By Shubhashis Gangopadhyay, Managing Trustee, India Development Foundation
and Kavya Vohra, Research Director, India Development Foundation
The Promotion and Regulation of Online Gaming Act, 2025, engages directly with a long-standing ambiguity in India’s digital gaming ecosystem. Its central move is to shift the legal inquiry away from whether a game is based on skill or chance, and towards whether participation involves money or other stakes in expectation of monetary or other enrichment. In doing so, it establishes a classification framework in which online money games are prohibited, while e-sports and online games are separately recognised as permissible categories.
The Act is a significant intervention in India’s online gaming economy. It does not regulate real-money gaming, it prohibits it. Media coverage at the time talked about the large-scale disruption the Act caused in the industry along with the government’s loss of large amounts of revenue obtained from the online money games. All major gaming platforms, Dream11, PokerBaazi, MPL, etc., halted their real-money offerings. The Act was best seen as a contest between two policy narratives: one centred on public health, financial harm, addiction, fraud, and national security; the other centred on investment, innovation, employment, and the earlier legal recognition of skill-based gaming.
The rules under the Act have become effective from May 1, 2026. An important aspect is that they have moved away from distinguishing games of chance from games of skill. Instead, the rules ban betting on online games, be they skill-based or chance-based. The government framed the legislation as a response to concerns around addiction, financial distress, and broader social harms associated with online money gaming, while continuing to recognise and promote e-sports and online social games. This dual-approach prohibition alongside recognition shapes the structure and interpretation of the Act.
The Act recognises online gaming as a dynamic digital and creative sector with opportunities for innovation, employment, and global competitiveness. At the same time, it identifies online money games as generating social, financial, psychological, public-health, privacy, money-laundering, tax-evasion, and national-security risks. The rules laid down under the Act balances the gains from online gaming activities against the risks associated with playing online for money.
The Act thus does not treat the online gaming sector as a single category. It differentiates between permissible and promotable forms of online gaming, and a prohibited category of online money gaming. The legislation moves legal inquiry away from the older distinction between games of skill and games of chance. Under the current framework, the central question is not whether the game involves skill, but whether money or other stakes are paid or deposited in expectation of monetary or other enrichment. It is now clarified that skill-based design is not, by itself, sufficient to keep a game outside the prohibited category.
Plugging the Loophole
Section 2(j) of the Act prohibits not only money games but games played for “other stakes” recognised as equivalent or convertible to money, including credits, coins, tokens, or objects — whether real or virtual — purchased directly or indirectly as part of or in relation to an online game. This is significant for modern gaming economies. The Act is not limited to cash deposits or direct money transfers. It can extend to virtual items, platform credits, or tokenised units where they are equivalent or convertible to money. This prevents platforms from avoiding the law merely by replacing rupees with coins, credits, or other digital units.
Permissible Boundaries
The Act’s treatment of e-sports is narrower and more specific. Section 2(c) defines e-sport as an online game played in multi-sports events, involving organised competitive events between individuals or teams, held in multiplayer formats under predefined rules, recognised under the National Sports Governance Act, 2025, and registered with the authority or agency. It must have outcomes determined solely by factors such as physical dexterity, mental agility, strategic thinking, or similar skills of users as players. It may include registration or participation fees and performance-based prize money, but must not involve bets, wagers, or other stakes. The nuance is important: the Act does not ban all paid competitions. It permits a carefully defined category where fees are connected to participation in recognised competitive sport-like formats, and where prize money is performance-based rather than derived from betting or wagering.
Online social games are treated differently. Section 2(i) defines an online social game as one that does not involve staking money (or other stakes), or participation with expectation of monetary gain in return. It may allow access through a subscription fee or one-time access fee, provided such payment is not a stake or wager. It must be offered for entertainment, recreation, or skill-development purposes, and must not be an online money game or e-sport. This provision clarifies that payment is not automatically prohibited. A platform may charge for access, but that payment must not become a stake linked to the possibility of monetary gain.
Overall, the Act addresses ambiguity by replacing the older skill-versus-chance inquiry with a money/stakes-plus-enrichment test. Its central distinction is between e-sports, where participation fees and performance-based prize money may be permissible within a recognised competitive framework; online social games, where access fees may be charged but without staking or monetary-gain expectations; and online money games, where payment or stakes are linked to expected monetary or other enrichment. The Act promotes online gaming as long as it doesn’t involve betting on outcomes.