[By Sahil Singh and Shivanshu Shivam]
The authors are students of Chanakya National Law University
Introduction
The Online Gaming Bill 2025 is a significant change of approach in moving away from a supervisory approach toward a statutory one, where prohibition is the new normal. This Bill introduces, on the one hand, a promotion of the e-sports and social-gaming activities under Sections 3 and 4, whereas it promotes, on the other hand, a ban on online real-money gaming under Section 5, supported by the additional prohibition on advertising under Section 6 and fund-transfer prohibition under Section 7.
This paradigm views enforcement not as a question of control over a sector but as the destruction of infrastructural access by banks and payments intermediaries, as well as app stores and ad networks. This regime contradicts the equilibrium that came into being in the year 2023, where the Information Technology Rules were to launch verification-registration of online games, which the GST Council had moved to reclassify to 28% of taxable actionable claims. That is a compromise of regulate-not-ban and de facto, and as a Bill, it will be superseded by ban-and-carve-out.
The extraterritorial Section 1(2) extends such that services rendered abroad to a foreign jurisdiction are also included, meaning offshore structures are not a protection. It implies to boards and investors re-engineering governance, contracts, and technical stacks within narrow confines, with criminal accounts under Section 9.
Regulatory Cartography and the Emerging Enforcement Landscape
The entire enforcement of the Bill is modelled on a polycentric system of governance where power centres overlap in various directions. The central point in the matters laid is the Authority created under Section 8 and its ability to find the game is an online money game and to make binding directives to the operators, intermediaries, and platforms. The decision-making power to declare it as legal or prohibited is done using the power to classify. States can continue to apply the means of entry of public order and health to legislate to their liking, which Tamil Nadu has already done using its 2023 Act and 2025 Regulations, which mandate Aadhaar KYC, time caps, and advertising ban, as embraced in the recent pronouncement of the Madras High Court. The clause overrides Section 18 of the Bill and prioritises central law in case of any conflict, does not displace state capacity to govern in the area of its state plan, leading to simultaneous regulatory independence of uniformity.
Another statutory choke point provisionally contained under Section 7 is the financial system, which prohibits banks, financial institutions, and even payment intermediaries from engaging in the processing of transactions in online money games. This brings the hitherto supervisory soft law to the criminal sanctionable rigid prohibition. Section 14 authorises the blocking of digital content that is related to banned games enforced by the Information Technology Act, 2000.
Lastly, Sections 15 and 16 give the regime powers of investigation and those of the police, to permit searches, seizures, and even warrantless arrests. Enforcement is thus carried out along a continuum, consisting of administrative guidelines, infrastructural inhibitors through to criminal procedure. This turns compliance into a kind of regulatory intelligence, which demands real-time updating and board-level monitoring.
Executive Accountability and the Expansion of Personal Liability in Corporate Governance
The Bill codifies an attributive liability principle in corporate governance. Under Section 11(1), in the case of a company committing an offence, each person who is in charge of, and is also responsible to the company, is liable. Section 11(3) proceeds to make directors, managers, and officers personally guilty, except to exempt independent and non-executive directors who have no involvement in the decision-making process.
The punishment of Section 9 is harsh; violations of Sections 5 or 7 are punishable with imprisonment up to three years and fines of up to 1 crore; the penalty is initially raised in case of a recurrence. Section 10 makes the offences cognizable and non-bailable, which makes directors and officers accessible to the coercive process.
Most importantly, boards should demonstrate reasoned decision-making and risk-balancing, including legal guidance ahead of product releases, authorisation grids to block code pushes or payment integrations, board notes to document deliberations on the potential harmful impact on consumers, and incident-response procedures to ensure that evidence will not be deleted.
Statutory fines and criminal fines are excluded, by default, under D&O insurance. Explicit coverage in regulatory inquiries, enhancements, and survival indemnities in employment contracts are crucial components of employment contracts, whose effectiveness is only effective when simplified by documented diligence. The jurisprudence of the state-level decisions supporting intrusive safeguards contains an unmistakable sign to the courts: they are lenient towards high burden compliance. Presumably, the corporate shield will consist not of rhetoric but of paperwork, immutable logs, deliberative records, and compliance artefacts against which that neglect is hard to assign.
