vacuum in which they thrive.

WHY REGULATION OUTPERFORMS PROHIBITION

History is a testament that what you can’t control (i.e., the internet), it’s better to regulate than ban it. The need of the hour is aptly utilizing India’s robust Digital Public Infrastructure (DPI) and Digital India Stack to build smart, digital-first regulations for India’s online RMG sector. Such an approach could unlock a $20-25 billion digital powerhouse, creating jobs, generating taxes, and contributing to human capital development, all while curbing downsides like addiction. A ban, in essence, is “inaction” in reverse: It erodes economic value, drives activity underground, and
challenges India’s Viksit Bharat ambitions of becoming a developed nation by 2047.

As Parliament reconvenes for the Budget session and chats about the future of India’s digital economy, like how we can grow jobs and tech, it’s time to really think about the good things from emerging technologies in skilled competitions and entertainment, such as online games that use brainpower. We can’t ignore the facts anymore.

EVIDENCE OF MIGRATION

A careful review driven by real data, like the CUTS study and lessons from neighbours, isn’t just a nice suggestion, it’s something we absolutely need to do right now to fix the PROG Act’s misses and build a safer, smarter system. Early behavioural data following the enactment of PROGA indicates that prohibition has not reduced user participation but has instead shifted it to riskier channels. These findings suggest a “behavioural displacement” where users now play for longer durations, some suggest it frequently exceeds two hours per session, on platforms that offer no KYC (Know Your Customer) verification, no grievance redressal mechanisms, and no responsible gaming tools like self-exclusion options or spending limits.

ECONOMIC SURVEY 2026: THE DIGITAL ADDICTION PARADOX

The Economic Survey 2026, released on 29 January by the Ministry of Finance, offers a timely framework to examine the internal contradictions in PROGA. In Chapter 11 on social progress, the survey devotes considerable attention to digital addiction and its cognitive and psychological impacts. It warns that excessive engagement across social media, gaming, and other online activities poses clear risks for young users, including anxiety, depression, low self-esteem, and impaired academic performance.

The survey further notes that digital addiction can undermine cognitive development and long-term productivity, explicitly flagging financial losses arising from risky online behaviour as a growing concern. With near-universal access to mobile phones and the internet among those aged 15 to 29, these harms are amplified, carrying potential implications for public health systems and future economic outcomes.

Yet this analytical rigour is applied unevenly. While the Survey endorses PROGA as a major intervention to address digital addiction and financial harm among youth through a ban on real-money gaming, it acknowledges similar behavioural and financial risks across other digital sectors without recommending prohibitions. Instead, those sectors are examined through the lens of regulation, risk mitigation, and institutional oversight, raising questions about the
consistency of the policy approach applied to online gaming.

LESSONS FROM FINTECH REGULATORY BLUEPRINT

In the fintech sector, discussed in chapter 3 (Monetary Management) and elsewhere, the survey praises regulatory innovations like sandboxes for testing fintech products under RBI oversight, which manage risks such as fraud and money laundering through KYC, transaction monitoring, and AI-driven alerts. It reports that digital infrastructure prevented ₹660 crore in financial losses from 90 lakh fraudulent transactions in 2025 alone, emphasizing regulation’s
role in fostering inclusion while mitigating harms. Fintech lending, microcredit platforms, and digital payments face addiction-like issues, compulsive spending via easy loans or buy-now-pay-later schemes, and money laundering vulnerabilities through anonymous transfers, yet they are refined with “risk-based classification” and ethical AI guidelines, as seen in Singapore’s model adopted for Indian fintech.

