India’s $23B Ban: A Warning for Investors

India Bans “The Great Evil” - Online Gambling

India's sweeping ban on all online real-money gaming represents a dramatic policy shift that bears striking parallels to America's Prohibition era of the 1920s. Just as the United States attempted to legislatively eliminate alcohol consumption nearly a century ago, India has now embarked on a similarly ambitious - and potentially misguided - effort to eradicate online gambling through absolute prohibition. The Promotion and Regulation of Online Gaming Bill, 2025, passed with unprecedented speed through both houses of parliament, bans all online games involving monetary stakes, regardless of whether they are based on skill, chance, or a combination of both.
The government's justification centers on four primary concerns:

1. Rising suicide rates linked to gambling losses
2. Algorithmic manipulation of vulnerable users
3. National security threats from money laundering and terror financing
4. Broader social protection needs

IT Minister Ashwini Vaishnaw articulated the government's moral stance, stating that the legislation prioritized "the welfare of society and avoiding a ‘big evil’ creeping into society". This language eerily mirrors the temperance movement's rhetoric from America's Prohibition era, when alcohol was similarly demonized as a societal evil requiring complete eradication.

This sweeping approach raises fundamental questions about whether India is repeating the same mistakes that led to Prohibition's spectacular failure or the similar ban on gambling from the 1900s-2010s in the United States, where outright bans created underground markets, increased criminal activity, and ultimately proved counterproductive to their stated goals.

India's Suicide Crisis: A Question of Correlation vs. Causation

The government's primary justification for the online real-money gaming ban centers on suicide prevention, citing cases where individuals took their own lives after suffering gambling losses. India recorded 171,000 suicides in 2022, representing a rate of 12.4 per 100,000 population - the highest on record for the country. This figure represents a 4.2% increase over 2021 and a 27% jump compared to 2018, making India responsible for approximately 36.6% of global suicide deaths among women and 24.3% among men.

National Crime Records Bureau

However, examining these statistics in a global context reveals a more complex picture. India's suicide rate of 12.4 per 100,000, while concerning, is sadly not dramatically higher than many developed nations. The global average stands at 10.6 per 100,000, with the regional average at 12.9 per 100,000. Countries like South Korea (26.9), Lithuania (25.7), and Russia (25.1) maintain significantly higher rates than India.

More tellingly, the specific online real-money related suicide data that the government cites is remarkably sparse. Tamil Nadu reported 47 suicides linked to online real-money gaming addiction between 2019 and 2024, while Karnataka recorded 32 gambling-related suicides over 31 months since 2023. While every life lost is tragic, these numbers represent a very small fraction of India's overall suicide crisis and there appears to be little supporting data that the recent rise is in part caused by online gambling.

‍The Social Media Double Standard

‍If the government's concern is genuinely about digital platforms causing youth suicide, the selective focus on online real-money gaming while ignoring other potential digital causes (such as social media) represents a glaring inconsistency. Research has established far more robust links between social media usage and suicidal behavior compared to online gambling. Multiple studies demonstrate that adolescents spending more than three hours daily on social media show elevated risks of self-harm, with 16.1% of Norwegian adolescents reporting past-year self-harm correlated with excessive social media use.

A comprehensive review of nine studies involving 346,416 young people found independent associations between heavy social media/internet use and increased suicide attempts, with heavy users being 1.03 - 5.10 times more likely to commit suicide after accounting for other key variables. The research consistently shows that greater time spent on social networking websites leads to higher psychological distress, unmet mental health needs, poor self-rated mental health, and increased suicidal ideation. The correlation between rising social media adoption and increasing youth suicide rates is far more established than any real-money gaming specific causation the Indian government claims to address.

Yet social media platforms continue to operate freely in India unchecked and unchallenged, generating billions in advertising revenue, while potentially contributing to mental health crises on a scale that dwarfs any online gaming related harm. The government's decision to ban real-money online gaming while preserving social media suggests ulterior motivations.

