The PROG Act and the Offshore Paradox: Why Banning Online Gaming May Have Backfired
Understanding how the Promotion and Regulation of Online Gaming Act, 2025, may be hindering safety for users by driving them to offshore platforms.
4 mins read
Context: A Well-Intentioned Law with Unintended Consequences
The Promotion and Regulation of Online Gaming (PROG) Act, 2025 was enacted to shield citizens — particularly youth and vulnerable populations — from the financial, psychological, and privacy harms of real-money online gaming. The objective was sound. The outcome, however, is proving to be the opposite of what was intended.
Early evidence suggests the ban has not reduced participation in online gambling. It has simply relocated it — from regulated domestic platforms to unregulated offshore ones, beyond the reach of Indian law.
The Offshore Shift: What the Data Shows
A study by CUTS International measured user behaviour before and after the PROG Act's implementation in October 2025. The results are striking:
Offshore Platform Usage (Before vs After PROG Act)
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Region Before Ban After Ban Increase
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Delhi NCR 68.3% 82.0% +13.7%
Tamil Nadu 67.8% 83.0% +15.2%
Maharashtra 66.7% 91.7% +25.0%
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In Tamil Nadu, for instance, many users were already accessing offshore platforms alongside domestic ones before the ban. After it, the domestic option disappeared — but the offshore habit stayed and grew. The net result is a behavioural shift, not a reduction in gambling activity.
This is not a surprise. Across industries, paternalistic bans on non-physical products rarely suppress demand — they redirect it. Unlike physical goods, digital platforms can be accessed instantly via VPNs and private links, making geographic enforcement extremely difficult.
Why Offshore is Worse Than Regulated Domestic Play
The shift to offshore platforms is not merely a regulatory inconvenience. It carries serious downstream risks:
- Money laundering and terror financing — offshore platforms operate outside AML/CFT frameworks
- No consumer protection or grievance redress — users have no recourse when defrauded
- Cybercrime exposure — illegal operators use VPNs, proxy servers, and encrypted apps like WhatsApp and Telegram to evade detection
- Mirror sites — when one domain is blocked, users are shifted to a clone with minimal disruption
- Mule account networks — fraudsters recruit ordinary citizens to open bank accounts used to launder proceeds
A case from Sivaganga, Tamil Nadu (February 2025) illustrates this vividly. A fraudulent "Old Coin Purchase Task" scheme was promoted via Telegram, luring victims with promises of high returns on fake coin-bidding platforms. Accused persons recruited villagers from Sivaganga, Paramakudi, and Kalayarkovil to open bank accounts in exchange for small cash payments — these accounts were then used to divert crime proceeds.
Despite the Centre blocking 8,376 URLs to combat offshore betting networks, suicides linked to illegal online gambling traps have continued to be reported even after the ban.
What Other Countries Are Doing
The global experience points in one consistent direction — regulation, not prohibition:
- United Arab Emirates (2023) — despite a long-standing prohibition, moved to establish a federal licensing framework with deposit limits, compliance requirements, and harm-prevention safeguards, precisely to contain offshore risks
- Sri Lanka — establishing a centralised Gambling Regulatory Authority by June 2026 to bring offshore activity within a domestic oversight framework
The lesson is clear: "The real policy choice is rarely between permitting and banning. It is between creating a regulated domestic framework with accountability and consumer safeguards, or allowing the space to be dominated by offshore operators beyond domestic oversight."
Way Forward
- Move from blanket ban to regulated framework — pilot a controlled licensing regime with strict compliance, deposit limits, and age verification
- Tax the regulated ecosystem — revenues can fund offshore monitoring, enforcement, and player-awareness campaigns, as done successfully in several Western countries
- Invest in technological enforcement — build domestic capacity to track VPN usage, identify mirror sites, and disrupt mule account networks
- Centre-State coordination — online gambling regulation sits at the intersection of IT law and state gambling laws; sustained coordination is non-negotiable
- Mandatory harm-prevention safeguards — self-exclusion tools, spending caps, and addiction helplines must be built into any licensing framework
Conclusion
The PROG Act represents a genuine attempt to address a real social harm. But the data now suggests it has created a more dangerous problem than the one it sought to solve. When a ban pushes users from accountable domestic platforms to unaccountable offshore operators, it weakens — not strengthens — consumer protection. India must reckon honestly with this evidence and consider whether calibrated regulation, with strong safeguards, serves citizens better than a prohibition that exists on paper but not in practice.
