09 Sep 2025
The Online Gaming Act, 2025 seeks to open opportunities for e-sports and online social games while shutting down online money gaming (irrespective of whether such a game is skill or chance based). This update discusses what this means for various stakeholders in the gaming ecosystem, such as providers of online money games and online social games, e-sports organisers and providers, intermediary platforms, influencers, advertisers, and payment processors.
Partners: Rahul Matthan, Nikhil Narendran, Jyotsna Jayaram, Jaideep Reddy, Jishnu Sanyal, Counsel: Thomas Vallianeth, Senior Associate: Madhav Tampi, Associates: Archita Sharma, Paarth Samdani and Anushka Gupta
In a significant move, the Indian Government has enacted the Promotion and Regulation of Online Gaming Act, 2025 (Online Gaming Act), creating a national-level legal framework to regulate online games in India. While the Online Gaming Act was published in the Official Gazette on 22 August 2025, it is yet to come into effect (although the Government reportedly intends to implement it in the coming months). Until then, the existing fragmented gaming law regime will continue. However, in anticipation of the new law, several leading real-money gaming operators have already stopped their online money game offerings.
The implications of the new law for the online gaming industry and its stakeholders are explored below.
The Online Gaming Act applies to all online games offered to users in India and has also been expressly made applicable to the offshore online money gaming operators.
The Online Gaming Act classifies online games into three categories:
The Online Gaming Act regulates each of the above categories differently. It prohibits all online money games. At the same time, it seeks to promote and develop: (i) the e-sports sector, including through the introduction of guidelines, standards of conduct, and incentive schemes designed to foster innovation and creation of e-sport technology platforms; and (ii) online social games, including by facilitating the creation of platforms or programmes that encourage the development and distribution of such games.
The prohibition on skill-based online money games marks a significant departure from established judicial precedent. Courts have consistently held that games involving a preponderance of skill over chance do not constitute gambling and are constitutionally protected. Blanket bans by State Governments on such games have previously been struck down as disproportionate (among other reasons), especially when less restrictive alternatives could address the purported harms sought to be addressed through the prohibition.
Importantly, the Act applies only to online games. Offline skill-based games where users pay to play and can win monetary rewards remain permitted under various state laws. This creates an inconsistency, where the same game may be legal offline but illegal online, despite posing comparable risks.
There is also uncertainty about whether the Central Government has the legislative authority to regulate such games. Chance-based online money games clearly fall within the States’ exclusive power to regulate betting and gambling. However, the position regarding skill-based online real money gaming is ambiguous. The Central Government may assert its legislative competence on grounds such as public interest, national security, inter-state trade, and the need to regulate offshore gaming activity. However, this could be seen as infringing on the State Governments’ authority to regulate sports, entertainment, and amusements. Some gaming operators have already challenged the Online Gaming Act on constitutional grounds before the High Courts of Karnataka, Madhya Pradesh, and Delhi with respect to its provisions on online money gaming. The Supreme Court, based on a petition from the Central Government, has ordered the transfer of the above cases challenging the Online Gaming Act to be heard before the Supreme Court. It has also directed that any fresh petitions challenging the Act should be filed directly before the Supreme Court.
The Online Gaming Act also expressly bars:
Such prohibitions may extend across the gaming ecosystem, impacting distributors and other intermediaries with partnerships in the gaming sector. Non-compliance could attract stringent penalties, including imprisonment of up to 3 years and fines up to INR 1 Crore (~USD 115,000), with heightened consequences for repeat violations.
The Online Gaming Act will establish a dedicated regulator called the Online Gaming Authority. This could be a new body or multiple bodies (especially for e-sports as part of multi-sport events, which fall under the Ministry of Youth Affairs and Sports) or an existing agency. Once established, the Online Gaming Authority will have the power to, among other things, determine whether a game qualifies as an online money game, register and categorise online social games and e-sports, and handle grievances in relation to online games. Both the Central Government and the Online Gaming Authority can issue directions to anyone involved in facilitating an online game. This could potentially bring gaming ecosystem players, such as advertisers, influencers, intermediaries, and payment processors, directly within the regulatory scope. Non-compliance with such directions is punishable with penalties up to INR 10 Lakh (~USD 11,000), and potential restrictions on offering, facilitating, or promoting the relevant online games (as applicable).
