[Update] Karnataka HC Seeks Centre's Response On Plea Against Gaming Law

Update | August 30, 09:58 PM

Days after A23’s parent, Head Digital Works, challenged the validity of the new online gaming laws, the Karnataka High Court (HC) has reportedly sought the Centre’s response to the petition.

As per Bar and Bench, Justice BM Shyam Prasad issued notice to the Union government on the matter. The company’s prayer for interim relief will next be taken up for consideration on September 8.

Arguing before the HC, Head Digital Works’ counsel contended that the legislation, despite being titled as one for the “promotion” of online gaming, effectively imposes a blanket ban.

The company’s counsel C Aryama Sundaram also urged the HC to direct the Centre to not notify the law until the matter has been examined by the Court.

Meanwhile, SG Tushar Mehta and ASG N Venkataraman, appearing for the Centre, argued that this would be the first time a court would test the Parliament’s competence to legislate on gaming with money.

“Once the President of India has assented, notifying is a Constitutional function,” Mehta reportedly told the court.

Original | August 28, 03:47 PM

The Karnataka High Court will hear on August 30 a petition filed by online gaming major A23, operated by Head Digital Works, against the ‘Promotion and Regulation of Online Gaming Bill, 2025’ which has banned real money gaming in the country.

The development was first reported by Bar & Bench. Inc42 has reached out to Head Digital Works for additional comments on the development.

The Bill, which was passed by the Parliament last week, got President Droupadi Murmu’s assent on August 22. The Bill outlaws all money-based online games, whether based on skill or chance, ending the long-standing legal distinction between the two.

Offenders may face up to three years in jail and fines of up to INR 1 Cr, with harsher penalties for repeat violations. Banks and payment providers are also barred from supporting such transactions.

The real money gaming ban has widened the existing rift within India’s gaming ecosystem. Real money gaming players like Dream11, MPL, WinZO and Games24x7 now find themselves fighting for survival, with valuations and business models evaporating overnight.

But for video game studios and esports companies, the Bill provides a long overdue clarity. For years, both sides of the industry were lumped together under the “online gaming” label. For esports organisers and studios, the ban is now being viewed as a chance to reposition themselves closer to traditional sports and entertainment. Freed from the shadow of what many perceived as gambling, esports tournaments can now appeal more strongly to broadcasters, advertisers and live audiences.

Game studios also believe the new law opens up the possibility of building original Indian IPs that can act as cultural exports.

Notably, the Bill also proposes creating a new authority to certify which games qualify as non-money games.

With the Bill, an industry worth about INR 30,000 Cr got wiped out. It is estimated that anywhere between 2 Lakh to 2.5 Lakh people were directly employed with real money gaming companies.

Diversification Of Business

Real money gaming was the main revenue driver for the likes of MPL, Dream11 and WinZO, and many other startups. The ban has left the startups scrambling for new business opportunities.

Dream11 parent Dream Sports, for instance, has now announced a pivot into fintech. The startup is now planning to launch Dream Money app which will be offering SIPs, FDs, gold investments, among other things to its users.

Additionally, it has partnered with SEBI-registered AI investment advisor Sigfyn to help users monitor their spending, income, and investments.

WinZo, meanwhile, chose a different path by shifting its base to the US and venturing into the emerging market of microdramas. We are equally excited to introduce ZO TV, our new short video format, which further diversifies our content offerings and strengthens WinZO’s position as a global hub and one stop destination for interactive entertainment,” cofounders Saumya Singh Rathore and Paavan Nanda recently said in a joint statement.

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