We use two-color pump-probe spectroscopy to study Rydberg excitons in CuO in the presence of free carriers injected by above-band-gap excitation. Already at plasma densities below one hundredth electron-hole pair per \textmu m, the Rydberg exciton absorption lines are bleached while their energies remain constant, until they finally disappear, starting from the highest observed principal quantum number . As confirmed by calculations, the band gap is reduced by many-particle effects caused by free carriers scaling as . An exciton line looses oscillator strength when the band edge approaches the exciton energy vanishing completely at the crossing point. We quantitatively describe this plasma blockade by introducing an effective Bohr radius that determines the energy distance to the shifted band edge. In combination with the negligible associated decoherence this opens the possibility to control the Rydberg exciton absorption through the plasma-induced band gap modulation.

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