Cryptocurrency Casinos and Indian Law: Legal Status, Enforcement Challenges and Player Risks

India has a rather complicated relationship with gambling. While an Act from over 150 years ago still covers the basics, individual states have had their own laws. In a country as diverse as India, this opened up significant grey areas, and that's where crypto casinos came in. All of that changed in August 2025 when Parliament passed the Promotion and Regulation of Online Gaming Act, 2025. This law imposes a complete ban on all online money games- whether skill-based or chance-based- with criminal penalties of up to three years' imprisonment and fines reaching ₹1 crore for operators.

In 2024, the global crypto gambling market reached $250 million . Twenty-five per cent of that comes from Asian markets driven by China, Japan and India. These figures suggest that a significant number of Indians are accessing offshore platforms. Despite the August 2025 Act, there are still enforcement challenges. While offshore crypto casinos continue operating through jurisdictional gaps and cryptocurrency payment channels, there's currently quite a stark disconnect between legal prohibition and operational reality.

Gambling Laws in India

India's gambling laws stretch back over a century and a half. While many states have had their own individual authority over these laws, grey areas remain throughout the country. This seems to be how crypto casinos were making their move. The new Act has cleared many of these grey areas, but there are still issues.

Gambling Laws Follow a 158-Year-Old Act

Most of India's gambling law follows an act that's over 150 years old. The Public Gaming Act 1867 prohibits the operation of physical gambling houses. As the act was created 130 years before the Internet came into being, there are obviously no provisions for online gambling or cross-border transactions- both contentious issues.

In 1950, the Constitution's Entry 34, List II (Seventh Schedule) came into effect and made gambling a state subject. While most states adopted the older act (often with amendments), some have enacted their own laws, yet only three Indian states have legalised casinos, with only one, Sikkim, previously offering online casino licenses. The new Act of 2025 changes everything.

What the 2025 Act Changed

On August 21, 2025, the Promotion and Regulation of Online Gaming Act was passed. Where there were initially grey areas about playing online games for money, primarily due to conflicting state vs central laws, everything is now extremely clear: there is a complete ban on all online money games, regardless of whether they're skill or chance-based.

The law applies to offshore platforms targeting Indian users, and there are penalties for any operators or advertisers, including up to three years in jail and fines of up to ₹1 crore.

Notably, the Act intends to curb the supply of illegal games, not punish users, meaning there are no penalties for players under this Act. However, there are still FEMA and tax laws that players breach when choosing to play online games- as discussed below.

How Indian Laws View Cryptocurrency

Cryptocurrency laws in India are reasonably new and in a state of creation. There are gaps in regulation that need to be filled, yet it's these gaps that casino players are using to their advantage.

Cryptocurrency Use in India

While India is the world's top country for crypto adoption, it's not recognised as legal tender. It can be held and traded, but not used for the purchase of goods and services domestically. The Indian Government doesn't support crypto as a payment method, and the heavy taxation ( 30% on gains + 1% TDS ) discourages merchant adoption.

Internationally, it's a different story. Crypto is widely used for international remittances, cross-border transactions and as a deposit option for offshore crypto casinos.

How Crypto Enables Offshore Casino Access

Crypto casinos operate on the premise that as long as they hold a licence- most commonly a Curaçao eGaming one- they can offer their platforms in whatever jurisdiction they like. Therefore, they can argue that as their platforms are physically located offshore, Indian laws don't apply to their operations. With no physical presence in India, there's no direct enforcement mechanism. While this assumption held steady for a number of years, the new 2025 Act negates it.

The Reserve Bank of India's (RBI) directives prevent Indian banks from processing offshore gambling transactions. That's one of the reasons players are turning to offshore crypto casinos. Crypto wallet-to-wallet transactions aren't governed by the RBI, and so they're not blocked. While the players may feel they've found a loophole, they remain subject to FEMA violations and tax obligations.

Legal Risks for Players Who Use Crypto for Gambling

While players may feel that they'll be fine when depositing to online casinos via cryptocurrency and bypassing bank transactions, there are other laws that they're violating.

FEMA Violations

The Foreign Exchange Management Act (FEMA) of 1999, through its Liberalised Remittance Scheme (LRS), states that Indian residents can remit up to USD 250,000 per financial year abroad, provided it is for approved transactions such as education, medical expenses, travel, investment and gifts. Gambling, however, is strictly prohibited under LRS, and FEMA violations carry penalties up to three times the amount remitted or ₹2 lakh. Players are choosing crypto casinos as they can use their crypto wallets to fund gambling, believing they're bypassing FEMA scrutiny. Detection is difficult due to the pseudonymity of blockchain transactions, so enforcement against individual crypto gamblers is rare.

Tax Obligations and Self-Incrimination

Here's where it gets even more challenging for those prepared to play at offshore crypto casinos. Under Section 115BB of the Income Tax Act, 1961, winnings from gambling are subject to a flat 30%. This provision applies to all gambling winnings regardless of payment method, including winnings from online casinos that accept ADA , Bitcoin and Ethereum.

The players put themselves into a precarious legal position. For starters, the tax obligations exist regardless of where the funds were sourced. If players comply with this tax law, they'll incriminate themselves under their relevant state laws. Until recently, there was no guidance from authorities on how to navigate this conflict; the new Act makes it clearer- players should avoid offshore platforms entirely.

Another way that players may inadvertently incriminate themselves is by approaching the Indian courts for disputes with offshore platforms. Doing so requires admitting participation in a federally prohibited activity. This jurisdictional vulnerability leaves players with zero remedies if platforms refuse payouts, manipulate odds or simply disappear with deposits.

Enforcement Challenges for the Indian Government

While the 2025 Act attempts to block any online gambling use, crypto or otherwise, the premise is solid, but enforcement faces challenges.

Jurisdictional Challenges

The online crypto platforms that Indian players access are all based offshore. These platforms, licensed under Curaçao, Malta or Gibraltar, don't have a physical presence in India, so they can't face prosecutions as Indian law can't reach foreign entities. While the 2025 Act applies to them legally, there is no real enforcement mechanism.

Technical Gaps that Make Enforcement Challenging

Section 69A of the Information Technology Act, 2000, empowers the Indian government to block sites and apps. As such, over 1,500 gambling sites have been blocked since 2022. It's not a permanent solution, though, as some platforms, even when blocked, resurface using mirror domains like .bet or .games, creating an ongoing enforcement challenge.

Meanwhile, Indian players have found a way to access them. VPN use is legal in India, so they're actively using a legal tool to access offshore gaming platforms. The underlying activity still violates state laws. The government has a limited ability to detect VPN use, so instead, the focus remains on blocking platforms, not prosecuting players.

The Current State of Crypto Casino Use in India

Prior to the August 2025 Act, there were numerous legal grey areas regarding online casino use. The act has created a comprehensive federal prohibition on all online money games.

However, the gap between legal clarity and operational reality remains, as enforcement limitations persist due to jurisdictional and technical reasons.

While offshore platforms remain beyond reach, cryptocurrency transactions enable circumvention. For now, it appears that players will continue participating despite clear prohibition and the multiple layers of legal exposure.