Commercial Choke Points in Payments, Platforms, and Digital Intermediation
The Bill brings into action one principle of infrastructural enforcement, a principle of closing flows of money and information, instead of simply adjudicating. Section 7 proposes the legislation, a statutory disability of payment, that compels PSPs, aggregators, and banks to freeze or reject transactions regarding banned games. Any judicial review may leave the operators panicking about liquidity. This compels business bargaining of continuity covenants in PSP contracts, to pre-freeze caution, strata throttling, and reinstatement procedures.
The conscription is also indirect to the platforms and intermediaries since Section 14 states that the information concerning the online money games can be blocked under the IT Act, 2000. When combined with Section 8(2)(a), which gives the Authority the right to classify any game, this gives rise to a scenario where an administrative classification can lead to app-store de-listings, ad network suspensions. Section 12 goes further still by authorising penalties or barring non-conformance with Authority directions, in effect weaponising the registration position.
Also, the regulatory takedown protocols, cure windows, and escrowed settlements for any period under investigation must be included in a contract with PSPs, ad networks, and affiliates. The operators should ensure forensic-ready logs are kept, so-called immutable event history between the stakes, accounts, and devices to challenge the allegation of disguised bets. It is no longer an exercise in technical hygiene to offer payment switch-over playbooks, non-RMG feature credit substitutes, and age-gating enforcement. In brief, the compliance has shifted out of policy manuals and into practical plumbing, where the enforcement risk is balanced by the file, SDKs and logs in banks.
Risk Allocation and Transactional Safeguards in Corporate Deal-Making
The Bill imposes the rule of contractual risk allocation in prohibition regimes in making deals. Discounts against exposed cohorts will be included in valuations, and closings ideally will involve no-adverse-action confirmations. Representations in PAs and term sheets will be further expanded to include the history of classification under Section 8, PSP reliance under Section 7, and ad restriction compliance under Section 6. Covenants will go further to the provision of legal sign-off of monetisation features, as well as requiring redundancy within payments and age-gating infrastructure.
Indemnities should be pegged to events that are statutory, e.g., settlement freeze under Section 7, fines/imprisonment under Section 9, and penalties on non-compliance under Section 12. Escrows will be bigger and longer, and they will be subject to release upon the end of proceedings or expiry notices. The clauses in MACs have to be objectively written, activated by prohibitory orders and suspensions of certain revenue levels as opposed to an unspecified regulatory hardship.
International routing comes under tax scope as section 1(2) renders the Act applicable to foreign operators who are service providers to India, and under the GST regime, online money gaming has already been classified as taxable actionable claims. Companies must game enforcement substitution, avoiding exposure to home-country Section 5 and triggering mirror compliance duties on the road.
Conclusion
Policy enshrined in the Bill is the policy of prohibition, and the idea of the regulate-and-tax experiment is relegated to the past, now replaced by ban-and-carve-out. Corporations have no alternative but to operationalize compliance in processes, contracts, and technical architecture to survive. The regulatory mapping must be maintained in vivo with an interface of Sections 5-7, 8, 12, and 14, and a readiness for litigation templates. The insurance and indemnities must be updated to cover Section 10 cognizable and non-bailable offences, operational resilience requires forensic-ready logging, age-gating according to state precedents, and PSP/app-store continuity drills.
At the policy level, India has two forms of prohibition-with promotion carve-outs: a national prohibition form, with carve-outs of promotion (Section 3, 4), and a state health and order mode that is permitted by side by judicial imprimatur. Even though Section 18 consists of a clause of overriding to have the primacy of centrality, the live practice contains a dual compliance. The survivors will be those who figure out how to engineer their way to enforcement, which means learning to see beyond board minutes, PSP covenants, and immutable logs as compliance costs, and instead see them as being strategic. The corporate fault-lines have been produced through prohibition, then the corporate playbook must navigate the corporate translation of manoeuvres between the contemporary law, code, and capital to manipulate them.