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Main syllabus
GS2Government PoliciesQuick Q&A
What are the key objectives of the Promotion and Regulation of Online Gaming (PROG) Act, 2025, and why is its effectiveness being questioned?
The Promotion and Regulation of Online Gaming (PROG) Act, 2025 was enacted to protect individuals, particularly youth and vulnerable groups, from the harmful social, economic, psychological, and privacy-related effects of online real-money gaming and betting platforms. The legislation sought to reduce addiction, prevent financial fraud, curb cybercrime, and address concerns such as suicides linked to online gambling traps. The Act represented a paternalistic regulatory approach in which the State attempted to minimise harm by restricting or banning certain forms of online gaming involving money.
However, the effectiveness of the Act is increasingly being questioned because evidence suggests that the ban has unintentionally driven users toward illegal offshore betting and gambling platforms. According to studies cited in the article, the use of offshore platforms increased sharply after the implementation of the Act. For example, offshore participation reportedly rose from 67.8% to 83% in Tamil Nadu and from 66.7% to 91.7% in Maharashtra. This indicates that consumer demand for online betting did not disappear; rather, it shifted from regulated domestic platforms to unregulated international operators.
The major concern is that offshore platforms operate beyond Indian legal oversight. They often use technologies such as VPNs, encrypted messaging applications, and mirror websites to evade restrictions. As a result, authorities face severe limitations in ensuring consumer protection, grievance redressal, and financial monitoring.
The article highlights several unintended consequences of the ban:
The debate therefore raises an important policy question: whether outright prohibition is effective in regulating digital activities that are easily accessible across borders. The experience of the PROG Act suggests that bans alone may not eliminate harmful behaviour in the digital economy. Instead, policymakers may need to balance public welfare concerns with practical regulatory mechanisms that emphasise accountability, monitoring, and harm reduction.
However, the effectiveness of the Act is increasingly being questioned because evidence suggests that the ban has unintentionally driven users toward illegal offshore betting and gambling platforms. According to studies cited in the article, the use of offshore platforms increased sharply after the implementation of the Act. For example, offshore participation reportedly rose from 67.8% to 83% in Tamil Nadu and from 66.7% to 91.7% in Maharashtra. This indicates that consumer demand for online betting did not disappear; rather, it shifted from regulated domestic platforms to unregulated international operators.
The major concern is that offshore platforms operate beyond Indian legal oversight. They often use technologies such as VPNs, encrypted messaging applications, and mirror websites to evade restrictions. As a result, authorities face severe limitations in ensuring consumer protection, grievance redressal, and financial monitoring.
The article highlights several unintended consequences of the ban:
- Increase in illegal offshore gambling activity
- Higher risks of money laundering and terror financing
- Growth of cyber fraud networks
- Reduced consumer protection mechanisms
- Loss of potential tax revenue for the government
The debate therefore raises an important policy question: whether outright prohibition is effective in regulating digital activities that are easily accessible across borders. The experience of the PROG Act suggests that bans alone may not eliminate harmful behaviour in the digital economy. Instead, policymakers may need to balance public welfare concerns with practical regulatory mechanisms that emphasise accountability, monitoring, and harm reduction.
Why do blanket bans on online betting and gambling often fail to achieve their intended objectives?
Blanket bans on online betting and gambling frequently fail because they do not eliminate consumer demand; instead, they push users toward underground or offshore channels. The article argues that digital platforms are particularly difficult to regulate through prohibition because users can bypass restrictions using technologies such as VPNs, proxy servers, encrypted messaging services, and mirror websites.
Historically, paternalistic bans across sectors have rarely succeeded in changing behaviour permanently. In the context of online gambling, users who were previously participating on regulated domestic platforms shifted to unregulated offshore websites after the implementation of the PROG Act. These offshore operators are often beyond the jurisdiction of Indian authorities, making enforcement difficult.
