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Soumya Awasthi and Shravishtha Ajaykumar, Eds., “Building a Regulatory Framework for Online Gaming in India,” ORF Special Report No. 300, Observer Research Foundation, March 2026.
The rapid expansion of digital connectivity has transformed online gaming from a niche entertainment activity to a significant digital ecosystem. Today, gaming is deeply embedded in the lives of billions of people, particularly young users connected through smartphones and high-speed internet. Around 80 percent of gamers worldwide are adults, with the largest group ages 18–34, while the average gamer is in their mid-30s.[1] Mobile gaming has emerged as the dominant platform, with 3.6 billion players globally[2] and serving as the most accessible entry point for young users.
At the same time, online gaming platforms are emerging as spaces for malicious actors to conduct financial fraud, establish criminal networks, enhance extremist recruitment, and inflict psychological harm.
India, with roughly 659 million smartphone users, is one of the fastest-growing digital gaming markets in the world.[3] Estimates indicate that the country has over 568 million gamers,[4] most of whom play on smartphones due to affordable data and widespread mobile penetration. This scale of participation, particularly among youth, has turned gaming platforms into complex socio-digital environments that extend far beyond entertainment.
One of the most visible concerns around online gaming is its intersection with financial crime and digital fraud. Real-money gaming platforms, betting applications, and unregulated digital gaming ecosystems have created opportunities for organised criminal networks to exploit users.
In India alone, government sources estimate that around 45 crore (450 million) people collectively lose nearly INR20,000 crore annually through real-money online gaming platforms, illustrating the scale of financial risk associated with these ecosystems. Law enforcement investigations have repeatedly uncovered networks operating gaming scams through social media channels, messaging apps, and the dark web while laundering money through digital banking systems.
Beyond financial crimes, security agencies have begun to identify online gaming platforms as potential channels for extremist networking and radicalisation. Multiplayer games often incorporate voice chats, messaging systems, and private gaming communities that can be difficult to monitor.
The psychological and social consequences of excessive gaming are also drawing attention from public health experts. They point to the negative consequences of online gaming, including addictive behaviours and dependency, along with other mental health concerns like anxiety, depression, and social isolation. This is particularly true for vulnerable communities and adolescents.
Finally, a major concern is financial distress, even outside of fraud, where users are vulnerable to losing money on real-money gaming platforms. In extreme cases, such gaming-related distress has contributed to suicides, violent conflicts, and family breakdowns. The lack of regulation, given the volume of negative outcomes, warrants serious consideration and already places enormous pressure on cybercrime units and financial intelligence agencies. Investigations frequently involve multiple jurisdictions, shell accounts, cryptocurrency transfers, and anonymous payment gateways, making enforcement an increasingly complex task.
Globally, these issues are garnering a response. International organisations, including agencies affiliated with the United Nations, have increasingly acknowledged that online gaming environments can function as unregulated digital social networks, capable of facilitating recruitment pipelines similar to those previously observed on mainstream social media platforms.
Recognising these emerging risks, several governments have begun developing regulatory frameworks for online gaming. Countries such as Australia, the United Kingdom, South Korea, and a number of European states have introduced restrictions on gaming hours for minors, identity verification systems, and strict rules on in-game financial transactions. These measures aim to balance innovation in the gaming industry with safeguards against addiction, financial exploitation, and exposure to harmful content.
This report discusses the initiatives that have been made by India towards stronger regulatory oversight for online gaming. In 2025, the government passed the Promotion and Regulation of Online Gaming Act, which introduced a notable shift in the country’s approach to the sector. The legislation targets real-money gaming platforms, banning games that involve monetary stakes and restricting advertising, payment processing, and financial transactions associated with such services. The move was motivated by growing concerns about financial losses, psychological harm, and the proliferation of illegal betting applications targeting young users.
The law also seeks to protect legitimate sectors such as e-sports, skill-based gaming, and educational gaming platforms, reflecting an attempt to regulate harmful activities without undermining the broader digital gaming industry.