‍A Historical Perspective: Gambling in Ancient and Modern India

‍Gambling has deep cultural roots in India, dating back thousands of years. Archaeological evidence reveals dice made of ivory from 2,000+ years ago discovered in Western Punjab, while literary sources from ancient texts document sophisticated gambling practices. The Arthashastra, ancient India's treatise on statecraft, recommended state-run gambling centers where the government collected 5% of winnings while providing regulatory oversight.

The colonial period introduced Western gambling restrictions, but independent India initially showed more flexibility toward gambling activities, the horse racing industry being a prime example. The current moral panic represents a departure from this historical pragmatism, driven more by contemporary political pressures than traditional Indian governance philosophies.

Cultural factors also play a significant role in the current crisis. Indian society's emphasis on family honor and financial responsibility creates particularly intense shame around gambling losses, potentially increasing suicide risk beyond what might be seen in other cultural contexts. However, this suggests a need for cultural sensitivity in regulation rather than outright prohibition.

‍The Economic Devastation: India's Multi-Billion Dollar Industry Wiped Out‍

The human cost of India's online real-money gaming ban extends far beyond moral considerations to encompass devastating economic consequences. The online real-money gaming sector represented a $3.8 billion industry in 2024, projected to reach $9 billion by 2029. This growth trajectory attracted significant international investment, with the sector raising $2 billion from global investors and achieving combined enterprise valuations of approximately $23 billion.

The industry supported over 200,000 direct and indirect jobs across approximately 400 companies. These were not merely low-skill positions but included high-value roles in software development, artificial intelligence, data analytics, and digital marketing - precisely the kind of technology jobs India has been trying to cultivate as part of its digital economy ambitions.

Major international investors now face substantial write-offs on their Indian real-money gaming portfolios. Tiger Global, Peak XV Partners (formerly Sequoia India), Alpha Wave Global, and other prominent venture capital firms invested billions in companies like Dream Sports (valued at $8 billion), Mobile Premier League (valued at $2.3 billion), and other real-money gaming unicorns that now face existential threats.

Nazara Technologies, the only publicly listed company with gaming exposure, lost ~$260 million in market capitalization in the week following the ban announcement, representing approximately 16.5% of its total market value, despite only ~5% of the company’s revenue attributed to RMG.The government will also suffer significant fiscal losses. The online real-money gaming industry contributed approximately Rs 20,000 crore ($2.3 billion) annually in GST and income tax revenue. This represents funding that could have supported schools, healthcare, infrastructure, or other public services - instead, it will now likely flow to unregulated offshore operators.

‍Corporate Casualties: The Companies Destroyed Overnight

‍The ban's immediate impact has been swift and brutal for India's online gaming companies. Major platforms began shutting down real-money operations within hours of the bill's passage, with some companies informing employees of impending layoffs even before the legislation received final approval.

‍Dream Sports, India's largest fantasy online gaming company and owner of Dream11, immediately halted its recently launched Dream Picks app and began shutting down real-money features across its platform. The company, backed by investors including Tiger Global and TCV, built an $8 billion enterprise primarily through fantasy cricket contests that are now illegal. Dream11's position as the official sponsor of the Indian national cricket team has become untenable, with the company informing the Board of Control for Cricket in India (BCCI) that it cannot continue the sponsorship due to revenue losses.

Mobile Premier League (MPL), valued at $2.3 billion, stopped accepting deposits and disabled cash games immediately after the ban. The company had been expanding internationally but now faces uncertain prospects in its home market. Games24x7, WinZO, Gameskraft, Zupee, and numerous other companies have similarly suspended real-money operations.

The speed and scope of these shutdowns reflects the gaming industry's complete dependence on real-money features for revenue generation. Unlike traditional gaming companies that can rely on advertising or subscription models, many of India's gaming firms built their entire business models around transaction fees and entry charges from cash-based contests.

Rehan Yar Khan, managing partner of Orios Venture Partners, bluntly assessed the situation: "These companies are going to be, not just for us, but for everyone, going to be very largely a write-off, because the business is shut effectively". The sentiment reflects a broader investor recognition that the ban represents an existential threat rather than a temporary setback.

