In 2025, petitioning lawmakers in Karnataka introduced a gaming authority bill to regulate the online betting market, as well as money-based games. This bill came on the heels of the Indian government banning online real-money gaming, creating further legal and economic ambiguity. As the first of its kind, the Karnataka bill proposed to regulate online gaming at the state level. In addition, it has a significant impact on gaming operators and players in the market.
Karnataka’s government has initiated the implementation of a framework to license and regulate online gaming and betting authorities. The framework proposes to regulate skill-based games while prohibiting games of chance, legislation of which will reside at the state level. This legislation comes shortly after the Indian parliament enacted a complete ban on real-money wagering with the passage of the Promotion and Regulation of Online Gaming Bill in 2025.
This law adversely impacts millions of participants and hundreds of organizations awaiting the real money gaming market in the country. Even within legal constraints, Karnataka is likely to dictate the response of other states to hybrid legislation at the national and state levels.
Karnataka’s Bold Step: The Proposed Gaming Authority Explained
The draft bill from Karnataka’s state gaming authority proposes to license and regulate skill games, while banning money-based games of chance and betting. The head of this authority will be designated by the Karnataka state government and will be backed by a board of members with expertise in law, technology, and social work. Licensed authorities are now obliged to maintain and report records of transactions, while non-compliant platforms are subjected to civil and criminal penalties.
The state accounts for about 25 per cent of the Indian skill‑based gaming sector and generated approximately Rs 1,350 crore in taxes in the latest reporting year. India’s broader skill‑based online gaming segment was valued at roughly $4 billion and contributed about $1.44 billion in tax revenue annually. Consumer reviews on independent platforms indicate that experiences with the top online casinos in India vary widely.
Many players report inconsistent service and payment issues, highlighting the sector’s current regulatory gaps and why oversight could improve trust and fairness. According to a study by India‑Briefing, these variations reflect the need for clear regulatory standards and enforcement.
Why India’s Online Casino Scene Is Poised for Change
Due to innovative technology and increased smartphone penetration, India’s online gaming industry has experienced rapid growth over the last few years. It is estimated by WinZO Games that the industry generated $3.7 billion in revenue in 2024, and it is projected to surpass $9 billion by 2029. Approximately 86 per cent of the revenue in 2024 came from real-money gaming.
However, in 2025, a new national law was implemented, which prohibits online real-money gaming, regardless of whether the games are marketed as being skill-based or as games of chance.
India had reported almost 490 million online gamers for the year 2024, according to GTPL. The government estimated that before the ban, millions of these gamers lost more than Rs 20,000 crore per year due to real-money gaming. The law of the land, in the words of India- Briefing, has placed significant importance on regulatory reform in terms of engagement and monetary value for both participants and operators.
Potential Benefits: Regulation, Transparency, and Player Protection
Supporters of the Karnataka authority believe that the unregulated gaming conundrum can be solved with the development of a gaming authority and a licensing regime. The gaming authority could develop a gaming license regime which includes age verification systems as well as fraud detection measures. This could significantly reduce underage gambling, money laundering, and fraudulent activity.
In addition to establishing licenses, the authority would be able to monitor compliance and make referrals for audit and prosecution, which would strengthen enforcement for the gaming ecosystem.
Possibly, Karnataka could create a safe and predictable ecosystem for businesses that invest in skill-based gaming, with the potential to keep the State’s tax revenues flowing, while also providing legalized gambling certainty to the users. Improving customer satisfaction and gaming system transparency is also a potential benefit. A Times of India study outlined the potential of regulated gambling systems to reduce illegal gambling portals.
Challenges Ahead: Enforcement, Licensing, and Legal Conflicts
Even with the benefits of the proposal, there are notable challenges. The proposal will be a singular state agency and will be focused on the enforcement of gambling, as well as the coordination of ISPs and banks. The closure of illegal gambling portals may create additional complexity.
The proposed legislation contains provisions for criminal prosecution that some sectors of the industry believe could stifle genuine creativity. In addition, the nationwide prohibition of real-money gambling obstructs state initiatives.
Companies and industry groups have submitted petitions for the law’s supremacy review, arguing that there is no consistent national versus state authority within the regulations governing online gambling and whether there is a need to distinguish between real-money games and games of skill. Lawmakers assert that more stringent regulations will drive gambling to unregulated international sites, resulting in the loss of consumer protections.