Summary: Promotion And Regulation Of Online Gaming Act, 2025

TLDR:The Indian government has passed Promotion and Regulation of Online Gaming Act 2025 (the Act).The Act applies to all online money gaming services offered in India, whether by domestic providers or foreign operators. The Act outrightly prohibits all online money games (OMGs), ads related to them and any facilitation by financial institutions for the transfer of funds within/through such games. This is irrespective of whether they are games of skill or games of chance. There is no licensing or registration process for online money games to operate in India within the ambit of the Act.

Next Steps:While the President hasassentedto the Act, the Government has yet to notify its commencement in the official gazette. In the interim, it isreportedlydrafting Rules (delegated legislation under the Act) to operationalise the proposed Authority and to promote e-sports and online social games. Additionally, the government will share FAQs and some guidance to assist companies with a smooth transition. At ameetingwith Union Minister for Electronics and Information Technology Ashwini Vaishnaw, online real-money gaming federations and companies were assured that the Government intends to leverage India's gaming ecosystem and infrastructure to position the country as a global hub for online gaming—including the development of Indian-made AAA titles and enabling Indian companies to offer online real-money gaming services in foreign markets.

The Act has also been challenged on constitutional groundsbeforethe Karnataka and Delhi High Courts. The Supreme Court has nowtransferredthese matters to itself, directing their transfer to be completed within a week, after which it will fix a hearing date.

Highlights of the Act:

1. Promotion of certain online games:The Act allowse-sports(Section 2 (c)), which are explicitly exempted from the ambit of prohibition and will be promoted by the Government through measures such as guidelines, training academies, research centres, and integration into broader sports policy. The Act also allowsonline social games, defined underSection 2 (i), which do not involve monetary stakes or rewards but may allow access through a one-time subscription or access fees, provided these payments are not wagers; these games are intended purely for entertainment, recreation, or skill development.
2. Prohibition of OMGs (i.e., real money games):The Act places acomplete prohibition on online money games(Section 5).It bans any person offering, aiding, abetting or inducing the offering of such games, and prohibits any advertising(Section 6). It also prohibits any financial institution or entity from facilitating or authorization of funds towards payments in online money games(Section 7).Importantly, there is no process of registration or licensing that will enable any online money game to operate in the country.
3. Penalties for offences related to OMGs: Offering or providing access to online money games can attract imprisonment of up to three years or fines of up to INR 1 crore (Section 9 (1)). Publishing or causing advertisements of such games can result in up to 2 years' imprisonment or fines up to INR 50 lakh(Section 9 (2)). Facilitating fund transfers for these services can draw up to 3 years' imprisonment or fines up to INR 1 crore(Section 9 (3)). Repeat offences carry harsher punishment, for operators and facilitators, three to 5 years' imprisonment and fines between INR 10 to 20 lakh(Section 9 (4)); and for repeat advertising offences, 2-3 years' imprisonment and fines between INR 5 to INR 10 lakh(Section 9 (5)).
4. Establishing oversight:The central government may establish an authority (Authority) to assist it in performing the functions under the Act and overseeing the sector. This may either be a new authority, or an existing authority or agency.(Section 8). This Authority, based on the direction of the government, can decide, either on applications or on its own motion, whether a particular online game is categorised as an OMG and hence must be prohibited(Section 8 (2) (a)). It will also be responsible for recognising, categorising, and registering online games(Section 8 (2) (b)). The details of these processes will be framed by the Central Government through rules (Section 19(2)(c). The Central Government may also empower the Authority through rules to encourage e-esports and online social games (Section 19(2)(a) – (e)).
5. Blocking of OMGs:The Act expands the scope of Section 69A and allows for any OMGs that is prohibited to be blocked using the Section 69A powers under theInformation Technology Act, 2000.The Union Government is empowered to make rules to operationalise the law.
6. Official rationale provided for the Act:Through this Act, the Government of India aims to harness India's immense IT talent, encourage Indian creativity and innovation, and support potential participation in global tournaments (e.g., e-sports), while also tackling the presence of bad actors such as offshore betting platforms, and the possible harms (e.g., addiction, financial loss leading to suicides) of unchecked online money gaming in India. The Act acknowledges that unregulated use of money and cryptocurrencies poses financial and national security risks, adding that entities are circumventing Indian data protection, tax and other legal obligations. The Act also acknowledges the employment generation potential for the online gaming industry, if it is passed. The government has also addressed its legislative competence over the subject on grounds of public interest, risks to public health, consumer safety, public morality and financial sovereignty.

What does it mean for India's gaming sector?

