India’s Online Gaming Ban Threatens Payment Growth and Gaming Industry

India’s sweeping new online gaming law is triggering widespread disruption across the country’s digital economy. The legislation, formally known as the Promotion and Regulation of Online Gaming Act, 2025, received presidential assent in August and will  2025. While the framework promises legal clarity for e-sports and social games, it places a strict ban on real-money gaming (RMG), including fantasy sports and card-based platforms, reshaping both the gaming and payments landscape.

According to a report by global intelligence platform Egomonk, the prohibition on money-based games will slash India’s transaction volumes by at least ₹30,000 crore ($3.6bn) each month. Payment gateways such as Razorpay, PayU and Cashfree, which historically processed millions of high-frequency RMG transactions, are already feeling the squeeze.

Leo Romano, Chief Payment Officer at Einpays Global Ltd, described the fallout as a structural risk: “The ongoing disruption in India’s iGaming and online betting sector has dealt a sharp blow to payment gateways, historically among the biggest beneficiaries of RMG transactions.” He noted that while the wider ecosystem may remain resilient, “in the short term, this squeeze is putting pressure on revenue stability and operating margins, particularly for fintech players with heavy reliance on gambling and betting flows.”

Data from the National Payments Corporation of India (NPCI) highlights the significance of the sector. In July, the Unified Payments Interface () recorded ₹10,077 crore ($1.2bn) worth of transactions in the “Digital Goods: Games” category, representing 1.38% of overall value and 2.8% of total transaction volume. Industry insiders estimate that the RMG ban will erase about 25 crore (250m) transactions monthly, valued at over ₹5,000 crore ($604m).

The gambling prohibition extends to fantasy cricket and card games, activities that have drawn in hundreds of millions of users. Government figures suggest the industry was generating $2.3bn annually from roughly 450 million players before the crackdown.

Fantasy sports leader Dream11, which previously served 260 million users, has suspended all cash-based contests. The company has shifted to offering non-cash prizes such as electronic devices and cars and has terminated its $43m jersey sponsorship with the Board of Control for Cricket in India. Analysts warn that the loss of sponsorship revenue and advertising spend from fantasy platforms could have long-term implications for cricket’s commercial ecosystem, particularly the Indian Premier League, whose media rights will be renegotiated in 2027.

Despite the suspension of legal cash games, reports suggest that many users are turning to offshore gambling sites, often accessed through virtual private networks and supported by foreign credit systems.

Union Minister for Information and Technology, Ashwini Vaishnaw, confirmed that the government intends to implement the new rules from 1 October, though he underscored the importance of ongoing consultation with industry stakeholders. “We engaged with practically every stakeholder possible in this, and we have finalised the rules,” Vaishnaw said at the AI Impact Summit 2026 pre-event. He added that if more time is needed, the government is prepared to adopt “a more consultative approach.”

The new law makes operating or promoting money-based online games a cognisable and non-bailable offence, targeting service providers, advertisers, and financial backers rather than individual players. Banking support, payment rails, and advertisements tied to such platforms are explicitly prohibited, cutting off vital financial lifelines for RMG operators.

At the same time, the framework seeks to legitimize e-sports and social gaming by providing them with regulatory recognition. By distinguishing between money-driven and skill-based play, policymakers hope to nurture safe, competitive digital entertainment while addressing concerns around fraud, addiction, and alleged links to illicit financing.

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Egomonk founder Sartaj Anand highlighted that while RMG flows were meaningful, they accounted for only a fraction of total UPI activity, leaving the payments network broadly insulated. “UPI is fairly insulated from RMG because of low volumes. Similarly, market leaders such as Razorpay and Cashfree will be able to weather this disruption because they’re well-capitalised and relatively strong in diversification,” he said.

Smaller processors may face harsher realities. Anand warned that fintechs with material exposure to RMG, such as PayKun and offshore intermediaries, could be forced out of the market if they cannot pivot quickly to alternative verticals like e-commerce or merchant services.

As India prepares for the October rollout, industry participants remain divided between optimism for a clearer regulatory framework and concern over the immediate economic fallout. What is clear is that the new rules mark a turning point for India’s fast-growing digital gaming space, reshaping both the payments sector and the broader sports economy.

Source:

, gamblinginsider.com, September 17, 2025.