Online Gaming in India
A Constitutional Way Forward

Sameer Kochhar
Reforms Historian and
Chairman, SKOCH Group

In Part I of my earlier article, I argued that India’s new Promotion and Regulation of Online Gaming Bill, 2025 risks taking a prohibitionist turn that could harm innovation, drive activity offshore, and bypass the federal balance of our Constitution. The mature alternative is regulation rooted in harm-prevention, cooperative federalism, and responsible innovation.

In this final part, I want to look ahead. The question is not only whether prohibition is wise policy but also whether it is constitutional. This question has already been raised by commentators, and it is at the heart of ongoing litigation. If policymakers, courts, and industry are to avoid a repeat of the crypto debacle, they must engage seriously with our federal structure and craft a system that protects users while respecting constitutional boundaries.

Federalism Is Not a Roadblock, It Is a Safeguard

One of the recurring themes in both commentary and litigation is the role of the states. Medianama rightly points out that by creating a national ban, the Bill risks trampling on State List powers. “Betting and gambling” is explicitly in Entry 34 of List II. The Karnataka rejoinder in the Supreme Court goes even further: it shows how industry’s reliance on Entry 31 (“communication”) would make large parts of Lists II and III irrelevant just because activities now happen online.

This matters because federalism is not a technicality. It is a constitutional safeguard for diversity, innovation, and freedom of trade. States are closer to the ground, better placed to gauge local harms, and constitutionally empowered to regulate. By treating federalism as an overhead rather than an opportunity, industry cornered itself into a binary: one law for all, or none at all. The result, predictably, is one law for all—prohibition.

The way forward is to restore respect for cooperative federalism. The Centre may set standards for intermediaries, payments, and cross-border enforcement, but states must retain space to adapt, experiment, and calibrate safeguards.

Why the Current Bill Risks Judicial Reversal

If enacted in its present form, the Bill will almost certainly be challenged in court. The constitutional arguments are not weak.

• Pith and substance: In substance, a law banning staking of money on games—whether online or offline—falls under “betting and gambling,” i.e. Entry 34, List II.
• No “occupied field”: The Centre’s IT Rules 2021/23 regulate intermediaries, not betting and gambling. They do not displace state laws.
• Article 19(1)(g): A blanket ban on real-money games, including skill-based formats, risks being struck down as disproportionate, failing the Article 19(6) test of reasonableness.
• Federal balance: If every activity conducted online can be shifted into Entry 31 (communication), the very logic of the Seventh Schedule collapses. As Karnataka argued, even filing an FIR online would then fall out of state police powers.

In short, the Bill is vulnerable. The irony is that in attacking state competence, the industry itself helped set up this confrontation. By fighting Tamil Nadu and Karnataka in court instead of working with them, it weakened the very federal shield that could now be its best defence.

A Constructive Regulatory Model

So what would a constitutionally sound, prudent, and practical framework look like?

(a) Shared Competence Through Co-Regulation

• Centre’s role: Standards for intermediaries, payment gateways, cross-border enforcement, fraud, and terror financing. These clearly touch Entries 31 and 42 (interstate trade).
• States’ role: Regulation of betting and gambling under Entry 34, including public health safeguards, advertising norms, and age restrictions.
• Overlap: A National Gaming & Responsible Tech Authority (NGRA) at the Centre to coordinate, but state gaming commissioners empowered to adapt rules to local conditions.

(b) Risk-Purpose Classification

Reintroduce the SKOCH framework’s Risk-Purpose Matrix, replacing the crude “ban vs. allow” distinction with a tiered system. Games could be classified into Green, Yellow, Orange, and Red zones based on design intent and harm potential. States could impose additional safeguards depending on zone.

(c) Corporate Digital Responsibility (CDR) Compliance

Make licensing conditional on measurable safeguards:

• Parental controls, cooling-off periods, play-time and spend caps.
• Independent audits of dopamine-triggering design.
• Ergonomic nudges and wellness dashboards.
• Transparent complaint redressal with public dashboards.

These are not voluntary “codes of conduct.” They must be auditable conditions of licence.

(d) Transparency and Public Trust

Introduce quarterly public disclosures: complaint volumes, audit findings, user-safety measures, and compliance scores. Trust is earned through openness, not advertising blitzes.

(e) Innovation Through Sandbox

Allow experimentation within a regulatory sandbox where harm safeguards are tested in controlled conditions. This would encourage innovation without creating a free-for-all.

What Industry Must Do Now

To make such a model viable, the industry must take responsibility for rebuilding credibility. That means:

1. Drop litigation as the first instinct – Work with states, not against them. Accept that they have competence and rights.
2. Go beyond watered-down guidelines – Produce auditable, enforceable standards—backed by independent verification.
3. Dial down advertising – Shift from celebrity endorsements to literacy campaigns on safe play and risks.
4. Learn from mistakes – Crypto-style overpromising must be replaced with a sober, cooperative posture.

If the industry embraces this shift, it can reframe itself not as a lobby for deregulation but as a partner in responsible governance.

Why This Approach Is Prudent

Such a framework would:

• Respect constitutional federalism avoiding a central overreach that risks judicial reversal.
• Protect consumers through real, auditable safeguards rather than cosmetic gestures.
• Preserve innovation by allowing skill-based and harm-mitigated formats to flourish under licence.
• Secure tax revenues by channelling play into the legal economy rather than driving it offshore.
• Restore trust by showing that both government and industry are committed to user well-being.

Conclusion: A Moment to Rebuild

The story of online gaming regulation in India is not over. Parliament may pass the Bill, but courts will scrutinise it. States will assert their rights. Users will keep playing, whether regulated or not.

The choice before us is whether to persist with prohibition and confrontation, or to move towards proportionate, constitutional regulation. That means recognising federalism as a friend, not a foe; embedding harm-prevention into licensing; and rebuilding trust through transparency.

In Parts I and II, I showed how prohibition is unwise and how industry missteps made matters worse. In this Part III, I have tried to show the way forward. It is not easy, but it is possible.

India deserves a regulatory framework that protects its youth, respects its Constitution, and nurtures responsible innovation. That is the constitutional way forward.