Several structural reasons explain why bans fail:
The article also highlights that prohibition may unintentionally worsen risks. Users on offshore platforms lack access to domestic grievance redressal systems, legal protections, and responsible gaming safeguards. Furthermore, illegal platforms may become channels for financial crimes such as money laundering and terror financing.
Example: Despite the Centre reportedly blocking more than 8,000 URLs associated with illegal betting networks, offshore gambling activity continues to flourish. This demonstrates the limitations of purely enforcement-based approaches in the digital era.
Critical analysis: Blanket bans may provide symbolic political messaging but often fail in practical implementation when dealing with borderless digital technologies. Excessive prohibition can also reduce transparency by driving activities into unregulated spaces where monitoring becomes harder.
Way forward: Many experts therefore advocate a harm-reduction model involving strong regulation rather than outright bans. Such an approach would focus on licensing, deposit limits, age verification, financial monitoring, and consumer awareness programmes while maintaining government oversight over digital gambling ecosystems.
Historically, paternalistic bans across sectors have rarely succeeded in changing behaviour permanently. In the context of online gambling, users who were previously participating on regulated domestic platforms shifted to unregulated offshore websites after the implementation of the PROG Act. These offshore operators are often beyond the jurisdiction of Indian authorities, making enforcement difficult.
Several structural reasons explain why bans fail:
- Ease of digital access: Users can instantly migrate to alternative platforms through VPNs and private links.
- Cross-border jurisdictional challenges: Offshore operators may be based in countries with weak or different regulatory standards.
- Persistent consumer demand: Individuals continue seeking gambling opportunities despite restrictions.
- Technological adaptability: Illegal operators quickly create mirror sites when authorities block domains.
The article also highlights that prohibition may unintentionally worsen risks. Users on offshore platforms lack access to domestic grievance redressal systems, legal protections, and responsible gaming safeguards. Furthermore, illegal platforms may become channels for financial crimes such as money laundering and terror financing.
Example: Despite the Centre reportedly blocking more than 8,000 URLs associated with illegal betting networks, offshore gambling activity continues to flourish. This demonstrates the limitations of purely enforcement-based approaches in the digital era.
Critical analysis: Blanket bans may provide symbolic political messaging but often fail in practical implementation when dealing with borderless digital technologies. Excessive prohibition can also reduce transparency by driving activities into unregulated spaces where monitoring becomes harder.
Way forward: Many experts therefore advocate a harm-reduction model involving strong regulation rather than outright bans. Such an approach would focus on licensing, deposit limits, age verification, financial monitoring, and consumer awareness programmes while maintaining government oversight over digital gambling ecosystems.
How do offshore betting and gambling platforms create challenges for governance, cybersecurity, and financial regulation in India?
Offshore betting and gambling platforms pose serious governance and security challenges because they operate beyond the effective jurisdiction of Indian regulatory authorities. Unlike domestic platforms that are subject to Indian laws and compliance mechanisms, offshore operators exploit technological loopholes and cross-border legal complexities to avoid oversight.
The article highlights that these platforms use advanced digital tools such as VPNs, encrypted communication channels, proxy servers, and mirror websites to evade government restrictions. Even when authorities block a domain, users are often redirected to alternative websites with minimal disruption. This creates a continuous cat-and-mouse challenge for regulators.
The governance challenges are multidimensional:
The article cites a case from Tamil Nadu involving the “Old Coin Purchase Task” fraud, where Telegram-based networks lured victims with promises of high returns and used mule bank accounts to divert illegal proceeds. This case illustrates how online gambling ecosystems can overlap with organised cybercrime and financial fraud.
Another concern is the weakening of regulatory sovereignty. As offshore digital ecosystems expand, domestic authorities struggle to enforce laws effectively. Traditional policing methods become insufficient in dealing with decentralised and encrypted online networks.
International perspective: Countries worldwide are facing similar challenges in regulating cross-border digital gambling activities. Many jurisdictions are therefore moving towards controlled licensing and monitoring frameworks instead of relying solely on prohibition.
