The Indian Parliament recently passed the Promotion and Regulation of Online Gaming Bill 2025, imposing a ban on real money online games. 

Government’s Stance on the Necessity of a Ban

• Not a Moralistic Decision: The government’s decision to ban real money online games is not based on a moralistic view that gambling is a sin. 
• Protection of Vulnerables: Instead, the focus is on protecting vulnerable citizens from significant financial losses. 
  • Many individuals, particularly those who are illiterate or lack financial literacy, can easily develop an addiction to these games, leading to severe debt, loss of savings, and even tragic incidents.

Key Arguments for the Ban include

• Gambling in Disguise: Online “gaming for money” is merely a euphemism for gambling. 
  • While presented as entertainment, these platforms primarily involve players betting money.
• Chance, Not Skill: The government asserts that these games are primarily games of chance, not skill. 
  • Even proponents of these games claim they involve skill, but the government likens this to believing one’s skill dictates outcomes in a casino. 
  • Games genuinely considered skill-based, such as chess or e-sports, remain permitted.
• Protection of Small Players: The ban aligns with efforts by regulators like SEBI to protect retail investors from highly risky financial instruments. 
  • SEBI has actively curbed “finfluencers” from encouraging naive individuals to trade in Futures & Options (F&O) due to the high probability of losses for most traders.
  • The government views online money games in a similar light, aiming to prevent small players from incurring substantial losses.

Concerns and Consequences of a Ban

• Significant Revenue Loss: The government will experience a substantial loss in tax revenue. 
  • Previously, a 28% Goods and Services Tax (GST) was levied on the entire amount players staked, not just their winnings. This revenue stream will now drop to zero.
• Disrupted Investment and Job Market: The online gaming sector has attracted considerable domestic and foreign direct investment (FDI). 
  • The ban, coupled with policy uncertainty, will halt new investments and dry up existing capital. 
  • This will lead to job losses for thousands of software developers, game designers, and customer support personnel who were part of this rapidly growing industry.
• Impact on the Sports Economy: Online gaming companies were major advertisers for high-profile sports events, notably the Indian Premier League (IPL). 
  • The advertising ban on real money games will severely hit the sports economy’s ad revenue.
• Outflow of Business and Rise of Black Markets: A major concern is that the ban will force the business overseas. 
  • Players may resort to using foreign applications, potentially via VPNs, or engage in illegal black market activities. 
  • This would result in Indian money flowing out of the country and the government losing all regulatory control over these activities, creating a more dangerous situation.
• Inconsistent Regulatory Approach: A perceived paradox exists in the current regulatory landscape. While online money games are banned, lotteries remain legal in states like Kerala, casinos are permitted in Goa and Sikkim, and horse racing bets are legal nationwide, having been deemed a game of skill by the Supreme Court.
  • This inconsistency raises questions about the selective application of bans.
  • The market size of this industry is also substantial, estimated at over ₹20,000 crore.

Addressing the “Black Market” Argument

• The government is aware of the potential for illegal markets to develop. However, it firmly maintains that the impossibility of completely stopping an illegal market does not justify legalising harmful activities. Examples include:
  • Dabba Trading: An illegal domestic market for stock and commodity speculation exists, using exchange prices for settlement, despite being banned.
  • Illegal Forex: Unauthorised dealers facilitate illegal buying and selling of foreign currency.
  • SEBI’s Actions: The market regulator has actively cracked down on YouTubers and Instagrammers who encourage retail investors to trade in risky Futures & Options (F&O), where most traders incur losses.
• These examples demonstrate the government’s consistent effort to curb harmful financial practices, regardless of the persistence of shadow markets.

Broader Ethical Questions related to Ban On Online Gaming

• Paternalistic State vs. Individual Liberty: One perspective supports the state acting as a “nanny state” or a parental figure, protecting citizens who may lack sufficient financial literacy from making poor decisions. The government views it as its duty to safeguard citizens from self-inflicted harm.
  • Conversely, the concept of individual liberty, championed by philosophers like J.S. Mill argues that individuals should be free to make their own choices, provided they do not cause harm to others. 
  • Under this principle, if an individual chooses to spend their money on online games, and the direct harm is limited to themselves and their family, then they should have that freedom.
• Unregulated Risky Financial Avenues: The debate also brings to light other financial activities that bear a resemblance to gambling but remain largely unregulated:
  • Cryptocurrency: Its value is often based on speculation rather than an underlying asset, akin to gambling. The question of its regulation or ban remains open.
  • IPO Investments: Many retail investors purchase Initial Public Offerings (IPOs) hoping for quick listing gains, often driven by herd mentality rather than detailed financial analysis. This speculative behaviour also involves a significant element of chance.

Way Forward

• Middle ground: A middle ground involving stringent regulation, similar to “sin goods” like cigarettes and alcohol, could be explored. 
  • These products are harmful but are not entirely banned; instead, they are heavily taxed and regulated.
• Age Restrictions: Strict enforcement of age limits, ensuring only individuals aged 18 and above can participate.
• Robust KYC Norms: Mandatory Know Your Customer (KYC) procedures to verify user identities.
• Spending Limits: Implementation of daily or monthly spending limits to prevent excessive losses.
• Self-Exclusion Options: Providing users with the ability to self-block themselves from gaming apps for specified periods.
• Awareness Campaigns: Launching public awareness campaigns to educate citizens about the risks and responsible gaming.
• National Online Gaming Commission: Establishing a regulatory body like the proposed National Online Gaming Commission to oversee licensing, monitor the industry, and ensure compliance. 
  • This commission would provide licenses, regulate the industry, and monitor for illegal activities, with penalties for violations including fines up to ₹1 crore and up to three years imprisonment.

Conclusion

By adopting such a regulated approach, the government could address the concerns of protecting vulnerable citizens while avoiding the negative economic consequences and the potential rise of an uncontrolled black market. 

• This would allow for a dynamic framework that learns and adapts over time.

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