The Government of India has come down hard on the online gaming industry, imposing a ban on real money games. While there is no doubt that many of these games can be addictive, surely there must be a better way to regulate them.

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Last week, out of the blue, the Government of India brought a ₹2 trillion industry to its knees. Over the course of a few short days, a brand new law against online gambling was placed before both Houses of Parliament, and before anyone had time to react, it was voted on and passed. That law has since received the President’s assent. As soon as it comes into force, it will put anyone who either offers or aids and abets the offering of real-money games at risk of imprisonment for up to three years.

The Promotion and Regulation of Online Gaming Act, 2025, defines three categories of games: e-Sports, online money games and online social games. While both e-sports and social games have been permitted, online money games have been unequivocally prohibited. Not only can these games no longer be offered in India, nobody can advertise them or facilitate financial transactions that relate to them.

In the wake of its passage, questions have been raised about the central government’s competence to enact such a law, given that under the Constitution, it is the states that have the power to legislate on “betting and gambling.” The government, however, seems confident and is prepared to defend the law before the courts should it come to that. Be that as it may, I am not as concerned about whether the government could enact such a law as much as if it should.

If we look past the unseemly haste with which this law has been enacted, there are several substantive reasons why the approach taken by the government is ill-conceived. Banning an activity rarely ever achieves the intended policy objective. All it does is force larger companies that might have had the incentive (and wherewithal) to comply with regulations to shut shop for fear of prosecution and drive smaller (arguably less scrupulous) entities underground, where it is much harder to police them.

If the government truly intended to prevent social harm, what it should have done was formalise the industry, secure the capital already invested and require compliance with a strict regulatory framework designed to deliver those objectives.

To those of us who have been studying the gaming industry, this seemed like the path the government was taking. Online gaming had been made liable to 28% GST and was subject to mandatory age-gating as well as KYC requirements. Companies were required to put in place grievance officers and file monthly reports, and questionable gambling sites and apps were being blocked under Section 69A of the Information Technology Act. Since these measures were already in place and working, it is hard to see why a need was felt to impose a ban.

The government has tried to justify this extreme measure by playing up the harms of online gambling. It argues that the manipulative design and aggressive marketing of these apps have already led to serious social, financial, psychological and public health harms, particularly among the youth and economically disadvantaged. And that they are being used for money laundering, tax evasion and financing terrorism.

Apart from data on the gaming industry’s exponential growth, it does not look as if the government has any empirical evidence to support this conclusion. But even if we were to trust the government on its word, there are other, far more socially corrosive addictions that society has chosen to regulate instead of ban. 

Even though tobacco is responsible for over a million deaths every year, we can still purchase cigarettes in the country. This is despite the fact that in 2017, it was estimated that the economic cost of tobacco addiction was in excess of ₹1.7 trillion. While there are no comprehensive statistics for alcohol-attributable deaths, drunk-driving claimed over 4,000 lives in 2022 alone, and the societal value of health lost on account of alcohol is, by some accounts, to the order of ₹6.2 trillion. While a few states have legally banned alcohol, it is not as if alcohol cannot be sourced in these places if you go looking for it.

As far as I have been able to ascertain, there are no comprehensive national statistical surveys suggesting that gambling is a social problem on the same scale as alcohol and tobacco. While some states have tallied suicides allegedly linked to online rummy games, those numbers are relatively small in comparison, and there is no national estimate of the extent of harm caused. 

If you look at data from other countries where online gambling is regulated (not banned), it is clear that a small and identifiable subset of the population does incur disproportionate harm (especially in relation to high-intensity, rapid-cycle products like online slot machines). However, the experience of these countries suggests that instead of banning online gambling across the board, what we really need is to put in place targeted risk controls.

Under the doctrine of parens patriae, the government is cast as a father figure—empowered to protect those unable to care for themselves. I can see how this spirit has motivated the enactment of this law. But every parent knows that they cannot always be around to protect their children, and it is sometimes necessary to allow them to make mistakes so that they can learn how to handle the many challenges that life will throw at them.

It’s high time our government does so, too. It should put in place appropriate regulations, and beyond that, it should just trust that people will do what they must to take care of themselves.