Supreme Court Told: Real-Money Gaming Fuels Fraud, Tax Evasion and National Security Risks
Government Defends Blanket Ban Under Online Gaming Act, Cites ₹20,000 Crore Annual Losses
Centre Warns of Links to Money Laundering, Hawala, and Terror Financing
By Our Legal Correspondent
New Delhi: November 29, 2025:
The Government of India has strongly defended its decision to impose a blanket ban on real-money online gaming, telling the Supreme Court that such platforms are directly linked to financial fraud, tax evasion, money laundering, and even terror financing.
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The Centre’s affidavit was filed in response to petitions by gaming companies challenging the Promotion and Regulation of Online Gaming Act, 2025, which received presidential assent in August but is yet to be notified. The Act imposes a complete ban on real-money gaming, whether based on skill or chance, and categorises violations as cognisable and non-bailable offences.
Government’s Submissions in Court
According to the affidavit:
- National security threat: Real-money gaming platforms have become conduits for hawala transactions, shell companies abroad, and crypto-based payments, posing risks to public order and national security.
- Financial fraud and tax evasion: Investigations revealed large-scale tax evasion and diversion of funds through gaming channels.
- Annual losses: Users lose nearly ₹20,000 crore every year, affecting 45 crore Indians.
- Outward remittances: In FY24, outward remittances routed through gaming channels crossed ₹5,700 crore, with funds sent to offshore jurisdictions with weak oversight.
- Suspicious transactions rising: Reports of suspicious activity linked to gaming accounts jumped from 1 case in 2019–20 to 239 in 2023–24, covering more than 7,000 bank accounts.
The government offered to present confidential records in a sealed cover to the Court, highlighting the seriousness of the issue.
The Promotion and Regulation of Online Gaming Act, 2025
The Act represents India’s most sweeping regulation of online gaming:
- Complete ban: All forms of real-money gaming are prohibited, regardless of whether they are skill-based or chance-based.
- Criminal penalties: Violations are treated as cognisable and non-bailable offences.
- Regulatory framework: The Act empowers authorities to block platforms, seize assets, and prosecute offenders.
Gaming companies have challenged the law, arguing that it unfairly penalises legitimate businesses and ignores the distinction between games of skill and chance.
Wider Legal and Social Context
The case reflects a broader debate in India:
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- Skill vs. chance: Courts have previously distinguished between games of skill (like rummy) and games of chance (like betting). The new Act removes this distinction.
- Consumer protection: The government argues that the ban protects vulnerable users, many of whom have lost savings to gaming platforms.
- Global parallels: Other countries, including China, have imposed strict curbs on online gaming citing addiction and financial risks.
Impact on Industry and Users
The ruling and the Act have significant implications:
- Industry setback: India’s online gaming industry, valued at $3 billion, faces existential challenges.
- User protection: Millions of users, especially youth, may be shielded from financial exploitation.
- Legal uncertainty: Companies argue that the blanket ban stifles innovation and legitimate skill-based gaming.
- Tax enforcement: Authorities expect improved compliance and reduced evasion.
Reactions from Experts
- Legal experts: Many say the government’s affidavit strengthens its case for a blanket ban, but courts may still examine proportionality.
- Consumer advocates: They welcome the move, citing widespread addiction and financial ruin among users.
- Industry voices: Gaming companies warn of job losses and argue for regulation instead of prohibition.
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Conclusion
The Supreme Court case on real-money online gaming is shaping up to be one of India’s most significant legal battles in the digital economy. The government’s affidavit paints a stark picture of fraud, tax evasion, and national security risks, justifying its blanket ban under the Online Gaming Act, 2025.
For users, the ruling could mean protection from exploitation. For the industry, it represents a turning point that may redefine the future of online gaming in India.
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