Authorised officers have sweeping search and seizure powers that may be exercised without a warrant in case of reasonable suspicion of an offence being committed. The Central Government may exercise its blocking powers under the Information Technology Act, 2000 (IT Act) in relation to non-compliance with online money gaming-related provisions.
Providers of real-money games will need to reassess their existing business models and explore next steps. With the ban, it seems clear that the Central Government is no longer considering the self-regulatory mechanism that was proposed in 2023 under the IT Act.
Given the wide definition of online money games, the prohibition may possibly also extend beyond conventional real-money staking formats to cover pay-to-play casual skill-based games with real-money rewards, certain types of in-game purchases, and loot boxes. Gaming service providers should accordingly assess their existing online game models that involve such elements.
The Central Government’s effort to recognise e-sport as a legitimate form of competitive sport and foster growth in this domain is laudatory. That said, the definition provided in the Online Gaming Act is narrow and may exclude certain types of online games which are ordinarily considered e-sports. For instance:
The Central Government will separately prescribe other e-sport compliances and any eligibility criteria for registration with the Online Gaming Authority. Organisers and developers should accordingly continue to engage with policymakers on these aspects, especially in light of the Act’s push to promote e-sports.
While one-time or subscription fees are allowed for accessing online social games, they must not include wagering or qualify as e-sports or online money gaming. For instance, pay-to-play or free-to-play games with no monetary or real-world value rewards may possibly fall within this category, rather than being classified as online money games. This may, however, require a case-by-case assessment, depending on the functionalities and features enabled.
Under the Online Gaming Act, all online social games (or certain categories) may require registration with the Online Gaming Authority. Imposing a blanket registration requirement for all online social games may be onerous and could potentially impede the sector’s development. The conditions necessary to obtain such registration and other compliances applicable to such games are also presently unclear. Industry stakeholders may accordingly consider liaising with the Central Government on these aspects for a balanced approach to regulating such games.
The advertisement of online money gaming has been prohibited across all media (including radio, television, offline campaigns, or the internet). The prohibition also extends to any other promotional activity. This will affect marketing campaigns featuring referral codes, gameplay showcases, coupons, affiliate links, etc., and may extend to advertising agencies, influencers, or even individual users who encourage such games. Such stakeholders may need to review marketing and other promotional content to ensure that it does not pertain to online money games.
The prohibition on online money gaming includes offering or otherwise indulging in or engaging in the offering of online money gaming, indulging in any activity promoting online money gaming, as well as facilitating payment transactions. Given this broad scope, intermediaries, and distributors (including app stores, live streaming platforms, social media platforms, OTT platforms, and ad-tech platforms) may need to consider enhanced monitoring controls in relation to online money games.
Financial intermediaries (i.e., banks and financial institutions, including payment intermediaries such as payment aggregators, gateways, wallet operators, card networks and other fintech platforms) are prohibited from facilitating payment transactions for online money games. To comply, they would therefore need to deploy strict gaming merchant onboarding controls, ongoing diligence, and transaction monitoring measures.
Existing arrangements with real-money gaming merchants should also be assessed to ensure smooth transitions for existing deposits and payouts for current users.
With the Online Gaming Act, the Central Government seeks to redefine the playing field – the prohibition on online skill-based money games hits at the heart of this industry and will have spillover effects into allied industries. The real test will lie in the interpretation and enforcement of the Act, with how aspects such as the implementation regime for e-sports and online casual games, the scope of online money games, and constitutional challenges to the prohibition on online money games play out in the coming months.
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