Analysing the Constitutional Validity of the Promotion and Regulation of Online Gaming Act, 2025

Introduction

The Promotion and Regulation of Online Gaming Act, 2025 (PROGA, 2025) received president assent on 22.08.2025. It aims to promote and regulate the gaming sector. It provides an umbrella of objectives it seeks to address, inter alia: the promotion and regulation of the Online Gaming Sector; the establishment of a Regulatory Authority; the Prohibition of Online Money Games; the protection of vulnerable groups; the protection of financial integrity and national security, etc.

The gaming industry has already challenged this Act on several grounds, including that it violates Articles 14, 19, and 21, and further argues that the Parliament lacks legislative competence to enact such legislation, as it falls under Entry 34 of the State List. The Parliament claims that it has the power to enact such laws, as they fall under Entry 52 of the Union List, which empowers the Union to control industries that the Parliament declares by law to be expedient in the public interest.

In this article, we will examine the full Act and analyse its provisions and their effects on the gaming industry. We will also try to find out the Constitutional Validity of the Act.

Key Provision of the Act

There are 6 chapters and 20 sections in total, making it a very small draft. The first chapter provides a short title and an interpretation clause. Clause (g) of Section 2 provides a definition of “online money game”

g) “online money game” means an online game, irrespective of whether such game is based on skill, chance, or both, played by a user by paying fees, depositing money or other stakes in expectation of winning which entails monetary and other enrichment in return of money or other stakes; but shall not include any e-sports;

Chapter II contains sections 3 and 4, which provide recognition and promotion of E-Sports and online social games in the country, respectively. Chapter III prohibits financial institutions from providing money gaming services, advertising online money gaming, or transferring funds to any online money gaming company.

Chapter IV provides that the Authority on Online Gaming will be established by the Central Government by notification, having a chairperson and such other members as required, or designate the existing authority to function under this Act. The chapter further defines the powers of the chairperson, including their qualifications, salary, disqualification, etc., which will be determined by the Central Government.

Chapter V provides offences and penalties; it states that all offences under this Act, notwithstanding BNSS, 2023, will be cognizable and non-bailable.

Chapter VI provides that this Act will supersede in case of any contravention with any other Act. Further, it provides that the Central Government can make rules to further the object of this Act.

Effect on the Online Gaming Industry

The Act has a serious effect on the online gaming industry, especially those that function as online money gaming, promoting betting and contest programs on their apps. After this Act was enacted, all online money gaming companies completely shut down. Apps like Dream11, My11Circle, etc., and other similar apps that were booming in the market prior to the Act came to a complete halt. Recently, when the Supreme Court allowed the retrospective 28% GST to be applied to these kinds of gaming companies, the situation became even worse.

In an article published in The Hindu, Sudipta Bhattacharjee, Partner at Khaitan and Co, who has represented several online gaming and casino companies before the Supreme Court, said that the condition of the gaming industry has come to a standstill, which could make the recovery of tax demands difficult. Many companies have either shifted their operations outside India or pivoted to sectors such as social gaming and fintech. He further stated that we are also likely to see a spate of insolvency proceedings.

The government is being very strict on these kinds of platforms, as it was mentioned in the statement of object that these kinds of apps have a serious effect on the minds of youth and vulnerable groups. They create addiction, which causes people financial hardships and leads to fallout in family and social standing. 

However, the government is promoting e-sports and online social games. It is good support shown by the government to help the game of skill shine in India. Many parents restrict their children from playing e-sports. With the government’s move, people who earlier did not allow their children to play games can feel a bit more confident that a career can also be built in this field. As the government is ensuring that research and development of this field is also ensured through this Act.

Constitutional Validity of the Act

The Act has been challenged on the grounds of violation of Articles 14, 19, and 21, as well as the legislative competence of parliament to enact such an Act. For the 1^st part of the challenge involving articles 14, 19 and 21. We will apply the proportionality test to determine whether this Act violates these articles.

Proportionality Analysis

The SC has laid down the proportionality standard to determine whether a violation of a fundamental right is justified. The proportionality standard is as follows:

1. The measure restricting a right must have a legitimate goal (legitimate goal stage);
2. The measure must be a suitable means for furthering the goal (suitability or rational connection/nexus stage);
3. The measure must be least restrictive and equally effective (necessity stage); and
4. The measure must not have a disproportionate impact on the right holder (balancing stage).

First, the goal of enacting this Act is to promote online gaming in India and to prohibit any form of gaming that is addictive, involves money, or results in betting. Therefore, we can see there is a legitimate goal.

