Karnataka plans regulatory authority to license real-money gaming, ban online betting

"The idea is that we cannot kill the industry—even the industry itself wants regulation. We are working to ensure that, with their help, we can create a framework that fosters innovation, sustains the industry, and builds skills while also protecting people from losing money to fraudulent gaming sites or shady networks operating outside the system,” Karnataka IT-BT Minister Priyank Kharge told Moneycontrol in March.

This is Karnataka’s second attempt at drafting a law to govern online betting and gambling in recent years. In 2021, under the previous Basavaraj Bommai-led BJP government, the state introduced a bill to ban all forms of online gambling.

However, it had removed the distinction between game of skill and game of chance, thereby bringing skill-based gaming startups under its purview. In February 2022, Karnataka High Court struck down majority of the bill’s provisions on online gambling, deeming them unconstitutional.

Who will be on the regulatory authority?

The bill states that the regulatory body will have the power to monitor and investigate unregistered platforms and illegal betting operations, as well as to launch public awareness campaigns on the risks associated with online betting.

The authority will have a chairperson with experience in law, public administration, or technology and three members including one expert in information technology, one in finance, and one in social welfare, all appointed by the state government.

This move follows a similar measure by Tamil Nadu, which established a five-member body called the Tamil Nadu Online Gaming Authority (TNOGA) in August 2023.

Chaired by retired IAS officer Md. Nasimuddin, TNOGA imposed time and usage restrictions on RMG platforms in February 2025. In June, the Madras High Court upheld these rules after RMG companies challenged them in court.

These developments come at a time when India still lacks a uniform regulatory framework for the rapidly expanding yet increasingly turbulent RMG sector.

In April 2023, the Ministry of Electronics and Information Technology (MeitY) notified gaming-related amendments to the IT Act, 2021, which allowed multiple self-regulatory organisations (SROs) to determine whether a real-money game could be permitted in India or not. However, the ministry is said to have later dropped the SRO plan.

Over the years, several RMG companies have pushed for a central regulation to eliminate the uncertainty of navigating through various state-specific regulations that frequently disrupts their business operations.

Roland Landers, CEO of skill gaming industry body All India Gaming Federation, said "While we applaud the state government’s initiative, we also believe that state-level laws alone may not be sufficient to curb the growing menace of offshore gambling platforms, which operate beyond India’s jurisdiction, offer no consumer recourse and are emerging as one of the biggest national security threat"

"Addressing this challenge requires a strong national framework that brings together all relevant stakeholders - to effectively regulate and monitor the ecosystem. Only through such a unified and coordinated approach can we ensure the long-term sustainability and integrity of India’s online gaming industry," he said.

The Indian gaming industry reported revenues of $3.8 billion for the financial year 2024, a 22.6 percent growth from $3.1 billion in FY23, according to a report by the gaming and interactive media venture fund Lumikai. Of the $3.8 billion in revenue, about $2.4 billion came from the RMG segment.

The report also said the sector is estimated to cross $9.2 billion in revenue by FY29 at a 20 percent CAGR over the next five years.

Monetary penalty

As per the bill, any person or entity operating an unregistered platform or engaging in online betting involving games of chance will face an imprisonment of up to three years and a fine of up to Rs 1 lakh.

Meanwhile, any person aiding, abetting, or promoting illegal online betting, including through advertisements or endorsements, will face imprisonment of up to six months and a fine of up to Rs 10,000.

The bill defines unregistered platforms as those offering online betting or gambling services without a valid license or registration. These platforms are also prohibited from targeting "vulnerable people" through advertisements, social media, or influencer promotions, as per the draft bill.

Licensing of skill-based platforms

Skill-based gaming operators intending to offer their platforms to users above 18 years of age in Karnataka will have to apply for a license, based on the eligibility norms prescribed by the authority.

These include Know Your Customer (KYC) verification, anti-money laundering compliance, and restrictions on "predatory practices such as excessive advertising or luring users with unattainable prizes". The licenses will be valid for three years and can be renewed later.

These operators should display clear warnings about the risks of excessive gaming and addiction on their platforms, provide tools for users to set spending limits, time limits, and self-exclusion options, and submit quarterly compliance reports. They should also maintain records of all financial transactions, including deposits, withdrawals, and payouts, for a minimum of five years.

The bill also states that the regulatory body will collaborate with the Department of Information Technology and the Karnataka Police Cyber Crime Branch to develop and deploy technology for blocking unregistered online betting platforms, including websites, mobile applications, and related digital services.

Internet service providers, network service providers, and search engines will be barred from hosting or promoting content that directly or indirectly supports illegal online betting.

Additionally, internet service providers and payment gateways must block access to unregistered platforms notified by the authority and suspend financial transactions, including deposits and withdrawals, to and from illegal betting platforms.

People aggrieved with the authority's order can appeal to a government-established Appellate Authority within thirty days of the order.

The bill also proposes that individuals or entities who act as whistleblowers by sharing credible information leading to the identification and prosecution of illegal online betting operators will be protected from retaliation and may be eligible for a reward.

Anuraag Saxena, chief executive officer of the E-Gaming Federation (EGF), a skill gaming industry body, welcomed the bill, calling it a "step toward regulatory certainty."

“At EGF, we have consistently advocated for a clear policy distinction between games of skill and games of chance, as this is foundational to ensuring user safeguards, enabling responsible innovation, and attracting sustained investment into the sector,” he said.

Saxena added that the move to incentivise whistleblowers signals strong intent to "dismantle illegal operations" and could serve as the "cornerstone for a national whitelisting framework that encourages compliance and strengthens the integrity of the online gaming ecosystem.”