Approximately86%of the industry's revenue is driven by companies providing OMGs (2024). The Act outrightly banning OMGs will shake up India's online gaming landscape and require companies to pivot to other revenue models and game offerings, that are compatible with the Act. The Act is also intended to prevent companies from profiting off Indians, and to protect mental health and financial risks to players. Therefore, even the permitted games will have to be designed, developed, and published with that yard stick in mind. It also effectively cuts off tax revenues and economic growth resulting from such games. The country's Unified Payment Interface is already seeing adeclinein transaction values because of this ban, with many companies in the industryshutting off accessto its OMG offerings. There is ongoing litigation to challenge the constitutional validity of the Act, with the Supreme Court of Indiatransferring3 petitions in High Courts to itself. However, the Act does provide some clarity for operators providing e-sports and online social games, with powers for the government to encourage these sectors.

Opportunities for India's gaming sector resulting from the Act:

• Promotion of e-sports and Social Online games:The government is keen to encourage these game segments, with the Act enabling it to do so. The Act empowers the government to recognise and support such games with training academies, tournaments, and research centres. In addition to these measures, the government should release an FAQ and clarificatory statements on what games and game features are legal. These clarifications should be done in close consultation with game developers and publishers who understand the various game mechanics, revenue streams, and app features. The government can organise online gaming showcases, summits, and investor events to connect local developers with global investors. These events can be of a scale and impetus like the global investor summits (e.g.,Invest UP) or theWAVES summitearlier this year in Mumbai. The government must partner with industry bodies, and back such events from the top to demonstrate their backing of these online gaming segments with global and local investor community.
• India's game studios:The Indian industry has invested in building culturally relevant IP in local languages, through Indie studios and AAA studios. Arjuna Studios, Dunali Games, Niku Games, ReDimension Games and Shura Games are examples of indie studiosdevelopingIndian mythology and history-based games. Mayhem Studios (buildingUnderworld Gang Wars– a mobile game with local mafia themes), Nodding Heads (building mobile gameRaji: An Ancient Epic), n-Core (buildingFAU-G Domination), and Goldon Studios (buildingRage Effect: Mobile) are some of the AAA game studios in India. These Indie and AAA studios in India could absorb the talent losing jobs because of the Act. These AAA studios are alsodrivinghiring in the industry. Funding such studios would support hiring, to fuel India's local game development.
• Made in India OMGs for the global market:The Indian government is reportedly open to allowing Indian companies making OMGs for offering in global markets. OMG companies will need to investigate whether their formats and game infrastructure can be used to provide games for different sports.

Implications of the Act for other technology policymaking in India:

The Act was pushed through Parliament with minimal debate, and after ignoring years of court precedents, policy literature, and industry calls for public consultations. For example, the Department of Consumer Affairs wasreportedlynot consulted before the bill was introduced in Parliament. The absence of process, rather than the ban itself, is unsettling for investors. The ban on OMGs is also unnerving because the government had actively championed the sector till this Act. The gaming industry was not a fringe sector, with the government seeding and nurturing it through various policy initiatives such as setting up anAVGC Taskforceand positioning the sector as akey componentof Digital India. By adopting such a hurried and brash approach, the government has opened the door to fears of overnight regulatory whiplash in every sector. This government's approach towards this sun rise sector, will make it difficult for investors to trust commitments made in other sectors, especially in newer innovative sectors.

Emerging Questions and Implications:

1. How does this Act impact the offering of online games in India?

If you are offering online games that involve staking or wagering of money, coins, or other items of value (whether real or virtual), where users can expect to win or be enriched, you will no longer be able to offer your games in India. This is irrespective of whether your game is considered a game of chance or game of skill. The Act prohibits banks and other organizations from facilitating payments and prohibits you from advertising your games online or on other media platforms. If you do not stop offering your game in India, the government can issue a blocking order to prevent access to your game and pursue prosecution against you and responsible officials in your company.

If you are an online game that is subscription based, or allows game play with a tournament fee, or is a game considered by the Act as an e-sport, you can continue to offer your game. You can offer your game if it does not involve monetary stakes or rewards and can be accessed through a one-time subscription or access fees where the games are intended purely for entertainment, recreation, or skill development. Such games are considered as "online social games" according to the Act.

Free-to-play games are not affected by this Act. In-app purchases may be allowed if they are for use within the game (i.e., for purchasing in-app gear for playing the game) but not for use outside of the game (e.g., real money winnings that can be withdraw, or vouchers to be re-imbursed on e-commerce platforms).

2. Does the outright prohibition on online money games mean there is no possibility of licensing or exemptions in the future?

Yes. As the Act reads currently, online money games will be banned outright. Online money games cannot be offered, aided, abetted, induced, or otherwise by any person.

The Central Government or the Authority created under the Act can on its own or when applied to by any person, determine if a game is an online money game or not.

