MC EXCLUSIVE Online gaming companies likely to approach high courts this week to contest ban on real-money gaming

Chapter III of the online gaming act likely to be challenged.

Several real-money gaming (RMG) companies are likely to file writ petitions, as early as possible this week, in 2-3 high courts of the country against the contentious online-gaming Act passed by the Parliament on Thursday, three people directly aware of the matter told Moneycontrol.

The new law prohibits online money games where a user makes a deposit, directly or indirectly, with the expectation of earning winnings on that deposit.

Sources say, the companies are having consultations currently to decide whether to file petitions individually or through federations, in order to seek a stay on the implementation of the 'Promotion and Regulation of Online Gaming Bill, 2025'.

However, it’s unlikely that the latter--such as E-Gaming Federation (EGF) and All India Gaming Federation (AIGF)--would be a party to these petitions, they say.

Dream 11, Gameskraft, and Head Digital Works, are among the major RMG companies, which may contest the Act in high courts, sources said. "It’s being discussed, which high courts to approach," one-person privy to the matter told Moneycontrol.

However, Harsh Jain, co-founder of Dream Sports, the parent company Dream11, told Moneycontrol in an interview on August 25 that the company does not plan to challenge the constitutional validity of India's new gaming law.

The provisions of the Act which relate to complete prohibition on 'online money gaming services', that is, Chapter III (which includes Sections 5 to 7) are most likely to be challenged, the sources said.

"Several companies are actively evaluating litigation as a legitimate option, especially since the regulatory changes directly affect their operations, revenues, and investor confidence," another person said. "Legal challenge is a necessary defensive measure rather than an optional strategy," the person added.

Union IT Minister Ashwini Vaishnaw, in an exclusive interview, had also told Moneycontrol that he "surely" expects legal challenges to the new law.

The strongest constitutional grounds likely to be raised, in the petitions, are rooted in Article 19(1)(g) (right to carry on trade or business), arguing that the bill imposes unreasonable restrictions beyond the scope of Article 19(6), say experts.

"Challenges could also arise on retrospective impact, where ongoing businesses and investments are disproportionately disrupted, and arbitrary classification under Article 14, if certain categories of games or operators are singled out without rational basis," explained Navod Prasannan, Partner, King Stubb & Kasiva, Advocates and Attorneys.

Shoubhik Dasgupta, Partner, Pioneer Legal said that the ills of gambling in society have been well documented across various countries in the world; but in this case, there has been no distinction drawn between games of skill and games of chance.

"Games of skill being accepted as perfectly legal businesses is the legal principle (upheld by courts numerous times) basis which the entire online gaming industry has been built and lakhs of people have been employed," he added.

Industry estimates that the immediate fallout of the prohibition on RMG would be job losses, the collapse of start-ups, and a sharp drop in foreign and domestic investment. The move threatens to wipe out 200,000 jobs, Rs 25,000 crore in foreign direct investment, and Rs 20,000 crore in tax revenues, they say.

Ananay Jain, Partner, Grant Thornton Bharat said that the blanket restrictions on certain real-money games may stifle segments of the gaming market that were previously generating significant revenue, particularly in mobile gaming and tournament-based platforms. "Smaller start-ups and emerging developers may face compliance burdens and financial strain due to penalties and regulatory requirements."