Legal regulation in India
Executive Summary (2025)
India regulates gambling primarily at the state level, while individual areas (for example, lotteries and part of digital rules) rely on central acts. In 2025, two critical vectors emerged: (1) a nationwide ban on online money betting games (online money gaming), which is already being challenged in the courts; (2) tightening of the tax regime: after a single rate of 28% from October 1, 2023, an increased rate of 40% was announced for online gaming (category "demerit goods/services") from autumn 2025.
Constitutional and federal framework
Competency of states. "Betting and gambling" are classified as a list of state issues, so basic prohibitions/exceptions are set regionally. Historically, most states have a version of the colonial Public Gambling Act, 1867 (or its local counterparts).
Lotteries. Regulated by the central Lotteries (Regulation) Act, 1998 and the relevant 2010 regulations; only state/Union governments can conduct them, private lotteries are prohibited.
Digital environment. In parallel, the IT rules and initiatives of the Ministry of Electronics and IT (MeitY) are in force, including projects/improvements to the rules of online games; in 2025, separate "online gaming" acts and adjustments were discussed.
Key changes 2023-2025: Online and taxes
1. A single GST of 28% (from October 1, 2023). Online gaming is subject to a 28% stake/face value rate, along with a simplified registration mode for offshore suppliers.
2. Increase to 40% (September 2025). In the decisions of the 56th meeting of the GST Council, the rate for a number of "demerit services," including real online money gaming, is fixed at 40% with entry into force on September 22, 2025 (with implementation reservations).
3. Prohibition of online games with cash bets (2025). In August 2025, Parliament approved a law banning money-based online games (poker, rummy, fantasy, etc.), which caused a halt in payment regimes and massive changes in the industry; the first legal challenges have already been filed.
"Skill game" vs "chance game": precedents
The Supreme Court in the cases of K. Satyanarayana (1968) and Dr. K.R. Lakshmanan (1996) drew a key distinction: rummy and race betting are recognized as games where skill prevails. This has influenced enforcement for poker, fantasy sports, and the like for decades, although the status of specific formats could vary by state.
From 2023-2025, the tax regime (28%→40%) ceased to distinguish between "skill/case" for fiscal purposes, and the new nationwide ban of 2025 temporarily blocks online money regimes as a class - regardless of skill qualifications.
Regulation by activity type
1) Land casinos
Goa, Daman and Diu. Casinos are permissible and regulated by the Goa, Daman and Diu Public Gambling Act, 1976 (including offshore casinos on ships in Goa based on notices/licenses).
Sikkim. Land casinos are regulated by a separate Sikkim Casinos (Control and Tax) Act, 2002; historically, the state has also experimented with in-state terminal/intranet formats for online games. The review on land casinos in Goa/Sikkim/Daman is confirmed by industry law reviews.
2) Lotteries
Central Framework Lotteries (Regulation) Act, 1998 + Rules 2010; each state decides whether to run state lotteries (private ones are prohibited). Requirements: Frequency limits, circulation transparency, interstate sale ban if state didn't allow.
3) Online gaming
Through 2025. There were staff licenses/modes for "skill games" (e.g. Nagaland, 2016), pilots and Sikkim intra-staff decisions, separate legalization/repeal attempts (e.g. Meghalaya passed a law but then repealed in 2023).
FROM 2025. A nationwide ban on online money games operates on top of full-time modes; a number of companies have stopped cash products, legal challenges are underway. Before the results of the courts and by-laws, there is the most conservative approach to RMG online operations.
Geography and differences by state (selective)
Goa/Daman/Diu - casinos are allowed for licensing.
Sikkim - land-based casinos and previously intra-state online formats under license; in 2022 +, amendments were made to online modes.
Nagaland is a separate law regulating online skill games (licensing).
Meghalaya - the 2021 law on the regulation of games is canceled in 2023.
Southern states (Anhra Pradesh, Telangana, Tamil Nadu, etc.) - periodic bans/restrictions on online games for money; regulation is fluid and dependent on court decisions. (General trends; details change frequently.)
Taxes and Finance
GST. 28% (from 01. 10. 2023) → 40% (from 22. 09. 2025) for online money gaming as a "demerit category"; for offline casinos and bets, their modes and bases are applied, depending on the service and state.
Personal income tax/deductions. Special taxation rules (TDS/flat bets) apply to winnings - take into account the sections on "net winnings" and the provider/platform reporting (check the current percentages and thresholds with the latest CBDT/Ministry of Finance notifications).
AML/payments. PMLA and KYC requirements apply to payment service providers; blocking suspicious schemes and transfers are regularly intensified (law enforcement practice 2024-2025).
Compliance risks for operators and platforms
1. Control level conflict. Even with a full-time license (for example, for "skill games"), a nationwide ban on online money formats in 2025 creates an upper-level restriction.
2. Judicial uncertainty. Industry lawsuits against the ban have already been filed; waiting for results can take months. Plan "off-ramp" for money online and "fallback" for free-to-play/cash-strapped mechanics.
3. Tax burden. With the resumption of monetary products - a high GST rate and a complex calculation base → the impact on the unit economy, revenshare and affiliate models.
4. Marketing and advertising. Risks due to restrictions on promo and cross-border traffic; consider local state bans and platform policies.
5. Payments and Pyrolysis Oil. Enhanced monitoring of banks/PSP, geo-filters and benchmarks for risky MCC/categories.
Practice Scenarios 2025
Land casino in Goa/Sikkim. Possible with a full-time license; strict AML/KYC and local tax/permit requirements are mandatory.
Online casinos/money bets (all of India). Cannot be launched until the final court results for the 2025 ban; any monetization through rates/contributions is in the area of blocking and increased risk.
Skill games without money bets (free-to-play, e-sports/ed-games). Possible subject to IT rules, consumer law, advertising and data protection; for "platform" commissions, other GST rates than RMG may apply. (Check current Treasury and GST Council notices.)
What to track next
1. The results of the courts on the ban 2025. The outcome will determine the fate of RMG online.
2. By-laws/MeitY guidelines. New definitions of "online game," SRO/RC procedures, etc. are possible.
3. Tax circulars. Exact bases/exceptions for 40% GST and interaction with "cash-free" modes.
4. Regular updates. Amendments in Goa/Sikkim/Nagaland and the "southern cluster" (Anhra Pradesh/Tamil Nadu/Telangana), including attempts at re-regulation.
Reference minimum for acts and precedents
Lotteries (Regulation) Act, 1998 - state lotteries.
Goa, Daman and Diu Public Gambling Act, 1976 - legal basis for casinos in Goa/Daman/Diu.
Sikkim Casinos (Control and Tax) Act, 2002/Sikkim Online Gaming (Regulation) Act, 2008 (with amendments) - Sikkim frame for casinos and limited online formats.
Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016 - licensing of online skill games.
Meghalaya Regulation of Gaming (Repetial) Act, 2023 - cancellation of the regulation mode.
State of A.P. v. K. Satyanarayana (1968); Dr. K.R. Lakshmanan v. State of Tamil Nadu (1996) - "skill predominance."
Disclaimer
India's regulatory environment for online gaming is changing rapidly (especially after the August 2025 ban and September GST decisions). Before launching a product, marketing or payment streams, be sure to conduct an up-to-date legal review for a specific state and monetization model.