Online Gaming Act 2025 constitutional challenge: Validity of user verification, age-gating, and state-specific bans—implications for fantasy sports and skill games.
Table of Contents
- The Act’s Framework: From Regulation to Prohibition?
- Constitutional Battlegrounds
- 1. Article 14: Arbitrary Classification and Manifest Arbitrariness
- 2. Article 19(1)(g): Trade/Profession Rights and Proportionality
- 3. Article 21: Privacy, Dignity, and Due Process
- Fantasy Sports and Skill Games: Industry at Stake
- Government’s Defence: Public Interest Trumps Commerce
- Federalism Faultlines: Concurrent Powers?
- Judicial Precedents and Proportionality Test
- Implications and Way Forward
India’s nascent online gaming industry faces an existential constitutional showdown as the Promotion and Regulation of Online Gaming Act, 2025 (“Online Gaming Act”) triggers multi-pronged litigation before the Supreme Court. Consolidating challenges from High Courts, petitioners contest the Act’s core mechanisms—user verification mandates, age-gating requirements, state-specific prohibitions, and the controversial elimination of the skill-chance distinction—arguing violations of Articles 14, 19(1)(g), and 21. While the government defends these as public welfare measures against addiction and financial ruin, platforms like Dream11 and MPL warn of industry shutdown, job losses, and federal overreach.
The Act’s Framework: From Regulation to Prohibition?
Enacted in August 2025 after rapid parliamentary passage, the Online Gaming Act establishes the Central Online Gaming Authority (COGA) with sweeping powers over “online money games.” Section 2(1)(g) defines these expansively to include any online game with stakes, obliterating judicial precedents protecting skill-based games (rummy, fantasy sports) as legitimate trade under Article 19(1)(g). Key challenged provisions include:
- User Verification (Sections 7-9): Mandatory KYC via Aadhaar/DigiLocker, real-time identity checks, and biometric authentication for all players.
- Age-Gating (Section 10): Strict 18+ restrictions with AI/ML-based age estimation and parental controls.
- State Bans (Section 15): Empowers states to notify complete prohibitions, overriding central licensing.
- Enforcement (Sections 14-16): COGA’s investigative powers, blocking orders, and criminal penalties up to 7 years imprisonment.
Petitioners like Head Digital Works Pvt Ltd (MPL) and Bagheera Carrom argue the Act functions as prohibition masquerading as regulation, citing ₹20,000 crore annual public losses and suicides as pretextual while ignoring skill-game precedents like R.M.D. Chamarbaugwala v. Union of India (1957).
Constitutional Battlegrounds
1. Article 14: Arbitrary Classification and Manifest Arbitrariness
The Act’s blanket treatment of skill games (rummy, poker, fantasy sports) as “money games” identical to chance-based gambling fails intelligible differentia and rational nexus tests. Fantasy sports platforms rely on Avinash Mehrotra ratios distinguishing user-controlled outcomes from pure lotteries. By equating Dream11’s player selections with teen patti, COGA creates a “one-size-fits-all” regime discriminating against legitimate businesses.
State-specific bans exacerbate this: Tamil Nadu/Andhra Pradesh prohibitions coexist with permitted operations elsewhere, fostering a “pick-and-choose” federalism violating horizontal equality. Petitioners invoke Shayara Bano v. Union (triple talaq) to argue “manifest arbitrariness” where lawmakers manifestly exceed delegated powers.
2. Article 19(1)(g): Trade/Profession Rights and Proportionality
Pre-Act jurisprudence (State of Bombay v. R.M.D.C.) held skill games with stakes as protected commerce. The Act’s retroactive reclassification triggers doctrine of eclipse, rendering it void against established businesses. User verification burdens small platforms disproportionately—biometric KYC costs millions, pricing out startups while compliant giants thrive.
Age-gating mandates fail proportionality (necessity, balancing): less restrictive alternatives like self-declaration + transaction limits suffice, per global standards (UK Gambling Commission). Criminal penalties (7 years) shock the conscience, disproportionate to regulatory defaults.
3. Article 21: Privacy, Dignity, and Due Process
Aadhaar-linked verification revives Puttaswamy scrutiny: mandatory biometrics for gaming collect sensitive data without opt-outs, enabling state surveillance. Cross-border data flows under DPDP Act conflict with Schrems II-style restrictions. Age-gating’s AI estimation raises algorithmic bias risks, profiling minors unfairly and violating procedural due process (no appeal against bans).
State bans extinguish livelihoods overnight—lakhs of esports professionals, content creators, and platform employees face unemployment without rehabilitation, offending right to livelihood (Olga Tellis).
Fantasy Sports and Skill Games: Industry at Stake
The ₹1.2 lakh crore sector employs 1.25 lakh directly, supports 50 million users. Fantasy platforms argue user-driven outcomes (player stats selection, captaincy choices) embody skill, backed by Varun Gumber (2023). Act’s redefinition ignores this, treating My11Circle as roulette.
State bans (TN, Andhra, Telangana) already crippled operations; central validation threatens nationwide shutdown. E-sports exemption (pure tournaments) excludes casual skill gaming, creating absurd dichotomies.
Government’s Defence: Public Interest Trumps Commerce
Centre counters that online money gaming is res extra commercium—inherently vicious, warranting absolute prohibition (State of Bombay v. R.M.D.C.). Data cites ₹20,000 crore losses, 52 suicides (2023-25), targeting youth addiction. Parliament’s Entry 34, List II (betting/gambling) competence reinforced by digital economy unionisation post-Jio judgment.
Verification/age-gating positioned as child protection (Article 39(f)), proportionate to harms. COGA’s expert composition ensures fairness; appeals lie to TDSAT/KATs.
Federalism Faultlines: Concurrent Powers?
Petitioners assail state override as colourable encroachment on Entry 52, List I (foreign trade, e-commerce). Pre-Act, states regulated physical casinos; online’s borderless nature demands uniform law. Act’s delegation risks “permit raj 2.0.”
Judicial Precedents and Proportionality Test
| Precedent | Skill-Chance Holding | Act’s Conflict |
|---|---|---|
| RMDC (1957) | Skill games = trade | Blanket “money game” ban |
| Avinash Mehrotra (2023) | Fantasy sports protected | Verification cripples access |
| Puttaswamy (2017) | Privacy proportionality | Mandatory biometrics |
| Shayara Bano (2017) | Manifest arbitrariness | No stakeholder consultation |
Supreme Court likely applies three-pronged proportionality (Modern Dental): suitable (yes, addiction real); necessary (no, regulation suffices); proportionate (no, industry obliteration).
Implications and Way Forward
Industry: Stay could revive platforms; merits ruling may mandate carve-outs for verified skill games with KYC-lite regimes.
Fantasy Sports: User verification feasible via OTP/bank-KYC; age-gating via device-level controls. Skill certification (E-Sports Federation) offers middle path.
Policy: Verdict may birth Online Gaming Code—uniform licensing, self-regulatory organisations, addiction safeguards without bans.
Hearing consolidation signals CJI’s intent for authoritative precedent. Till resolved, platforms operate under uncertainty—state bans persist, COGA notifies rules, litigation multiplies. For fantasy operators: document skill metrics, implement voluntary KYC, prepare Article 19 dossiers. The Act’s fate hinges on whether “promotion” means empowerment or prohibition.