For policymakers, the challenge is not to suppress the gaming industry but to govern it intelligently. This requires a combination of regulatory frameworks, digital literacy initiatives, parental awareness, platform accountability, and international cooperation.
As the digital generation grows up within gaming environments, the critical task for governments, technology companies, and civil society alike is ensuring that these spaces remain safe, transparent, and responsible.
This special report assesses the new legislation, outlines the policy gaps, and proposes ways to bridge them.
Soumya Awasthi analyses the Act’s provisions, its operational and compliance implications, and the broader socio-economic and security context in which it has emerged. Rakshit Tandon’s chapter identifies the vulnerabilities, offers practical recommendations on certain provisions of the Act, and argues that the legislation by itself may not be fully prepared to confront the challenges posed by malicious non-state actors. Shravishtha Ajaykumar, in her contribution, discusses the concerns being raised by industry stakeholders and regulatory experts about the potential misuse of current regulations by state agencies.
Virag Gupta then highlights the contradiction between strict enforcement against small-scale local gambling and the limited effectiveness of state action against large online betting networks. The article proposes a coordinated central-state regulatory strategy, including blocking illegal platforms, restricting digital payments, regulating app stores, protecting minors, and pursuing international financial recovery to address the growing menace of online betting. The report closes with an article by Devhuti Bakshi, which argues that offshore operators exploit regulatory gaps, weak enforcement, and digital technologies to evade laws, launder money, misuse personal data, and target vulnerable users, including minors. The piece recommends stronger KYC norms, licensing mechanisms, coordinated government action, and international cooperation to curb illicit betting while protecting legitimate digital gaming activities.
Even with the Government of India’s timely effort to address the growing risks associated with online gaming through the Promotion and Regulation of Online Gaming Act, 2025, various policy, regulatory, and enforcement gaps persist. The complexity of the digital gaming ecosystem, marked by offshore operators, evolving financial technologies, and cross-border data flows—demands a more comprehensive and adaptive framework.
This report offers constructive, evidence-based insights from practitioners across the legislative, judicial, analytical, and policymaking communities of India. By bringing together these diverse perspectives, the report aims to contribute to the framing of a more robust, balanced, and enforceable regulatory architecture that strengthens the Act while safeguarding innovation, public welfare, and national security.
Read the report here.
Soumya Awasthi is Fellow, Centre for Security, Strategy, and Technology, ORF.
Shravishtha Ajaykumar is Associate Fellow, Centre for Security, Strategy, and Technology, ORF.
All views expressed in this publication are solely those of the authors, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.
Endnotes
[1] Richard Jaimes, “Video Game Statistics 2026,” Quantumrun Foresight, December 31, 2025, https://www.quantumrun.com/consulting/video-game-statistics/
[2] Michiel Buijsman, “Global Games Market to Hit $189 Billion in 2025 as Growth Shifts to Console,” Newzoo, September 9, 2025, https://newzoo.com/resources/blog/global-games-market-to-hit-189-billion-in-2025#:~:text=Regionally%2C%20Asia%2DPacific%20remains%20the,are%20reshaping%20the%20global%20audience.
[3] Ilma Athar Ali, “Top 6 Countries With the Highest Smartphone Usage, Know Where India Stands,” WION News, October 23, 2025, https://www.wionews.com/photos/top-6-countries-with-the-highest-smartphone-usage-know-where-india-stands-1761158914280/1761158914285
[4] “Mobile Gaming in India: Trends, Growth and What the Future Holds,” Rancho Labs, https://www.rancholabs.com/post/mobile-gaming-in-india-trends-growth-what-the-future-holds#viewer-qreq710385
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Dr Soumya Awasthi is a Fellow, Centre for Security, Strategy and Technology at the Observer Research Foundation. Her work focuses on the intersection of technology and ...
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Shravishtha Ajaykumar is an Associate Fellow at the Centre for Security, Strategy, and Technology. Her research areas include Chemical, Biological, Radiological, and Nuclear (CBRN) strategy ...
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