Gaming Apps Used In Money Laundering, Terror Funding: Ashwini Vaishnaw

Explaining the rationale behind the Centre’s move to table a Bill that proposes to ban real-money gaming, Union IT minister Ashwini Vaishnaw has reportedly said that such platforms have, at times, been misused for laundering funds, terror financing and as messaging tools for terrorist groups.

The minister further highlighted that a host of online money gaming operators functioning from offshore hubs bypass state-specific rules, skip tax obligations and pose challenges for enforcement agencies on cross-border grounds, a Moneycontrol report said.

In the Statement of Objections and Reasons, accompanying the “Promotion and Regulation of Online Gaming Bill, 2025,” Vaishnaw said, “In certain cases, these platforms have been linked to illegal activities including money-laundering, financial fraud, the financing of terrorism, and use as messaging platform for terrorist and terrorist organisations, thereby affecting the security and sovereignty of the state.”

Meanwhile, Karnataka’s IT and Biotechnology minister Priyank Kharge today lashed out at the Centre for enforcing a blanket ban on online real money gaming

“India earns INR 20,000 Cr annually from GST and income tax via online RMG. The ban means states lose this revenue stream,” Kharge said in an X post.

The minister also highlighted that over 2,000 gaming startups and more than 2 Lakh jobs in IT, AI and design would be at risk.

The Cabinet has approved legislation that will impose a blanket ban on online games with a monetary component, noting they lead to suicides due to financial losses, besides addiction among children and the youth.

Govt Tightens Screws On Real Money Gaming Platforms

The government’s move to regulate and potentially ban certain online games, particularly those involving real money, comes amid growing concerns about their negative impact on individuals and society.

Sources told Inc42 that the draft norms plan to prohibit all real money games, irrespective of whether they are games of chance or skill or both. The only exception granted has been for esports competitions. 

The proposed rules also ban all advertisements, or production thereof, involving money-based online gaming platforms. Not just this, the draft rules also bar banks, financial institutions and “individuals” from facilitating any transactions related to online money-based gaming platforms.

The Bill came after gaming companies were stuck in limbo for a long time over no clear guidelines by the Centre. Since 2023, online gaming firms have been subjected to a 28% GST on the full-face value of the bets placed, a levy that they have been contesting in the Supreme Court against the Centre’s decision.

Earlier this year, the Directorate General of GST Intelligence (DGGI) reportedly told the SC that online gaming companies are engaging in activities that qualify as betting and gambling, which are subject to the GST. 

The online gaming platforms informed the SC that the 28% GST on real money games was fundamentally flawed and contrary to the legal framework. In a response, the Centre argued before the apex court that gaming companies qualify as “supplier” and would therefore become the “taxable person”, even if no specific HSN code exists for their services. 

It is pertinent to note that the government issued 1,524 orders to block online betting and gambling platforms between 2022 and June 2025, minister of state (MoS) for IT Jitin Prasada had informed the Parliament in a written reply.