Way forward: India requires coordinated action involving cybersecurity agencies, financial intelligence units, telecom regulators, and international cooperation mechanisms. Strengthening digital literacy, improving cybercrime investigation capabilities, and developing robust regulatory frameworks can help address the governance challenges posed by offshore gambling networks.
The article highlights that these platforms use advanced digital tools such as VPNs, encrypted communication channels, proxy servers, and mirror websites to evade government restrictions. Even when authorities block a domain, users are often redirected to alternative websites with minimal disruption. This creates a continuous cat-and-mouse challenge for regulators.
The governance challenges are multidimensional:
- Cybersecurity risks: Offshore platforms may misuse user data and facilitate identity theft or financial fraud.
- Money laundering: Illegal betting transactions can be used to transfer illicit funds across borders.
- Terror financing: Anonymous digital payment systems may support unlawful activities.
- Weak consumer protection: Users lack access to domestic grievance redress mechanisms.
- Tax evasion: Governments lose potential tax revenues from unregulated transactions.
The article cites a case from Tamil Nadu involving the “Old Coin Purchase Task” fraud, where Telegram-based networks lured victims with promises of high returns and used mule bank accounts to divert illegal proceeds. This case illustrates how online gambling ecosystems can overlap with organised cybercrime and financial fraud.
Another concern is the weakening of regulatory sovereignty. As offshore digital ecosystems expand, domestic authorities struggle to enforce laws effectively. Traditional policing methods become insufficient in dealing with decentralised and encrypted online networks.
International perspective: Countries worldwide are facing similar challenges in regulating cross-border digital gambling activities. Many jurisdictions are therefore moving towards controlled licensing and monitoring frameworks instead of relying solely on prohibition.
Way forward: India requires coordinated action involving cybersecurity agencies, financial intelligence units, telecom regulators, and international cooperation mechanisms. Strengthening digital literacy, improving cybercrime investigation capabilities, and developing robust regulatory frameworks can help address the governance challenges posed by offshore gambling networks.
Critically analyse the argument that strong regulation may be more effective than an outright ban on online gambling.
The debate between prohibition and regulation of online gambling reflects a broader governance challenge in the digital economy. While supporters of bans argue that gambling harms public morality and mental health, proponents of regulation contend that prohibition often pushes users toward unregulated offshore ecosystems where risks become even greater.
Arguments supporting strong regulation include:
The article argues that the PROG Act’s blanket restrictions have unintentionally increased offshore platform usage. Since these operators exist beyond Indian oversight, authorities face difficulties in ensuring accountability and cybersecurity. This suggests that prohibition alone may not be sufficient in a digitally interconnected environment.
However, regulation also carries challenges. Critics argue that legalising or regulating gambling may normalise addictive behaviour and expose vulnerable groups to financial and psychological harm. There are concerns that commercial interests could influence policymaking and encourage aggressive advertising targeting youth.
International experiences provide useful lessons. The United Arab Emirates, despite traditionally prohibiting gambling, introduced a tightly controlled licensing framework in 2023 to address offshore risks. Similarly, Sri Lanka is establishing a Gambling Regulatory Authority to consolidate oversight and regulate digital gambling activity.
Critical evaluation: The real policy choice may not be between complete prohibition and unrestricted gambling. Instead, it is between a regulated domestic framework with safeguards and an uncontrolled offshore ecosystem. Effective regulation would require:
A purely prohibitionist approach may appear morally attractive but can become ineffective when technology allows easy circumvention. Therefore, a balanced regulatory framework based on harm reduction, transparency, and accountability may provide a more practical and sustainable policy solution.
Arguments supporting strong regulation include:
- Regulated platforms can implement age verification and responsible gaming safeguards.
- Governments can monitor financial transactions and reduce money laundering risks.
- Consumers gain access to grievance redress mechanisms and legal protections.
- Tax revenues generated from licensed platforms can fund awareness and addiction-control programmes.
