India’s constitutional structure rests on a deceptively simple idea: the Union and the States each have their own spheres of law-making power, and neither can invade the other’s domain, subject to exceptios. This division, crystallised in the Seventh Schedule, has long been treated as the bulwark of Indian federalism. Yet the rise of the digital economy is rapidly eroding these boundaries. The Union government increasingly invokes the internet as a pretext to regulate areas once firmly reserved for the States, as it is already doing under the IT Act.
The Promotion and Regulation of Online Gaming Act, 2025 (the “Online Gaming Act”) is the most recent illustration of this trend. By prohibiting all “online money games”, regardless of whether they are based on chance or skill, the Act squarely enters the terrain of “betting and gambling,” an activity listed in the State List. Its justification is simple but far-reaching: because these games are played over the internet, they fall within the Union’s competence to regulate communications and digital platforms.
This move raises a deeper constitutional question: can the medium of online delivery be used to shift subjects from the State List into the Union List? If so, the implications are immense. If the centre can push the boundaries of its legislative competence and regulate gambling because it is conducted online, it could potentially try to push the boundaries further and extend the regulation to alcohol delivery apps, ride-hailing platforms, online education, and even local healthcare services. The Online Gaming Act is therefore not just about gaming. It is a constitutional stress test for federalism in the platform age.
I. The Online Gaming Act and the Federal Faultline
The Online Gaming Act defines an “online money game” expansively as any online game played for stakes, “irrespective of whether such game is based on skill, chance, or both.” It prohibits offering or advertising such games, mandates payment intermediaries to choke related transactions, and creates a new central authority to oversee compliance. Violations attract heavy penalties, including fines and imprisonment.
This definition deliberately collapses the judicially recognised distinction between games of skill and games of chance. Starting with the Chamarbaugwala line of cases, the Supreme Court held that games of skill, like rummy or horse-race betting, were not “gambling” in the constitutional sense and could be pursued as legitimate commercial activities. More recently, the Madras High Court struck down Tamil Nadu’s attempt to impose a blanket ban on online rummy and poker, reasoning that even States could not constitutionally erase the skill/chance distinction. By ignoring this jurisprudence, the Online Gaming Act not only trenches upon State competence but also rewrites the internal limits that States themselves are bound by.
The stakes are clear when we locate the Act within the Seventh Schedule. Entry 34 of the State List assigns “betting and gambling” exclusively to the States. Entry 33 covers sports and entertainment, while Entry 62 allows States to levy taxes on betting. In contrast, the Union List provides Parliament competence over telecommunications (Entry 31), interstate trade (Entry 42), and residuary subjects (Entry 97). The government’s justification for the Act rests on these Union entries: online gaming, it argues, is not really about gambling but about the digital infrastructure through which it operates.
The problem with this reasoning is obvious. The substance of online gaming, which the Government aims to proscribe, remains players staking money on uncertain outcomes in the hope of financial gain. The internet is simply the medium of delivery. Treating the medium as dispositive effectively allows Parliament to reclassify any State subject as a Union subject the moment it migrates online. If that logic is accepted here, what principle would prevent Parliament from similarly taking over liquor distribution, taxi regulation, or school curricula delivered through digital platforms?
In this sense, the Online Gaming Act represents a constitutional strategy of centralisation by medium. The Union asserts jurisdiction not because the activity itself is inherently federal, but because its digital form gives the appearance of being so. This is a far more subtle and insidious encroachment than the familiar story of Parliament overriding State laws through the Concurrent List. It is a recasting of federal boundaries by leveraging technological shifts.
II. Doctrinal Limits in the Platform Economy
Indian federalism has so far relied on a familiar set of doctrines to police the boundary between Parliament and the States. Courts usually ask what the “pith and substance” of a law is; tolerate some incidental overlap if the core lies in the Union’s domain; or occasionally invoke the double-aspect doctrine to permit both levels of government to legislate from different perspectives. These tools made sense in a world where activities could be neatly localised and their dominant character could be identified. But the platform economy scrambles these assumptions.
