Introduction As the dust settles after yet another electrifying season of the Indian Premier League (IPL), the spotlight has shifted from the cricket field to the meteoric rise of sports betting though online platforms. The 2025 IPL alone saw a 25-30% revenue surge, reaching an estimated $500-$525 million, driven by widespread smartphone use and affordable internet. With real-time apps offering a seamless experience, online gambling has shifted from the shadows to mainstream digital enterprise. 

India has long adopted a prohibitionist yet conditional approach to gambling. The Public Gambling Act, 1867, remains the cornerstone, banning physical gambling houses but remaining silent on digital platforms. Indian jurisprudence distinguishes between games of skill and games of chance—with the former often being exempt. For instance, games like rummy and fantasy sports have, in various judgments, been deemed as skill-based and therefore lawful in many states. Betting on pure chance, however, remains largely banned.

In the absence of central legislation, a fragmented legal landscape has emerged, with states addressing local concerns. One notable example is the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, followed by the Madras High Court judgment of June 3, 2025. This Article analyses these regulatory developments and judicial pronouncement within India’s evolving online gaming ecosystem. 

Background-

The rise of online gambling and the widespread availability of Online Real Money Games (ORMGs) have raised significant regulatory and social concerns in India, prompting several state governments to intervene. One of the most comprehensive legal responses emerged from the State of Tamil Nadu through the enactment of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 (hereinafter referred to as the “TN Act”), the primary objective of the TN Act is to mitigate the adverse consequences associated with ORMGs, including financial losses, addiction, and psychological harm, particularly among vulnerable populations such as minors.

To operationalize its provisions, the TN Act established the Tamil Nadu Online Gaming Authority, a statutory body empowered to oversee and regulate online gaming activities within the state. The Authority is entrusted with formulating rules for consumer protection, verifying the age and identity of users, and enforcing gameplay restrictions to promote responsible gaming practices.

In furtherance of these objectives, and pursuant to Section 5 of the TN Act, the Authority issued the Tamil Nadu Online Gaming Authority (Real Money Games) Regulations, 2025 these regulations introduced several significant safeguards, including: (i) a strict ban on the participation of minors in ORMGs; (ii) compulsory two-factor authentication (2FA) linked to Aadhaar-verified phone numbers to establish user identity and age; (iii) mandatory “blank hours” from 12:00 AM to 5:00 AM during which access to gaming platforms is restricted; and (iv) user-facing tools such as spending reminders and voluntary monetary/time limits to curb excessive gaming behaviour.

However, the introduction of these measures was met with legal challenges. A group of petitioners, led by 24x7 Games Private Limited, questioned the constitutional validity of the Act and the Regulations. The matter was brought before the Madras High Court, which rendered its judgment on June 3, 2025, examining issues related to legislative competence, Aadhaar-based verification, and the proportionality of user restrictions in the context of constitutional rights.

Legal Challenges to the Tamil Nadu Act-

Following the enactment of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, and the subsequent notification of the 2025 Regulations, several online gaming operators challenged the legality and constitutional validity of the framework before the Madras High Court. The challenge was spearheaded by 24x7 Games Private Limited & Others, raising multiple grounds of legal and constitutional concern. A central issue was the legislative competence of the State of Tamil Nadu to enact laws regulating online gaming. The petitioners argued that online gaming, being conducted over the internet, falls under Entry 31 of the Union List in the Seventh Schedule of the Constitution, which pertains to telecommunications and internet-based activities. As such, they contended that only Parliament, and not the states, has the authority to legislate in this domain.

Another contentious point was the mandatory Aadhaar-based two-factor authentication (2FA). The petitioners asserted that this provision violated the Aadhaar Act, 2016, particularly Section 4(7), and infringed upon the right to privacy under Article 21 of the Constitution, as laid down in the landmark Puttaswamy judgment. They also questioned the efficacy of Aadhaar as an age verification tool, given that even minors can possess Aadhaar cards. Further, the petitioners objected to the imposition of “blank hours”--a mandatory restriction prohibiting users from accessing online gaming platforms between 12:00 AM and 5:00 AM. They characterized this restriction as arbitrary and disproportionate, arguing that it unreasonably interfered with individual autonomy.

