In a move that could significantly tighten regulatory oversight of the burgeoning online real-money gaming industry, the Government of India is in the final stages of a proposal to bring platforms like Dream11, Games24x7, and Winzo under the ambit of anti-money laundering laws. According to a report by media, the Ministry of Finance is spearheading this initiative, which could soon classify these companies as “reporting entities” under the Prevention of Money Laundering Act (PMLA), 2002.
Once classified as reporting entities, these gaming firms would be required to comply with stringent obligations under the PMLA, including Know Your Customer (KYC) verification, record-keeping of client data and transactions, and reporting of suspicious transactions to the Financial Intelligence Unit-India (FIU-IND) — the central agency responsible for analysing financial data related to money laundering.
Gaming firms to face financial sector-like oversight
If implemented, the measure would bring real-money gaming firms into a compliance framework similar to banks, financial institutions, and virtual digital asset (VDA) platforms, which were brought under PMLA regulations in 2023 amid growing concerns around cryptocurrency misuse. The classification as reporting entities would mean that gaming companies would be obligated to:
• Maintain records of all financial transactions.
• Collect and preserve identity documents of clients and beneficial owners.
• Submit Suspicious Transaction Reports (STRs) and Cash Transaction Reports (CTRs) to FIU-IND.
• Retain business correspondence and account files related to users for specified durations.
• Comply with anti-money laundering and counter-terrorism financing (AML/CFT) standards set by the Financial Action Task Force (FATF), an international watchdog.
Consultations underway among Ministries
Sources familiar with the matter told media that inter-ministerial consultations are currently underway and nearing completion. The final decision is expected shortly, and it may have long-term implications for the real-money gaming sector, which has seen exponential growth but is also facing increasing scrutiny from tax authorities and regulators.
Once approved, the move will make it mandatory for gaming companies to install robust due diligence systems and report any irregular or large-value transactions. It is expected to affect operational protocols significantly, especially around onboarding new users and handling large volumes of user deposits and withdrawals.
This potential regulation marks the second major policy move targeting the online gaming sector. In 2023, the Centre imposed a steep 28 per cent Goods and Services Tax (GST) on the total value of user deposits into gaming applications — a decision that sparked outrage among gaming companies and triggered fears of revenue drops and job losses. Several firms had even approached the courts challenging the GST Council’s interpretation and retrospective tax demands.
With the new PMLA-related proposal, the Centre is sending a clear message: real-money gaming, due to its financial nature and potential misuse, cannot exist outside the ambit of strict financial oversight.
Industry reactions awaited
Although the gaming industry has not yet publicly responded to the report, experts believe that compliance with PMLA norms will increase operational costs for gaming platforms. “If this move goes through, these companies will be treated at par with NBFCs or crypto exchanges in terms of compliance obligations. This means onboarding processes will change, users may have to undergo rigorous verification, and companies will need to invest in financial monitoring technologies,” said a senior regulatory analyst.
However, government officials argue that the step is long overdue. “With the growing concerns around money laundering, betting, and online frauds using gaming platforms, it is necessary to bring them under a formal regulatory architecture,” said an official from the Finance Ministry.
Building a transparent gaming ecosystem
The central government has, in recent years, taken various steps to regulate the online gaming sector, especially real-money games that involve cash stakes. While gaming platforms have argued that their products are skill-based and distinct from gambling, multiple courts and regulators have continued to scrutinize them closely.
Earlier in 2023, the Ministry of Electronics and Information Technology (MeitY) was tasked with framing rules for the online gaming industry. It notified self-regulatory mechanisms and mandatory grievance redressal systems for gaming firms. But critics argued that these were not enough to tackle potential financial crimes.
Bringing gaming under the PMLA could fill a crucial regulatory gap, especially as reports emerge of online platforms being used to launder money or fund illicit activities. With the enforcement authorities already keeping a close eye on cryptocurrency platforms, gaming may be the next big area of focus.
The online real-money gaming industry once seen as a booming startup success story is now under increasing pressure to align itself with the norms of India’s regulated financial ecosystem. With anti-money laundering laws on the horizon, stakeholders are bracing for a transformative change in how these platforms operate, manage data, and deal with their users. For the government, the goal is clear: ensure that every financial interface, even those masked as entertainment, operates within a transparent and accountable framework.
Comments