SELECTIVE BANS: A POLICY PARADOX

Why, then, a blanket ban for online RMG but calibrated regulations for fintech, crypto exchanges, social media, or e-commerce? The survey underscores fintech’s contributions to financial inclusion and economic growth, with GIFT City’s rise in global rankings (43rd in GFCI) attributed to dedicated regulatory frameworks. Crypto and digital assets, prone to laundering and volatility-induced losses, are governed by FIU reporting and PMLA amendments, not outright prohibition. Social media platforms, linked to addiction in the survey’s analysis, operate under IT Rules with content moderation and age-gating, not bans. This double standard is puzzling: RMG’s pre-ban ecosystem already mirrored these safeguards – voluntary KYC, traceable banking, and tax compliance – yet it was dismantled, while fintech thrives
under similar risks. The survey’s call for “stronger education-skills-industry linkages” and public-private partnerships to combat digital harms suggests a regulatory path forward for all sectors, not selective bans that stifle innovation.

ECONOMIC FALLOUT

While early signs show that the law has so far failed to stop online money gaming, it has succeeded in dismantling a once-thriving domestic ecosystem while giving reasons to offshore/unorganized platforms to thrive. Before PROGA, legitimate Indian operators provided a traceable, accountable, and taxable environment, contributing an estimated ₹20,000 crore annually in taxes. Due to high contributions at deposit (28% GST) and withdrawal (30% TDS), this ecosystem could never be a breeding ground for money-laundering, as every transaction was auditable.

The current landscape tells a different story:

Job Losses: Estimates indicate that over 2 lakh direct and indirect jobs have been impacted, from developers to support staff, crippling youth employment in a sector poised for growth. Capital Flight: Stranded investments exceed ₹20,000 crore, with major players forced to suspend operations or pivot, leading to capital outflows and reduced FDI in gaming tech.
Frictionless Illegality: Despite the ban, offshore evasion persists through surrogate ads, social media influencers, and crypto gateways, with government blocks (1524 in 2025) proving ineffective against adaptive tactics.

FROM BLUNT BANS TO SMART GUARDRAILS

The current “one-size-fits-all” approach does more than just stifle business; it actively punishes those who want to play by the rules. When a tax-paying, transparent Indian startup faces the same criminal threats as a shadowy offshore app, the law loses its moral compass. We have essentially told the innovators that their efforts to be compliant do not matter. To fix this, we need to stop treating the sector as a monolith and start distinguishing between genuine
entertainment and predatory exploitation.

India already possesses the “digital brain” to solve this problem. Our world-class Digital Public Infrastructure is the perfect foundation for a safer system. By using familiar tools like Aadhaar for age checks, UPI for transparent payments, and DigiLocker for secure verification, we can move away from total prohibition toward active protection. This transition would allow for a gaming environment with a human touch. It means a system that identifies a player in distress through addiction alerts, enforces sensible deposit limits, and ensures that every rupee is traceable. Instead of pushing millions of young Indians into the unregulated wild west of the dark web, we can offer them a supervised, secure, and uniquely Indian digital playground.

GLOBAL LESSONS IN LOCAL PROTECTION

We are not alone in this journey. Countries like the United Kingdom and the United States have moved away from total bans because they realized that visibility is the best form of protection.
By licensing skill-based games and enforcing mandatory self-exclusion tools, these nations have built a “safety-first” culture. In the UAE and the Philippines, governments are using strict oversight to keep the bad actors out while keeping the economic benefits in. These are not just economic policies; they are proactive ways to safeguard families and national interests.

THE PATH TO A SAFER FUTURE

In India, a dedicated Online Gaming Authority could serve as a watchful guardian. This body would not just be about licenses and taxes; it would be about bringing mental health experts, youth representatives, and tech innovators to the same table. Together, they can build a system that monitors for behavioral red flags and promotes digital detox initiatives, much like the suggestions in the recent Economic Survey.

Prohibition is a blunt instrument for a world that is now hyper-connected. For the PROG Act to truly serve the people, it must evolve from a symbol of punishment into a framework of protection. We do not have to sacrifice India’s economic potential to keep our citizens safe. By choosing regulation over a ban, we can create jobs, build tech skills, and face risks head-on. The time for this mid-course correction is now.