Lastly, the petitioners contended that the 2025 Regulations were repugnant to the Information Technology Act, 2000, and the IT Rules, 2021, which already address online gaming. This, they claimed, created a legislative overlap and regulatory inconsistency, violating the federal structure envisioned by the Constitution.

Court’s Verdict and Analytical Observations-

In its judgment delivered on June 3, 2025, the Madras High Court upheld the constitutionality of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, and the 2025 Regulations, rejecting all major contentions raised by the petitioners. The Court adopted a balanced, purposive, and welfare-centric approach, especially in the context of increasing addiction and financial distress linked to Online Real Money Games (ORMGs).

On legislative competence, the Court ruled that the TN Act falls within the ambit of Entries 6 (public health) and 26 (trade and commerce within the state) of the State List, as the legislation primarily aims to mitigate the negative public health and socio-economic consequences of ORMGs. It rejected the petitioners' reliance on Entry 31 of the Union List, clarifying that regulation of gaming content, even when delivered via the internet, does not amount to regulation of telecommunications infrastructure per se.

Addressing Aadhaar-based 2FA, the Court acknowledged concerns regarding privacy but emphasized that the scope of authentication is narrowly limited to verifying age and mobile number, with no sensitive personal data being accessed. The Court noted that the Aadhaar Rules, 2025 provide for such use by private entities in the public interest, with requisite government approvals. Furthermore, the Court found the challenge diluted by the petitioners’ prior endorsement of Aadhaar authentication in earlier litigation. Regarding the “blank hours” regulation, the Court upheld the restriction as a legitimate behavioural intervention to curb compulsive gaming. It stressed that ORMGs, due to their financial stakes, warrant stricter regulation than casual entertainment platforms, and blanket restrictions serve a preventive purpose.

Lastly, the Court dismissed claims of repugnancy with the IT Rules, 2021, observing that key provisions of those Rules—such as the designation of Self-Regulatory Bodies (SRBs)-had not been implemented. Thus, in the face of a regulatory vacuum, the state was entitled to act. In sum, the judgment reaffirmed the validity of state-level regulation in protecting public health from the evolving risks posed by digital gambling platforms.

Conclusion-

The Madras High Court’s judgment upholding the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, along with the 2025 Regulations, marks a decisive turning point in the evolution of India’s digital gaming jurisprudence. By anchoring its analysis in public health concerns, the Court has laid a strong foundation for legitimizing state-level regulatory interventions in the online gambling space, especially when central regulatory frameworks remain underdeveloped or inactive.

A key takeaway from the decision is the recognition of the real-world consequences of online real money games (ORMGs), including behavioural addiction, financial distress, and mental health deterioration. The Court’s reasoning reflects an acute awareness of how the borderless, instant-access nature of digital platforms exacerbates risks traditionally associated with gambling. By distinguishing ORMGs from casual games of entertainment, the Court affirmed that the economic stakes involved justify greater regulatory scrutiny and intervention.

The Court's pragmatic stance on Aadhaar-based verification is particularly significant. Without formally applying the three-pronged proportionality test established in Puttaswamy, the Court nonetheless accepted limited use of Aadhaar-linked authentication for verifying users’ age and mobile number, provided it is backed by governmental approval and involves no processing of sensitive personal data. This sets a precedent for purpose-specific Aadhaar use in the digital economy when user safety is at stake. 

However, the judgment also highlights the need for harmonization at the national level. While Tamil Nadu’s initiative addresses immediate public concerns, the absence of centralized oversight, particularly MeitY’s delay in operationalizing Self-Regulatory Bodies (SRBs) under the IT Rules, 2021 has created a fragmented legal landscape. The inclusion of online gaming in the National Broadcasting Policy, 2024, and MeitY’s ongoing work on the proposed Digital India Act, underscore the necessity of a coherent, uniform regulatory architecture ,while the Tamil Nadu legislation sets a valuable precedent for protecting digital users, long-term regulatory success will depend on timely central coordination, inter-state consistency, and a nuanced balance between consumer protection and industry innovation in India’s rapidly expanding online gaming ecosystem.