‍America's Gambling Revolution: Risk On

‍While India closes its doors to real-money gaming, the United States has moved decisively in the opposite direction, embracing gambling as a mainstream entertainment option and significant revenue source. The contrast could not be starker: as India implements prohibition-style bans, America celebrates the most rapid expansion of legal gambling in its history.

‍Currently, 39 states plus Washington D.C. and Puerto Rico have legalized sports betting in some form, with 32 states offering online/mobile betting options. This represents a dramatic transformation from just seven years ago when only Nevada offered legal sports betting. The 2018 Supreme Court decision in Murphy v. NCAA opened the floodgates, allowing states to determine their own sports betting policies.

Last week, the CFTC's Division of Market Oversight and the Division of Clearing and Risk announced that they have taken a "no-action" position against Polymarket-owned QCX, a designated contract market, and QC Clearing, a derivatives clearing organization. This enables Polymarket (a prediction markets platform) to go live in the U.S.

The numbers reflect America's embrace of gambling. 22% of all Americans - approximately 72.6 million people - now have active online sports betting accounts, with the percentage rising to 48% among men aged 18-49. Overall, 85% of Americans have gambled at least once in their lives, with 60% gambling in the past year. This represents a participation rate nearly three times higher than India's real-money gaming population.

This expansion has not occurred without problems. 52% of online sports bettors have "chased" bets, 37% have felt ashamed after losing, and 20% have lost money that directly hurt their financial situation. Approximately 5 million Americans meet the criteria for compulsive gambling, though only 8% ever seek help. Yet American policymakers have chosen regulation over prohibition, implementing consumer protections, spending limits, and support services rather than blanket bans.

The philosophical difference is profound. Where India sees gambling as a "big evil creeping into society," America views it as a legitimate form of entertainment requiring appropriate regulation. This divergence may prove costly for India as international investors and technology companies observe how different jurisdictions treat emerging digital industries.

The Future of Gambling in India: Paths Forward

‍Despite the current federal ban, India's online gambling future remains uncertain and potentially more complex than the legislation suggests. Several major states are moving toward regulated real-money gaming frameworks that may create a patchwork of different policies across the country.

• Karnataka: has emerged as a leader in reshaping gambling regulation, initiating stakeholder consultations with industry associations to draft comprehensive frameworks for online skill games. The state is considering a "whitelist mechanism" for legitimate operators, providing formal recognition and legal protection alongside mandatory Aadhaar-based age verification and player protection features.
• Maharashtra: has launched consultations across its IT, home affairs, and revenue departments to develop licensing frameworks, while Haryana enacted the Prevention of Public Gaming Bill, 2025, which modernizes enforcement while explicitly excluding skill games from the definition of "gambling". Andhra Pradesh is circulating proposals to legalize state lotteries and online skill gaming, and Uttarakhand is preparing a Gaming Act that separates skill games from chance games.

The Indian Supreme Court is expected to rule on the legality of online skill gaming and GST applicability, decisions that could significantly impact state-level initiatives. If the Court distinguishes between skill-based and chance-based games - as several states are already doing - it could create legal pathways for regulated gaming despite federal opposition.

International pressure may also influence India's approach. The country's aspiration to become a global technology hub sits uncomfortably with prohibitionist policies that discourage innovation and investment. As other nations, including the United States, embrace regulated gaming, India risks appearing backward-looking and unpredictable to international investors.

‍Takeaway: India's comprehensive ban on online real-money gaming ultimately reflects a triumph of cultural perception over empirical evidence. By characterizing online gambling as a 'big evil creeping into society,' the government reveals a moral framework that views gambling as inherently corrupting, rather than as a legitimate activity in need of appropriate regulation. The overnight elimination of a $23 billion sector sends a concerning signal about regulatory unpredictability that may influence international investment decisions across other industries, raising questions about the stability and predictability of India's business environment when governments can eliminate entire sectors through rapid three-day legislative action. This paired with the selective application of moral concerns does not promote foreign investment confidence in the country.