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Ban Creates $15 Billion Offshore Market
India's strict Promotion and Regulation of Online Gaming Act (PROGA), enacted October 1, 2025, sought to stop real-money online gaming. Instead, it has created a huge, untaxed shadow economy. The illegal fantasy and betting market could exceed $15 billion in 2026. Offshore operators are filling this void, exploiting demand unmet by legal domestic options. The Act, while prohibiting real-money games, has light penalties for users. Enforcement targets promoters and operators, who face up to three years in prison and fines up to Rs 1 crore.
How Illegal Sites Evade Blocks and Risky Users
Offshore operators are skilled at evading government blocks. They quickly reappear with minor website URL changes, route payments through "mule accounts" or fake UPI IDs to bypass banks, and promote on private Telegram and Instagram. This constant evasion makes enforcement a game of cat-and-mouse. The Ministry of Electronics and Information Technology (MeitY) has blocked over 8,400 illegal sites and apps, yet the shadow market continues. Users face significant risks like fraud, frozen withdrawals, data theft, and misuse of financial details, as most platforms are offshore with little recourse. Nithin Kamath, CEO of Zerodha, noted these apps use India's UPI to attract users with low entry amounts, as little as Rs 300, making it seem low-risk.
Lost Taxes and Hurt for Legitimate Gaming
Moving to offshore, untaxed platforms causes a significant economic loss for India. The All India Gaming Federation estimates annual Goods and Services Tax (GST) losses at about $2.5 billion. This drains national revenue that could fund domestic industry or public services. Legitimate Indian platforms like Dream11, MPL, and My11Circle, forced to switch to free-to-play games, have seen revenues crash, with Dream11 reporting a 95% drop. Their move away from cash models means they can no longer earn from platform fees or large ads during events like the IPL.
IPL League Struggles Against Illegal Rivals
The IPL launched its official fantasy league for 2026, complying with the PROGA Act. This league offers non-monetary prizes like meet-and-greets, signed merchandise, and VIP tickets. However, it faces a tough challenge attracting users from the allure of risky, high-reward illegal offshore platforms. The appeal of real-money contests and the perceived easy access to offshore sites remain a major obstacle for the official league. The government's crackdown has intensified, blocking 300 more platforms recently, bringing the total to 8,400. But demand and operator adaptability suggest the shadow economy will persist as a regulatory and economic challenge.
Regulation Backfires, Fueling Illegal Trade
The core problem is PROGA's unintended result: banning real-money gaming created a market gap that offshore firms quickly filled, operating without Indian law or tax accountability. This leaves regulators in a reactive position, struggling against a dynamic illicit market. While e-sports and social games are fine, banning money-based games has hurt domestic players, forcing cost and workforce cuts. Using offshore platforms drains government revenue and exposes Indian consumers to extreme risks with little recourse. This mirrors concerns in other sectors where regulatory gaps enable shadow economies. The current enforcement's success against these illicit operations, which thrive by exploiting regulations, is still unknown.
Shadow Market to Persist Despite Crackdown
PROGA 2025 has reshaped online gaming in India. Though the government blocks platforms, the $15 billion illegal market remains a major challenge. The appeal of winning real money, plus the difficulty tracking offshore operators, means this shadow economy will likely continue, using new tactics. The official IPL fantasy league, despite being legal, faces an uphill battle persuading users to leave the instant rewards and perceived high payouts of illegal sites. Expect a continued fight between government crackdowns and offshore operators' adaptability. This could lead to more economic losses and user harm if stronger measures aren't found.