Promotion and Regulation of Online Gaming Sector in India : What It Means for India’s Gaming Industry

Introduction

For years, India’s online gaming story has been two parallel plots: explosive growth, and equally loud concerns around addiction, misleading ads, and regulatory grey zones.

The push for reforms comes in the wake of increased cases of addiction, financial ruin and social distress caused by gaming platforms through their aggressive, almost predatory advertisement.

On August 2025, the President of India gave assent to The Promotion and Regulation of Online Gaming Bill, 2025. The law bans money-staked online games, regardless of involvement of skills or chance and departs from the well-established jurisprudence on the difference between ‘games of skill’ and ‘games of chance’. However, the legislation explicitly backs e-sports and social/educational gaming. In policy terms, it’s a reset. It is less “game over,” and more “new level unlocked,” with different rules.

The Online Gaming Sector in India

From Conflict Strategy to Courtroom Resolution

Before the reset, India had already become one of the world’s biggest gaming markets. Reports peg the base at ~590 million gamers in FY24, with industry revenues of ~3.7 billion USD in 2024 and projections of ~9 billion USD by 2029. The online gaming sector also got a boost with mobile-first consumption and creator-led streaming. This revenue, however, leaned heavily on online money gaming (OMG), the very segment the Act now shuts down.

Previous Attempts at Regulation

This ban didn’t come out of nowhere; it caps years of fragmented moves:

• States vs platforms: Multiple states tried to curb or ban money-staked online games, triggering litigation and inconsistent outcomes.

  
  

• MeitY’s IT Rules amendments (2023): Introduced “self-regulatory bodies” for permissible games and due-diligence duties for gaming intermediaries.

  
  

• GST at 28%: A fiscal hammer that changed unit economics without resolving underlying legality.

Salient Features of the Online Gaming Act

What does the law actually do?

Blanket ban on “online money games.”

• If a player pays money or other stakes (including convertible tokens/credits) in expectation of monetary or similar enrichment, it’s prohibited.

  
  

• The ban extends to offering, facilitating payments, and advertising such games. Offences are cognizable and non-bailable with jail terms and steep fines.

Backs non-wagering gaming.

• The Act instructs the Centre to recognize and promote e-sports and social/educational games, including event standards, training academies, and incentive schemes.

• The Online Gaming Act provides for the designation of an authority (Authority) to regulate online gaming and e-sports.

• The Authority will register, classify and regulate Online Social games and will have the adjudication power for determining whether an online game is an online money game or otherwise.

Classification of games

Online Money Game: Online games that: (a) may be based on skill or chance, (b) involve payment of fees, deposit of money or other stakes (i.e. anything equivalent or convertible to money), in expectation of winning monetary enrichment or other stakes, and (c) are not E-sports.

E-sports: Games played as part of multi-sport events involving multiplayer competitive formats governed by defined rules. Registration of e-sports under the National Sports Governance Act 2025 is mandatory. These games are skill-based and may include participation fees and/ or performance-based prizes, but do not involve betting or staking.

Online Social Game: Games offered solely for entertainment, recreation, or skill development purposes, which do not involve bets, wagers, or monetary stakes, although they may include participation fees that are not in the nature of a stake or wager.

Impact: The Shock and the Openings

Short term. There’s no sugar-coating it: this is an existential hit to OMGs. Sponsorships are being unwound, and investor appetite for OMG-first models has cooled. Even marquee deals in cricket are being revisited in light of the Act’s prohibitions on advertising and association with banned games.

Employment & investment. Industry commentary warns of job displacement across studios, adtech, sports marketing, event ops, and payments. VCs are reassessing valuations built on OMG revenue. In the near term, expect down-rounds, stalled term sheets, and some strategic exits.

Regulatory overhang. The Act centralises policy, but state laws and past bans still exist so some companies worry about “double regulation” until courts and rules clarify the center–state balance.

Consumer behaviour risk. Demand won’t vanish; it may shift offshore to unregulated apps unless enforcement coordinates tightly with app stores, ISPs and payment rails. That could undercut the very consumer-protection aims of the law.

Medium term. The upside is clarity. With the money-stake perimeter drawn, capital can flow into formats the law explicitly promotes, e-sports, casual/social, educational, and studios can build for the long term without second-guessing legality.

How the Industry Can Pivot: Real, Working Ideas

The winners will move from wagers to worlds, from monetizing chance to

monetizing community, content, and capability. Practical pivots we’re

already advising:

E-sports leagues (no stakes needed). Franchise or city/college circuits funded by sponsors, media rights, merchandising, and streaming, not prize pools built on wagers.

Export-only OMGs (compliant structuring). Where lawful overseas, build for those markets under strict geofencing and AML/KYC, while keeping Indian ops compliant.

Freemium + microtransactions. Free-to-play with cosmetics, season passes, subscriptions. Build India specific IP mythology skins, cricket modes, Bollywood collabs.

Ed-tech gaming. Gamify coding, maths, languages, compliance; partner with universities and skill councils for certificate-linked gameplay.

Fitness & wellness games. AR step-challenges and wearable-linked goals with

insurer/fitness brand partnerships.

Metaverse/AR for culture & training. Low-cost AR heritage hunts (Hampi, Rajasthan forts) and enterprise VR training (aviation, healthcare, manufacturing).

Creator-led platforms. India’s “Twitch-style” verticals with tips, memberships, sponsorships and UGC tools for community-built maps/modes.

Gamification-as-a-Service (B2B). Sell your engine for employee training, recruitment, compliance and to brands for interactive campaigns, stable enterprise revenue.

Govt & CSR games. Co-design social-impact games (cyber-safety, financial literacy, climate) with ministries and CSR arms for predictable funding.

What to Expect Next

Courtroom tests. The trade bodies should consider the constitutionality of the new law on the basis of trade freedoms and proportionality, and scrutiny of search/arrest-without-warrant powers.

Capital reshuffle. Money moves from OMGs into e-sports/ edutainment/ casual; some OMG-native teams go overseas-first and keep India as a tech hub.

Consolidation & reskilling. Smaller studios without a pivot plan should look for opportunities to be acquired; talent redeploys into e-sports ops, AR/VR, and

enterprise gamification.

Rule-making & guidance. The Act is the skeleton; classification/registration rules and ad standards will supply muscle and tendons over the next few months.

Global positioning. If India manages the transition well, we can credibly style

ourselves as Asia’s hub for safe, skill-driven e-sports, not just a market of wagers.

Closing Thoughts

Policy has drawn a hard line and cleared the fog. If you build safe, skill-led, socially valuable experiences, India remains one of the most exciting gaming markets in the world. We should expect the great pivot towards ESports by the existing OMG platforms. The Online Gaming Act turns the page; the next chapter belongs to teams that convert compliance into competitive advantage.