Take the Online Gaming Act. Its core is at once the act of gambling and the medium of the internet. To ask whether its “substance” is one or the other is to force a false choice. The internet is not incidental to online gaming; it is constitutive of it. Similarly, describing the spillovers of digital platforms as “incidental encroachment” mischaracterises what is happening. Cross-border effects are not accidents of design but the very architecture of the network. And the double-aspect doctrine, which presumes separable perspectives, also falters. Playing rummy on a phone is simultaneously participation in a skill-based contest and engagement in a telecom transaction. To treat those as distinct aspects that can be cleanly divided between Union and State is to ignore their fusion in practice.
The difficulty is that each doctrine rests on categorisation, while the digital economy is defined by the collapse of categories. The old toolkit either privileges the Union by allowing it to frame every online activity as a communications law or leaves courts mired in formalism about whether the medium or the activity is more essential. In both outcomes, the State List shrinks without any explicit constitutional amendment. The Online Gaming Act is therefore a reminder that doctrines crafted for a territorial economy cannot carry the weight of platform federalism.
III. Rethinking Federalism for the Platform
If the old doctrines cannot make sense of the digital spillover, the challenge is to imagine a framework that does. The first step is to resist the temptation to treat the internet as a magic key that converts every activity into a Union subject. What the Constitution gave to the States was not a technological monopoly but a substantive policy choice: whether gambling should be permitted, whether liquor may be delivered at home, how taxi fleets are to be licensed, or what counts as an acceptable curriculum. These decisions remain embedded in local culture and community values. The fact that they are now mediated through a digital platform does not strip them of their State-List character
At the same time, the Union is not excluded. Online platforms generate risks that no single State can effectively manage: interstate fraud, money-laundering schemes, cyber-security breaches, and the maintenance of payment and data infrastructure. In these domains, central intervention is not only appropriate but necessary. The Online Gaming Act illustrates why Parliament’s role in digital regulation cannot be denied altogether, but neither can it be allowed to displace States wholesale. Central intervention is sometimes necessary, yet this authority must be carefully disciplined. The guiding principle is not that the Union regulates the “rails” and the States the “content” in watertight compartments, but that whenever central measures risk overriding a State policy choice, they must be justified by a demonstrable interstate concern, the inadequacy of coordinated State action, and a proportional design that goes no further than required.
That discipline would require the Union to show three things before displacing State authority: first, that there is a genuine interstate or extra-territorial problem; second, that even coordinated State action would not suffice; and third, that the central measure is tailored narrowly to that concern.
Comparative practice points in this direction. In Canada, provinces decide on the permissibility of gambling, while the federal Parliament uses its criminal law power only to address national harms; attempts by provinces to regulate internet infrastructure itself, such as Quebec’s ISP-blocking law, have been struck down as intruding on federal telecom jurisdiction. In Australia, the states continue to license and regulate local wagering, but federal law polices offshore casinos and interstate exchanges. And in the European Union, the Digital Services Act sets common obligations for platform safety, yet deliberately leaves the choice of whether to allow online gambling to the member states. Each system accepts that some centralised guardrails are indispensable, but equally insists that local autonomy over substance must be preserved.
In practice, this means Parliament may validly set standards for how gaming wallets interact with payment systems or how foreign websites are filtered, but it cannot use those tools to collapse the constitutionally recognised distinction between skill and chance, or to substitute its own judgment for the States’ on whether gambling itself should be permitted. The line is not perfectly neat, and some overlap is inevitable, but the burden of justification must lie with the Union when its regulations effectively negate the State’s substantive authority. This ensures that federalism adapts to the platform age without becoming a charter for unchecked centralisation
IV. Conclusion
The Online Gaming Act, on its face, is an innocuous, well-intentioned act. But beneath that surface, it reveals a deeper constitutional shift, where the Union uses the internet as a lever to redraw federal boundaries. The Government has already heightened these anxieties by initiating take-downs of multiple real-money gaming apps using the IT Act. This move risks hollowing out the State List not by amendment, but by technological re-description. If unchecked, the same logic will extend beyond gaming to liquor, transport, education, and every other domain with a digital footprint. Doctrines born in a territorial age cannot answer this challenge. What is required is a principled recalibration: States must retain control over the substance of activities, while the Union limits itself to regulating the digital rails and genuine cross-border externalities. Anything more would undo the careful balance that has marked Indian federalism since 1950.
Baibhav and Shashin are 3rd-year students at NALSAR.
[Ed Note: This piece was edited by Jeetendra Vishwakarma and published by Vedang Chouhan from the Student Editorial Team.]
