India stands at a critical juncture in the governance of one of its most explosive digital sectorsâReal Money Gaming (RMG). With over 100 million users and billions in economic activity, RMG platforms such as fantasy sports, card games, and skill-based apps have become a formidable part of Indiaâs digital economy. Yet, the sector remains under-regulated, mis-taxed, and socially hazardous.
This is not just a moral or legal questionâit is a public policy challenge with urgent implications for state capacity, financial health, and user welfare. Indian states must move from prohibition to governance. Done right, RMG regulation can become a template for the governance of digital markets, where risk and revenue are managed symbiotically.
The RMG Boomâand the Regulatory Black Hole
Real Money Games are online platforms where users stake actual money with the promise of monetary rewards. According to EY-FICCI (2023), RMGs make up over 82% of Indiaâs online gaming revenue, contributing close to âš76,000 crore in indirect tax estimates between FY24â28E. The sector has grown rapidly, fueled by affordable smartphones, Jio-led internet penetration, and aggressive marketingâoften riding on national cricketing sentiment. Yet, despite its massive scale, no Indian state has a fully operational taxation or licensing regime for RMGs. While some like Nagaland and Meghalaya have attempted basic regulatory structures, most others have defaulted to bans or outdated colonial-era laws, failing to account for the behavioural, financial, and digital complexities of modern gaming ecosystems.
RMG Regulation: A Missed Constitutional Opportunity
Indian states already have the constitutional authority under Entry 62 of the State List to regulate and tax “betting, gambling, and amusements”. Yet, this power remains underutilized. By failing to regulate, states not only forgo substantial revenue but also cede the regulatory battlefield to offshore operators and unlicensed apps, many of which operate with zero oversight, data protection, or consumer safeguards. Moreover, the legal grey zones between “games of skill” and “games of chance” have paralyzed proactive policy. Courts have repeatedly upheld skill-based RMGs as legitimate under Article 19(1)(g)âthe right to carry out a profession. But rather than embracing this opening to build regulated, revenue-generating frameworks, many states have swung towards blanket bans that fail judicial scrutiny and only push the sector further underground.
Social Harm and the Public Health Crisis
Beyond fiscal concerns, RMG poses a serious public health threat. Addiction, spiraling debt, underage access, and rising suicides linked to online gaming have become regular headlines. Platforms exploit psychological vulnerabilitiesâparticularly among youth and lower-income usersâoffering the illusion of quick wealth. Research shows that about 3.5% of Indian adolescents already exhibit signs of Internet Gaming Disorder, higher than the global average. States have a duty not just to regulate content, but to protect citizens from harm. By institutionalizing real-time harm reduction, financial monitoring, and behavioural safeguards, governments can reclaim control.
The Wrong Tax: India’s 28% Turnover Levy
Indiaâs current national tax regime applies a 28% tax on turnover, not actual profit. This means platforms are taxed on the entire user depositâeven if 90% of it is returned as winnings. This structure is not only economically irrational but also pushes legitimate platforms out of business, encouraging illegal and offshore alternatives. Global best practicesâseen in the UK, France, Colombia, and Spainâclearly favour Gross Gaming Revenue (GGR) taxation, where tax is levied only on the platform’s margin (bets minus winnings). Such models improve compliance, reduce grey markets, and still yield high state revenue. Indian states should push for GGR-based state-level surcharges or entertainment levies, a constitutional option under Entry 62.
Moments of Truth: Toward a Real-Time, Ecosystem-Based Regulatory Framework for RMG
In the digital age, regulation must be as real-time and dynamic as the behaviours it seeks to govern. The “Moments of Truth” (MoT) framework introduces a novel approachâintervening at critical points in a user’s gaming journey, such as repeated deposits, withdrawal reversals, or significant losses. These behavioural inflection points offer the state opportunities to mandate KYC and affordability checks, enforce cool-off periods, trigger financial warnings, or offer helpline accessâall in real time. But effective governance must go beyond apps. To truly regulate the Real Money Gaming (RMG) sector, states need to oversee the entire ecosystem: from advertisers and payment intermediaries to tech platforms and affiliate marketers. This calls for smart levers like ad levies, KYC-linked APIs, platform audits, and location-based consumption taxes. Plugging revenue leakagesâsuch as GST misclassification, surrogate ads, shadow affiliates, and cross-state arbitrageâcan unlock significant fiscal gains. India stands at a pivotal moment to move from prohibition to governance. By establishing agile State Gaming Regulatory Authorities, integrating affordability tools, deploying AI-led harm dashboards, and embedding safety protocols across the user lifecycle, the country can set a global precedent for digital-first, behaviour-sensitive regulation that both protects users and nurtures innovation.
Conclusion: The Time to Act is Now
Real Money Gaming is not just a technological phenomenonâit is a governance challenge. It tests the capacity of Indian states to respond to fast-moving digital trends, protect vulnerable citizens, and expand their fiscal base. The policy vacuum in RMG has allowed predatory platforms to flourish while responsible innovation suffers. But by reclaiming constitutional powers under Entry 62 and enforcing smart, behavioural, and fiscally sound regulation, states can transform RMG into a beacon of responsible digital economy governance.
This is a moment of truthânot just for users, but for Indiaâs public policy imagination.