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Sikkim is India's only state offering online gambling licenses and its first state to pass online gaming legislation, which it did in 2008. The state legalized betting on sports in early 2010 and received nine Letters of Intent (LOI) from operators seeking licensing. No state-sanctioned online gaming is actually taking place in Sikkim, due in part to the central government's introducing the Information Technology (Due diligence observed by Intermediaries Guidelines) Rules 2011, which charged Internet companies with preventing the spread of various socially undesirable material, including racism, child pornography, and anything "relating to or encouraging money laundering or gambling."

In 2002, Sikkim granted a license to Playwin to run its state lottery. It is the officially sanctioned online lottery and the only one of its kind in the country. The state revenue from lottery sales surged from 1% to over 20% once the lottery was played online. Players can play from their mobile phones and from computers countrywide. Exclusively operated by Pan India Network Ltd., Playwin Lotto Games accepts bets from players nationwide, making Playwin unique among India's otherwise localized legal gaming activities and worth more than 50 billion rupees (1.12 billion USD) in annual revenues.

Case law surrounding skill games has been contradictory at best. While courts have maintained that it is legal for Indians to wager on skill games – one court even found poker to be a game of skill – various state courts have ruled that it's illegal to offer skill games for wagering in an organized fashion.

With the IT Due Diligence Rules 2011, it seems that any content relating to online gambling is prohibited and access to such content may be blocked. Payment gateways for gambling websites are also blocked by the Reserve Bank of India, making it difficult to start online gambling operations.

In 2015, Sikkim attempted to pass legislation that would allow the state to offer online gambling throughout India, but the Union Home Ministry denied that attempt.
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