The article argues that the PROG Act’s blanket restrictions have unintentionally increased offshore platform usage. Since these operators exist beyond Indian oversight, authorities face difficulties in ensuring accountability and cybersecurity. This suggests that prohibition alone may not be sufficient in a digitally interconnected environment.
However, regulation also carries challenges. Critics argue that legalising or regulating gambling may normalise addictive behaviour and expose vulnerable groups to financial and psychological harm. There are concerns that commercial interests could influence policymaking and encourage aggressive advertising targeting youth.
International experiences provide useful lessons. The United Arab Emirates, despite traditionally prohibiting gambling, introduced a tightly controlled licensing framework in 2023 to address offshore risks. Similarly, Sri Lanka is establishing a Gambling Regulatory Authority to consolidate oversight and regulate digital gambling activity.
Critical evaluation: The real policy choice may not be between complete prohibition and unrestricted gambling. Instead, it is between a regulated domestic framework with safeguards and an uncontrolled offshore ecosystem. Effective regulation would require:
- Strict licensing norms
- Deposit and spending limits
- Advertising restrictions
- Data protection measures
- Real-time monitoring of suspicious financial transactions
A purely prohibitionist approach may appear morally attractive but can become ineffective when technology allows easy circumvention. Therefore, a balanced regulatory framework based on harm reduction, transparency, and accountability may provide a more practical and sustainable policy solution.
What lessons can India learn from international approaches to regulating online gambling and offshore betting platforms?
International experiences demonstrate that countries are increasingly shifting from outright prohibition towards tightly regulated frameworks to manage the risks associated with online gambling. These examples provide important lessons for India as it grapples with the unintended consequences of the PROG Act.
The article highlights the example of the United Arab Emirates (UAE). Despite historically maintaining strict prohibitions on gambling, the UAE established a controlled federal licensing framework in 2023. The new system introduced strict compliance requirements, deposit limits, and harm-prevention safeguards. The objective was not to encourage gambling but to reduce the influence of unregulated offshore operators and improve government oversight.
Similarly, Sri Lanka is moving toward establishing a centralised Gambling Regulatory Authority expected to become operational by 2026. This authority aims to consolidate regulation, improve accountability, and bring offshore gambling activity under a formal domestic framework.
These international examples highlight several key lessons:
Western countries such as the United Kingdom and several European nations also use regulated licensing systems combined with strict advertising controls, age verification requirements, and public awareness campaigns. Revenues generated through taxation are often reinvested into mental health support and gambling addiction treatment programmes.
However, India’s context differs significantly. India has a large youth population, uneven digital literacy, and varying State-level laws on betting and gambling. Therefore, any regulatory framework must be carefully designed to balance economic considerations with social protection.
Way forward: India may adopt a phased and experimental regulatory model involving pilot frameworks, stronger cybersecurity enforcement, inter-State coordination, and robust public awareness campaigns. International experiences suggest that regulation, when combined with accountability and harm-prevention safeguards, may offer a more effective long-term strategy than blanket bans.
The article highlights the example of the United Arab Emirates (UAE). Despite historically maintaining strict prohibitions on gambling, the UAE established a controlled federal licensing framework in 2023. The new system introduced strict compliance requirements, deposit limits, and harm-prevention safeguards. The objective was not to encourage gambling but to reduce the influence of unregulated offshore operators and improve government oversight.
Similarly, Sri Lanka is moving toward establishing a centralised Gambling Regulatory Authority expected to become operational by 2026. This authority aims to consolidate regulation, improve accountability, and bring offshore gambling activity under a formal domestic framework.
These international examples highlight several key lessons:
- Technology-driven sectors require adaptive regulation: Digital bans are difficult to enforce due to cross-border accessibility.
- Consumer protection is stronger within regulated ecosystems: Licensed operators can be monitored more effectively.
- Financial transparency improves under formal oversight: Authorities can track suspicious transactions and tax revenues.
- Harm reduction is more practical than absolute prohibition: Responsible gaming tools can reduce addiction risks.
Western countries such as the United Kingdom and several European nations also use regulated licensing systems combined with strict advertising controls, age verification requirements, and public awareness campaigns. Revenues generated through taxation are often reinvested into mental health support and gambling addiction treatment programmes.