3. Will games that are currently marketed as "skill-based" but involve entry fees be banned immediately upon notification?

If the game does not involve winnings for the users, and staking or wagering by the users, but has an entry fee, it may be permitted. But if users pay an entry with an expectation of winning, this is prohibited even for skill-based games.

4. What is the appeal or review mechanism if the Authority categorises a game as an "online money game"?

There is no explicit appeal/ review mechanism. It is possible that this mechanism is created through subsequent rules. In the absence of an explicit appeal/review mechanism, it would be possible to approach courts in their writ jurisdiction.

5. How do I know if my game is an "e-sport" under the Act?

To be considered an e-sport, you must meet all six criteria laid out in the Act. The criteria are (a) your game is played as part of a multi-sports event; (b) your game involves organized competitive events between individuals or teams and are conducted in multiplayer formats governed by pre-defined rules; (c) your game is registered with the authority or agency under the National Sports Governance Act 2025; (d) the outcome of game is determined solely by factors such as physical dexterity, mental agility, strategic thinking, or other similar skills of users; (e) your game may include payment of registration/ participation fees for the purpose of entering the competition or covering administrative costs including prize money; and (f) your game does not include wagering, staking, or betting.

If your game is not part of a multi-sport event, then it may not be considered an e-sport. Therefore, if there are competitions organized for a single game (e.g., Chess), the game may not be considered an esport under the Act.

6. What happens to opinion trading platforms?

Opinion trading platforms will likely be prohibited by the Act, because they will be treated as online money games and there is no carve-out for games of skill.

7. Will the Authority be an independent regulator?

The Act does not establish the Authority as an independent statutory regulator. Instead, it empowers the Central Government to either create a new authority or designate an existing agency to assist in implementing the law. The functions, powers, and scope of the Authority are left to the discretion of the Central Government, which will be prescribed through rules or notifications (Section 19(2)(d)). This means the Authority will operate as an extension of the executive, rather than as an autonomous regulator.

8. Will the Authority's registration framework for social games and e-sports be available before prohibition takes effect, or will there be an interim period of uncertainty?

If an online game falls within the definition of e-sports or online social games, it can continue to operate. There is currently no mandatory registration requirement with the Central Government, although such a requirement could be introduced later through rulemaking. Importantly, the Central Government or the Authority on its behalf, can examine the classification of a game either suo motu or in response to a user complaint to determine whether it is an online money game.

9. How will the Act impact foreign operators providing online gaming into India without a local presence?

The Act applies(Section 1(2))to both Indian companies and foreign companies offering online games within the territory of India, irrespective of whether they have a local presence in India.

10. Does the Act impact any other games?

The Act empowers the Authority to respond to complaints about online games which are prejudicial to the interests of users. It is unclear what "prejudicial to the interests of users" will entail, but the preamble and statement of objects to the Act indicate that it will also tackle harms such as addiction, and suicides because of financial losses. It is likely that these harms will play a role in determining whether the online game is prejudicial to users.

11. How does this Act impact the applicability of other relevant laws?

The Act does not have a repeals and savings clause. However, it does state that the Act will be in addition to existing laws, and where there are conflicts between the Act's provisions and a state law, the Act will prevail.

This will lead to closure of online money gaming businesses in states (e.g., Tamil Nadu), which allow businesses who comply with the state's law (e.g., The Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022) to provide online money games.

12. How quickly after Gazette notification will companies need to cease operations? Is there any grace period for winding down?

The Act does not reference a grace period. Therefore, in the current version of the Act, companies offering online money games will have to cease their operations on the date the Act is notified in the Official Gazette.

13. What happens to existing user balances (wallet money, credits, or prizes) once prohibition applies?

The current version of the Act does not provide a timeline for ceasing operations of online money games. Therefore, the treatment of existing user balances remains unclear, and as such can be an opportunity to engage with the government on an appropriate grace period for winding down operations or pivoting business models.

14. How will platforms and advertisers know whether a game is prohibited?

The Act bans advertisements of online money games, creating a proactive obligation on advertising and marketing companies, as well as platforms running ad programs, to ensure such ads are not carried. Since there is no licensing or classification system for permissible online money games, these entities will need to undertake their own due diligence to assess whether a game falls within the prohibited category. In effect, no advertising campaigns for online money gaming can be created, accepted, or delivered, and advertisers, marketers, online platforms, and influencers will bear responsibility for staying updated on the Central Government or Authority's classifications and decisions.

15. How will penalties apply to influencer marketing or endorsements of online games?

The Act penalises people for making or causing to make advertisements of online money games with fines up to INR 50 Lakh, up to 2 years prison sentence, or both. This will impact celebrities and influencers' marketing and endorsements as the Act applies to "any person"who is involved in the making of such ads.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.