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RMG Gaming Apps To Come Under PMLA?

The Union Government is reportedly finalising a proposal to bring online real-money gaming platforms like Dream11, Games24x7, and Winzo under the ambit of the Prevention of Money Laundering Act (PMLA). According to this report, this move is intended to enforce Know Your Customer (KYC) norms and enable the monitoring of suspicious financial transactions.

The proposal, led by the Ministry of Finance, could designate these companies as “reporting entities” under the PMLA. As per the Act, reporting entities are subject to specific record-keeping and reporting responsibilities similar to those of financial institutions.

Reporting entities under the PMLA can include a wide range of individuals and institutions, from banks and financial intermediaries to those engaged in designated businesses or professions.

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Under the PMLA, a reporting entity is obligated to share client and transaction information with the Ministry of Finance’s intelligence unit. It must also fulfill requirements such as maintaining records of transactions, identity documents of clients and beneficial owners, as well as account files and business correspondence related to its clients.

If brought under the purview of the PMLA, online gaming firms would be required to adhere to the standards set by the global money laundering watchdog, the Financial Action Task Force (FATF), and comply with anti-money laundering and counter-terrorism financing (AML/CFT) regulations.

The Indian gaming and real-money gaming (RMG) industry is currently grappling with a series of regulatory and financial challenges. One of the major issues stems from the stringent measures introduced by the Tamil Nadu government, which has implemented rules such as mandatory two-factor authentication for players and restrictions on gameplay during night hours.

These measures are aimed at curbing addiction and ensuring user safety but have added significant compliance burdens for gaming companies. In addition to state-level regulations, the central government’s taxation policies have also hit the industry hard.

The imposition of a 28% Goods and Services Tax (GST) on deposits—rather than on platform fees or net earnings—has significantly impacted the revenue model of RMG platforms. This high tax rate has led to a wave of layoffs and, in some cases, the complete shutdown of smaller companies unable to absorb the financial strain.

Together, these regulatory and fiscal pressures are creating an uncertain environment for both investors and operators in the sector. While the government’s intent may be to protect consumers and prevent misuse, industry stakeholders argue that a more balanced and clear regulatory framework is necessary to ensure innovation, fair play, and the sector’s long-term sustainability. It now remains to be seen how these aspects play out in court.

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