Why UK fintech professionals should take note of India’s bold regulatory pivot
A Shockwave from New Delhi
In August 2025, India’s Parliament passed the Promotion and Regulation of Online Gaming Bill, enacting a sweeping ban on all real-money gaming (RMG). The new law criminalises the offering, promotion, and payment processing of games involving monetary stakes—whether judged as ‘skill’ or ‘chance’.
For fintech professionals in the UK and Europe, this is more than a local Indian policy. With nearly 488 million online gamers—the largest user base in the world—India was projected to be a $9 billion sector by 2029. Overnight, that growth story has been derailed, sending shockwaves through fintech corridors in London, Brussels, and Singapore.
“India’s ban is a bold step that could either reset the digital economy—or push innovation offshore.”
What the Bill Does
• Financial Firewall: Banks, PSPs, and wallets prohibited from processing related payments.
• Blocking Powers: ISPs and app stores compelled to delist non-compliant platforms.
• Prohibition: A blanket ban on all games involving money.
• Exemptions: Only e-sports, educational, and casual/social gaming are spared.
The Numbers Behind the Decision
• User Base: ~155 million Indians engaged in RMG in 2024.
• Revenue Impact: $2.7 billion wiped out almost overnight.
• Jobs: 130k–200k positions in gaming, payments, and ad-tech at risk.
• Tax Haul: Under India’s steep 28% GST regime, the government earned ₹6,909 crore (£650m) in just six months of FY24–25—now jeopardised.
• Investments: An estimated $1–2 billion of FDI and domestic VC capital exposed.
SIDEBAR: India’s digital tax ambitions now face a critical test, as policymakers risk losing a key revenue stream.
The Government’s Narrative: Indian policymakers justify the ban on three fronts:
1. Public Health First: Rising reports of addiction-driven bankruptcies and suicides.
2. Legal Clarity: Ending decades of litigation over ‘skill vs. chance’.
3. Consumer Trust: A ‘reset button’ before building a safer digital economy.
Risks and Downsides
• Economic Fallout: The ban threatens to unravel one of India’s fastest-growing digital sectors.
• Fiscal Leakage: By removing taxable platforms, India risks losing billions in GST and TDS revenue.
• Offshore Migration: Indian players may shift to unregulated offshore platforms, similar to grey-market betting seen in Africa and Southeast Asia.
• Investor Sentiment: Global VCs are again citing regulatory unpredictability as a deterrent to long-term capital deployment.
Global Financial Perspectives
The Indian RMG ban reverberates far beyond its borders. Global financial flows are intricately tied to online gaming ecosystems:
• Remittance Corridors: With India being the world’s largest remittance market ($125bn annually), fintech platforms now need to tighten scrutiny as cross-border gaming payments could disguise themselves as P2P remittances.
• PSP Adjustments: Payment Service Providers in the UK and Europe face higher compliance costs as MCC codes linked to Indian gaming are monitored more closely.
• FX Implications: The sudden stop of billions in cross-border inflows/outflows via RMG affects forex settlements. While minor globally, in emerging markets this volatility can disrupt liquidity planning.
• Tax & Treasury Impacts: India’s £650m half-year GST loss reverberates in fiscal planning. For global investors, this signals unpredictable tax continuity risks.
Comparative Global Models
• United Kingdom: Regulatory safeguards, stake caps, and affordability checks allow a sustainable, taxable ecosystem.
• European Union: Countries like Malta have positioned themselves as gaming hubs, drawing tax revenue and employment.
• United States: State-by-state licensing enables both innovation and fiscal capture.
• China: Youth play restrictions instead of outright bans; heavy state oversight ensures control without collapsing the market.
• UAE & Singapore: Strict centralised licensing, balancing consumer risk with capital attraction.
Investor and Market Impact
The ban creates uncertainty for investors:
• Venture Capital: $1–2bn of capital at risk; VCs are revisiting term sheets and exit strategies.
• Public Markets: Listed gaming-adjacent firms in India and abroad see valuation dips amid fear of contagion regulation.
• Global Spillover: Emerging markets in Africa and Southeast Asia look to India’s move as precedent, creating broader risks for gaming-focused fintechs.
Scenario Analysis
• Ban Holds: Domestic industry shrinks, while offshore operators thrive.
• Partial Reversal: Courts or political recalibration introduce a UK-style licensing framework.
• Dual Market: Legitimate e-sports grow, but money gaming migrates underground.
Verdict – A Bold Step or Strategic Misstep?
India’s ban is a short-term victory for consumer protection, but risks becoming a long-term strategic own goal if regulation is not reintroduced. By outlawing instead of regulating, India cedes innovation and tax opportunities to offshore players.
Call to Action for UK Fintech Leaders
• Monitor: India’s Gaming Authority rulemaking and court challenges.
• Review: Transaction monitoring for India-linked gaming flows.
• Reassess: Portfolio exposure to Indian gaming/fintech ventures.
• Engage: In cross-border policy debates—India’s recalibration will shape how emerging markets regulate digital economies.
Final Word
India’s RMG ban is not the end of the story. It is the opening act in a regulatory theatre that could either reset the market responsibly—or drive innovation and capital offshore.
