At a closed-door training workshop for BJP parliamentarians, prime minister (PM) Narendra Modi urged his party members to spread awareness about the new gaming legislation which has been presented as a welfare measure. The Promotion and Regulation of Online Gaming Act, 2025 was passed on 22nd August, with no public consultation and minimal debate, it breezed through the two houses of parliament and received presidential assent in three days flat. Members of Parliament (MPs) were told to reassure constituents that the law, presented as a welfare measure, targets only harmful gaming, not harmless entertainment.
The speed of the ban is largely attributed to political calculation. According to IT minister Ashwini Vaishnaw, over 450mn (million) Indians had been harmed by online gaming, triggering ‘depression and suicides’. Losses are estimated at Rs15,000 crore annually. According to reports, gaming-related debt led to 32 suicides in Karnataka over 31 months. The law sailed through, since no political party would want to be seen defending gambling, given our puritanical streak (also evident in the proliferation of ‘dry days’).
But India is no stranger to gambling. The great Mahabharata war, known to every Indian, has its roots in the gambling addiction of an otherwise virtuous king. Yudhishthira gambled away his empire and his wife in a game of dice. Yet, gambling has never disappeared from India—only changed forms.
The Gaming Boom and Bust
Until the ban in August, gaming platforms were thriving. Dream11, India’s biggest fantasy sports company, had secured a Rs358-crore three-year jersey sponsorship with the BCCI (Board for Control of Cricket in India) in 2023, its logo emblazoned on Team India kits. After the ban, the cricket board terminated the deal overnight. The industry, which attracted Rs25,000 crore in foreign direct investment (FDI), employed over 200,000 people and generated Rs15,000 crore–Rs20,000 crore in tax revenues, was decimated overnight.
The government defends its stance by citing global research on online gambling’s addictive nature. But the ban raises uncomfortable questions about consistency across avenues for addictive behaviour and losses. Why crack down only on gaming apps while allowing state governments to run lucrative lotteries under the Lotteries (Regulation) Act, 1998, justified on grounds of ‘social purposes’?
India’s lottery market, valued at US$27.37bn (billion) in 2024, is understood to have been affected by the convenience of online games and the imposition of steep goods and services tax (GST) in 2020. State lotteries had faced competition from the more accessible giant international lotteries like EuroMillions and Powerball, but the ban on gaming has put an end to it.
The Real Casino: Indian Stock Markets
A far bigger outlet for gambling instincts is not gaming apps or lotteries but stock market speculation—especially in derivatives trading. This activity enjoys government blessing, couched in the language of risk management, capital formation, and a hedging tool. It is further sanctified by the fact that it is governed by the Securities Contracts Regulation Act (SCRA) and tightly regulated by the Securities and Exchange Board of India (SEBI). Yet, the staggering numbers, put out by the regulator itself, expose a grim reality. According to SEBI’s studies:
Every year from FY21-22 to FY24-25, 90% of individual F&O (futures & options) traders lost money.
Losses in FY21-22 were Rs51,689 crore; these were almost matched by transaction costs (Rs48,000 crore).
Cumulative losses in FY21-22 to FY23-24 were Rs1.8 lakh crore, with transaction charges of Rs50,000 crore.
Losses in FY24-25 alone were Rs1.05 lakh crore.
So losses from derivatives are five to six times higher than from online gaming. Yet, instead of bans, regulators have responded with pop-up warnings, token investor education drives and a half-hearted debate about tweaking weekly expiries which has yet to happen.
Meanwhile, SEBI’s investigation into US quant firm Jane Street revealed how billions of dollars in profits were made by sophisticated global players, mainly off Indian retail traders. Jane Street, while denying wrongdoing, agreed to pay up Rs4,754 crore. SEBI is not alone in worrying about the markets providing an outlet for gambling. The Economic Survey 2023-24 also noted that the surge in retail derivatives trading may stem from ‘gambling instincts’, as it offers potential for outsized gains but, typically, results in losses.
