The Indian government plans to prohibit real-money games — whether based on skill or chance — under its proposed online gaming regulation, per a draft seen by TechCrunch, which was also verified by three sources, including one consultant with the Indian IT ministry and two people working closely with the Indian government and real-money gaming companies.

Proposed to be called the Promotion and Regulation of Online Gaming Act, 2025, the legislation would restrict online games involving real-money stakes and outlaw both their advertisements and financial transactions.

“No bank, financial institution, or any other person facilitating financial transactions or authorization of funds shall engage in, permit, aid, abet, induce, or otherwise facilitate any transaction or authorization of funds towards payment for any online money gaming service,” the draft said.

Real-money gaming has been the biggest revenue driver for India’s online gaming industry, which generated $3.8 billion in revenue in the financial year 2023–24 — a 23% increase year-over-year, per a recent report by gaming-focused VC firm Lumikai. Real-money gaming alone accounted for $2.4 billion of that total, the firm said.

However, the sector has come under growing scrutiny amid public concerns over incidents of harm — including cases where individuals reportedly died by suicide after losing large sums of money in games. Industry stakeholders largely attribute these incidents to offshore betting and gambling apps, which continue to operate — and even expand — despite repeated claims by federal and state authorities of enforcement actions such as website blocks and account freezes.

In 2023, the Indian government imposed a 28% tax on online gaming to curb real-money play — a move the industry called “catastrophic” and “unconstitutional.” Top investors, including Tiger Global and Kotak, urged Prime Minister Modi to reconsider, warning of $2.5 billion in write-offs and 1 million job losses. The tax stayed, though companies have challenged its retrospective application in the Supreme Court. However, it could rise to 40% under new rules, some recent reports suggested.

The draft legislation states that real-money gaming companies could face imprisonment for up to three years, a fine of up to ?10 million (approximately $115,000), or both. Similarly, celebrities promoting such games on any media platform could be liable for up to two years of imprisonment or a fine of ?5 million (around $57,000). The bill also empowers the Indian government to establish a regulatory authority to oversee its implementation.

“Businesses will shut if the legislation comes into force,” the founder of a leading Indian real-money gaming startup told TechCrunch, requesting anonymity as the draft is not public yet.

Investors are equally concerned about the proposed law, which is expected to be tabled in the Indian parliament soon for debate.

“All unicorns in this sector are going to be significantly impacted due to the move if it comes true,” an investor in Indian real-money gaming startups said, while not agreeing to be quoted on record as the proposal has yet to be released by the Indian government.

Dream Sports, Games24x7, and WinZO are among India’s top real-money gaming startups. Collectively, they have raised billions of dollars and generate significant revenue from millions of users. India has the highest number of real-money gaming startups globally, per Tracxn, followed by the U.S. and the U.K.

While many of these companies also offer non-monetized games, one founder told TechCrunch that real-money gaming accounts for over 85% of their total revenue. They did not comment on the record as the draft is not public, but agreed to share their thoughts anonymously.

Likewise, some startups have explored going outside India to sustain their business amid regulatory challenges in the country. That has also not yet been fruitful for them, as they currently generate almost 100% of their revenue from India alone, the founder quoted above said.

This is not the first time New Delhi has looked to regulate real-money gaming. In 2023, the Indian government amended the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to curb “user harm” associated with real-money games. It proposed the creation of self-regulatory bodies to approve legitimate games while restricting illegal betting and gambling. However, the self-regulation model faltered due to conflicts among industry stakeholders over enforcement and standards.

Local reports on Tuesday suggested that India’s Union Cabinet had cleared the proposed bill for its introduction in the lower house of parliament as early as Wednesday. However, the Indian government did not confirm the development.

The Indian IT ministry did not respond to a request for comment.