- India’s gaming law covers crypto stakes, including Bitcoin, USDT, and tokens.
- Online gaming winnings are taxed at 30% under India’s current income-tax law.
- India raised GST on betting and online money gaming from 28% to 40% in 2025.
Using Bitcoin, USDT, or another token at an offshore gambling site does not place an Indian player outside the country’s gaming framework. Since May 1, 2026, the Promotion and Regulation of Online Gaming Act, 2025, and its implementing rules have applied nationally.
The law defines an online money game as one involving skill, chance, or both, where users stake money or something convertible into money. That includes virtual credits, coins, and tokens, while offshore services offered to users in India are also covered.
Therefore, crypto casinos can fall within the prohibition even with foreign licenses, digital-asset payments, and no Indian payment gateway.
Why Crypto Payments Do Not Bypass India’s Gambling Laws
The legislation focuses on the nature of the game and the value being staked, rather than whether payment uses rupees, Bitcoin, stablecoins, or another digital asset. Accordingly, Section 5 prohibits the offering of online money games.
Section 7 then extends the framework to payments by prohibiting banks, financial institutions, and other persons from facilitating prohibited transactions or fund authorizations. In addition, Section 9 allows imprisonment of up to three years, a fine of up to ₹1 crore, or both for contraventions involving Section 7.
Offenses under Sections 5 and 7 are cognizable and non-bailable. However, the law does not state that every person who places a wager automatically faces the maximum Section 9 penalty.
As a result, a direct transfer from a self-custody wallet creates a more fact-specific legal question. The central issue is whether sending personal funds directly to a casino amounts to facilitating a prohibited payment under Section 7.
At the same time, state gambling laws can remain relevant as the national legislation operates alongside other applicable laws. Meanwhile, constitutional challenges to the national framework remain before the Supreme Court, with hearings scheduled for October 6 and 7, 2026.
How Casino Winnings Can Trigger Multiple Tax Liabilities
Under the Income-tax Act, 2025, effective April 1, 2026, net winnings from online games are taxed at 30%. The calculation considers deposits, withdrawals, and opening and closing gaming account balances.
Therefore, withdrawing ₹1 million does not automatically mean the entire amount is taxable when part represents deposited funds. Moreover, an offshore operator may not follow Indian withholding procedures, but that does not remove the resident player’s underlying tax obligation.
Basically, income from transferring virtual digital assets remains taxed at 30%, generally allowing acquisition cost while denying loss set-offs and carry-forwards. For example, Bitcoin bought for ₹500,000 could appreciate before a player transfers it to a casino for gaming credit.
If that transfer constitutes a VDA disposal, the appreciation can potentially create a separate taxable gain before gambling winnings are calculated. However, the 1% VDA TDS rule should also be distinguished from ordinary blockchain transfers.
Section 393 applies withholding to consideration paid for a VDA transfer, so simply moving assets between wallets does not automatically trigger 1% TDS. Nonetheless, if casino proceeds are later sold through an Indian exchange, normal VDA reporting and withholding procedures can become relevant.
How 40% GST Applies to Offshore Online Gaming Platforms
India increased GST on betting, casinos, gambling, lotteries, and online money gaming from 28% to 40%, effective September 22, 2025. The valuation rules also cover amounts deposited with gaming suppliers, including deposits made using virtual digital assets.
Therefore, using crypto does not allow operators or users to bypass the gaming GST structure. For ordinary players, however, the 40% levy is primarily a supplier-side GST obligation rather than an additional 40% personal income tax on winnings.
Moreover, overseas online money-gaming suppliers serving Indian customers must register under the applicable GST framework. As a result, an offshore platform can still face Indian GST obligations even when it accepts only digital assets.
Importantly, GST compliance does not determine whether the underlying gaming activity is lawful. A platform can therefore face tax obligations while its services remain restricted under India’s gaming legislation.
Why Casino Withdrawals Can Trigger AML and FEMA Checks
Beyond gaming and tax rules, additional compliance issues can emerge when gambling proceeds return to a regulated Indian exchange. FIU-IND’s January 2026 guidelines require VDA service providers to examine customers’ source of funds and monitor transaction origins and destinations.
Accordingly, providers must review unusual crypto-to-crypto and crypto-to-fiat activity and file suspicious transaction reports when appropriate. For example, a player could receive USDT from an offshore casino and later transfer those tokens to an Indian exchange.
At that stage, the exchange could request transaction hashes, wallet histories, gaming statements, or other source-of-funds evidence before processing further activity. However, such a review does not automatically establish money laundering, nor are casino-linked assets automatically confiscated.
Regulators have nevertheless shown that offshore gaming payment trails can attract scrutiny. In March 2025, DGGI said it blocked 357 illegal or non-compliant offshore gaming URLs and attached nearly 2,000 related bank accounts. Similarly, FIU-IND issued non-compliance notices to 25 offshore VDA platforms in October 2025, including BC.game.
Banks and financial institutions must also continue applying KYC, AML, counter-terrorist-financing, and relevant FEMA requirements. Even so, not every direct crypto transfer to an overseas wallet automatically constitutes a FEMA violation.
Instead, the legal and compliance outcome can depend on the payment structure, intermediaries, source of funds, and broader cross-border circumstances. For Indian users, Bitcoin or USDT changes the payment method, but not the legal character of the gambling activity.
As a result, deposits can create gaming-law exposure, winnings can trigger gaming and VDA taxes, and withdrawals can lead to AML, banking, or cross-border compliance reviews.
Users who have transferred significant amounts should therefore preserve wallet addresses, transaction hashes, exchange records, gaming statements, and INR valuations for legal and tax review.
Related: India’s GDP Is Booming at 7.8%: So Why Aren’t Nifty and Sensex Rallying?
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