A Global Issue
As it happens, the concern about investing beginning to resemble gambling is a global issue. In a 28th August article titled “Gambling or Investing?”The Economist noted how American markets increasingly resemble casinos due to the blurring line between gambling and trading. But comparing speculation to casinos is nothing new.
The renowned economist, John Maynard Keynes had warned as early as in 1936 that unchecked speculation could turn a nation's capital development into "a by-product of the activities of a casino." Vanguard’s founder Jack Bogle, in 1999, lamented that intermediaries profit most from the ‘Wall Street casino’. In 2023, investment guru Warren Buffett observed that markets show ‘far more casino-like behaviour’ than in his youth. This has happened even though the US has liberalised betting for online sports allowing gaming platforms to create avenues for betting on stocks too, says the magazine.
Why the Silence on Derivatives?
If gaming losses of Rs15,000 crore a year can justify an outright ban, why are trading losses of over Rs1 lakh crore annually not treated as a national crisis? The answer may lie in fiscal gains for the government. As Debashis Basu has pointed out, securities transaction tax (STT) collections have grown at a 24% compounded annual growth rate (CAGR) in recent years. In FY24–25 alone, STT brought in Rs55,000 crore of which nearly 40% came from derivatives trading. For the government, this casino is clearly too lucrative to curb.
The Bigger Debt Trap
Financial distress and huge losses can have other causes too. At Moneylife Foundation, a not-for-profit entity, which counsels retail borrowers facing a debt crisis, we have observed a sharp increase in financial distress caused by easy loans. Many borrowers who approach us are not just victims of gaming or trading losses but, far more often, of easy credit. Multiple credit cards, personal loans and predatory digital lending apps have pushed people into a spiral of six to eight concurrent loans. Many borrowers are unemployed or have lost their jobs but seem to be able to access easy loans. The app-based loans are especially toxic; interest compounds at punishing rates; recovery practices are ruthless; and suicides are rising because there is no way out. Despite our repeated alerts to the Reserve Bank of India (RBI), its response has been glacial, compared to the swift ban on gaming.
Unlike gaming firms, which had generated jobs, attracted FDI and tax revenue, digital lenders add little economic value. Yet, regulation here lags far behind.
Ban or Band-aid
If the government’s rationale is to protect citizens from gambling impulses and the ruinous thrill of easy money, then it cannot cherry-pick targets. Lotteries, stock speculation and digital lending are far bigger contributors to financial distress than online gaming apps. Banning one outlet while ignoring the rest only drives the problem underground, fuels corruption and creates black markets—exactly as prohibition has done with alcohol.
What India needs is a holistic approach to financial distress: tighter regulation of lending, stronger guardrails in derivatives markets and restrictions on predatory influencers.
Unless this happens, the knee-jerk ban on online gaming will be remembered, less as a welfare measure than as political gesture, leaving citizens just as vulnerable to losing everything at the next table—whether in a casino, a lottery, the stock market or being bled by app-based lenders.
The Scale in Derivatives Trading is 1 Cr active Traders Vs 45 Crs on Online Gambling Apps.....Parties want to play the Moral Card to the 45 Cr..The Derivatives Traders may be losing a lot more but is not a Vote Base or who need Moral lessons Yet ! A Gambler will find other avenues to Gamble....The reactive Mode will continue with Moving Targets all the time...
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This is sometimes called the “Romeo and Juliet effect”. For Example: Forbidden relationships intensify attraction.
When something is restricted, banned, or made scarce, people often value it more and desire it even more strongly.
In the book, Cialdini explains that:
• Censorship and banning often backfire.
• When information or goods are restricted, people assume “if they don’t want me to have it, it must be valuable or true.”
• Instead of reducing interest, banning can increase demand, curiosity, and emotional appeal.
That’s why attempts to ban games, books, substances, or even ideas often make them more attractive, rather than eliminating them.
Book – Influence
Author - Robert Cialdini