Indian gaming company A23 has challenged the government’s ban on online money-based games, a legal filing shows, in the first case against a law that led to the sudden shutdown of popular contests and has thrown the industry’s future into doubt.

Prime Minister Narendra Modi’s government issued a law last week to ban such games, which the industry says rely on skill and are therefore not gambling. Gambling was already highly restricted in India.

The legislation is a setback for an industry backed by venture capital firms such as Tiger Global and Peak XV Partners, and that was on track to be worth $3.6 billion in India by 2029, according to industry estimates.

In a court filing at the High Court of Karnataka in southwestern India, A23, which offers rummy and poker games, said the law “criminalises the legitimate business of playing online games of skill, which would result in the closure of various gaming companies overnight”, a Reuters report from New Delhi stated yesterday.

The new law is a “product of State paternalism”, A23 added in its filing, asking it to be declared unconstitutional when applied to games of skill such as rummy and poker.

The filing, dated August 28, is not public but was reviewed by Reuters. India’s IT Ministry did not immediately respond to queries. A23.com describes itself as an online gaming platform with more than 70 million players.

Endorsements by leading Indian cricketers and other marketing efforts have boosted the appeal of apps such as Dream11 and Mobile Premier League, where virtual cricket teams are created based on real players, earning points on runs, wickets and catches. Both apps have discontinued their money games after the ban.

MPL has decided to not pursue a legal challenge against the gaming law, and also advised industry bodies to which it belongs to focus instead on free-to-play business models, a senior source at the gaming company told Reuters. The source asked not to be named because they were not authorised to speak publicly on the issue.

Dream11 will also not challenge the law, though “95 percent of our group’s revenues have disappeared overnight,” its CEO Harsh Jain told CNBC TV 18 this week.

MPL did not respond to Reuters queries, while Dream11 said it plans to “build a great Indian sports company, driven by AI and the creator economy”.

Modi’s government has repeatedly expressed its unhappiness over money-based games, saying they cause addiction. In announcing the law last week, it said it had a duty to act against “social evils”.