However, India’s context differs significantly. India has a large youth population, uneven digital literacy, and varying State-level laws on betting and gambling. Therefore, any regulatory framework must be carefully designed to balance economic considerations with social protection.
Way forward: India may adopt a phased and experimental regulatory model involving pilot frameworks, stronger cybersecurity enforcement, inter-State coordination, and robust public awareness campaigns. International experiences suggest that regulation, when combined with accountability and harm-prevention safeguards, may offer a more effective long-term strategy than blanket bans.
Suppose you are part of a government committee tasked with reforming India’s online gaming and betting policy. What measures would you recommend to balance consumer protection and digital freedom?
If tasked with reforming India’s online gaming and betting policy, the primary objective would be to create a balanced framework that protects vulnerable users while ensuring effective regulation of digital platforms. The experience of the PROG Act demonstrates that outright prohibition alone may push users toward illegal offshore ecosystems, thereby weakening consumer protection and regulatory oversight.
First, a comprehensive regulatory framework should replace blanket bans. Licensed operators should be required to comply with strict rules regarding:
Second, a specialised National Online Gaming Regulatory Authority could be established to coordinate regulation across States. This body should work with the RBI, cybersecurity agencies, and financial intelligence units to monitor suspicious transactions and prevent money laundering.
Third, technology-based enforcement mechanisms are necessary. Artificial intelligence tools can help detect fraudulent activity, suspicious betting patterns, and illegal offshore transactions. Cooperation with telecom operators and social media platforms would also help identify and block illegal networks more efficiently.
Consumer protection should remain central to policy design. Public awareness campaigns must educate citizens about addiction risks, cyber fraud, and illegal betting traps. Dedicated helplines and counselling services should support individuals facing gambling-related financial or psychological distress.
The policy should also address socio-economic realities. Excessive commercialization and aggressive advertising targeting youth should be restricted through strict guidelines. Revenues generated through taxation of regulated platforms can be used to fund addiction treatment programmes, cybercrime enforcement, and digital literacy initiatives.
Critical perspective: Regulation must avoid becoming a mechanism for unrestricted commercial expansion. The State’s role should be to minimise harm rather than maximise revenue from gambling activities.
In conclusion, India requires a pragmatic and technology-sensitive policy approach. A regulated framework with accountability, transparency, and strong safeguards would likely be more effective than blanket bans in balancing consumer protection, digital freedom, and national security concerns.
First, a comprehensive regulatory framework should replace blanket bans. Licensed operators should be required to comply with strict rules regarding:
- Age verification and identity authentication
- Deposit and spending limits
- Transparent terms and conditions
- Responsible gaming mechanisms
- Data privacy and cybersecurity standards
Second, a specialised National Online Gaming Regulatory Authority could be established to coordinate regulation across States. This body should work with the RBI, cybersecurity agencies, and financial intelligence units to monitor suspicious transactions and prevent money laundering.
Third, technology-based enforcement mechanisms are necessary. Artificial intelligence tools can help detect fraudulent activity, suspicious betting patterns, and illegal offshore transactions. Cooperation with telecom operators and social media platforms would also help identify and block illegal networks more efficiently.
Consumer protection should remain central to policy design. Public awareness campaigns must educate citizens about addiction risks, cyber fraud, and illegal betting traps. Dedicated helplines and counselling services should support individuals facing gambling-related financial or psychological distress.
The policy should also address socio-economic realities. Excessive commercialization and aggressive advertising targeting youth should be restricted through strict guidelines. Revenues generated through taxation of regulated platforms can be used to fund addiction treatment programmes, cybercrime enforcement, and digital literacy initiatives.
Critical perspective: Regulation must avoid becoming a mechanism for unrestricted commercial expansion. The State’s role should be to minimise harm rather than maximise revenue from gambling activities.
In conclusion, India requires a pragmatic and technology-sensitive policy approach. A regulated framework with accountability, transparency, and strong safeguards would likely be more effective than blanket bans in balancing consumer protection, digital freedom, and national security concerns.
Practice questions
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