Second, there should be a rational nexus between the means and the goal which the Act tries to achieve. As the problem of gambling is real, we have seen many people become addicted to online gaming platforms. Furthermore, there is no regulatory authority for online gaming in India. Since this act introduces both. We can say there is a reasonable nexus between the means and the object sought to be achieved.

Third, whether banning all online money-gaming platforms is the least restrictive measure. Under this limb, we do not need to see whether other alternatives are available or not. Since the Supreme Court recently dealt with SIR, it laid that “The Doctrine of Proportionality does not mandate the adoption of the least restrictive measure in the abstract; rather, it requires that the measure adopted must not be palpably arbitrary when viewed against the objective sought to be achieved.”

Other alternatives include imposing heavy taxes, implementing restrictive measures, etc. However, it won’t be that effective. Determining what constitutes an appropriate or effective measure to address complex and systemic concerns is a matter primarily within the domain of specialised bodies with the requisite expertise. Therefore, on the third prong of proportionality, we can say that the government has taken the least restrictive measure.

Fourth, we have to see whether there is a proper balance between the object and the extent of restriction on the constitutional right. We can see that there is a public purpose: curbing online gaming addiction and regularising the gaming industry. The restrictions are necessary to further this goal in the long term. The welfare of youth is the utmost priority for any country, as they build the country’s future, and the upliftment of the vulnerable section is part of welfare governance.

The right affected by the ban is Article 19(1)(g), read with Articles 14 and 21. All these rights can be curbed with reasonable restrictions. What is reasonable depends upon a case-by-case analysis. In the foregoing discussion, one more point can be added: much of the money earned through these apps is directed toward money laundering, funding terrorism, etc. So, in the interest of the general public, the restriction is necessary, balancing the other rights that this Act infringes.

Legislative Competence Analysis

Here, the clash is between two Entries. One is provided in the union list entry 52, and the other is provided in the state list entry 34. For this analysis, we need to examine various doctrines for testing legislative competence.  Throughout our discussion, we will delve into the following doctrines:

1. Doctrine of Pith and Substance
2. Doctrine of Harmonious Construction
3. Doctrine of Severability

The doctrine of pith and substance is applied to stop legislative encroachment on the jurisdiction of other levels of government. It ensures that laws are interpreted and applied in a manner consistent with the division of powers outlined in the Constitution. In this doctrine, the court first identify its dominant purpose and overall effect to determine its true character.

The Supreme Court has enunciated the principle in Premchand Jain v. R.K. Chhabra as follows:

“As long as the legislation is within the permissible field in pith and substance, objection would not be entertained merely on the ground that while enacting legislation, provision has been made for a matter which though germane for the purpose for which competent legislation is made, it covers an aspect beyond it. In a series of decisions this Court has opined that if an enactment substantially falls within the powers expressly conferred by the Constitution upon the Legislature enacting it, it cannot be held to be invalid merely because it incidentally encroaches on matters assigned to another legislature.”

Now, the primary purpose, or dominant purpose, of the Act is two-fold: first, to promote and regulate online gaming activities. Second, to prohibit any kind of online money gaming because of the negative effect on the population, as discussed above. The main constitutional question arises from the second fold of the Act, i.e., the prohibition of online money gaming. The conflicting part is entry 34, list II of the seventh schedule, which provides betting and gambling with the State legislative domain.

The real question is whether the Act directly encroaches on a subject in the state list or is only incidental to the larger public interest and falls within the definition of industry under entry 52 of list I.

Therefore, if the Act is in direct contravention of the state list, either a harmonious construction of conflicting interest can be ensured, or the contravening part can be separated from the Act to make it constitutional using the doctrine of proportionality. We are not delving deep into the question of public interest and leave it to the hon’ble Supreme Court to determine, because the definition is arguable and can be considered from both ends with equal force.

Conclusion

The PROGA, 2025, is surely in a position of critical constitutional challenge, where both sides of the argument can be considered equally good. We have looked into the key provisions of the Act and also examined its effect on the gaming industry. The Act was brought with the purpose to ensure there should be no online money gaming which causes addiction to youth, and a lot of money was transferred to these gaming platforms without regulation. The money was brought from different sources, and there are chances of funding terrorism from money that was involved in online money gaming.  

In our analysis, we found that the Act passes the proportionality test. However, the question of legislative competence remains in limbo, as various critical definitions depend on the interpretation adopted by the Hon’ble Supreme Court.