Legal specialist Aaron Kamath highlights disparities in India’s real-money video gaming restriction, however firmly insists the marketplace stays appealing if gamers can pivot to social and free-to-play designs.
India’s brand-new online video gaming routine has actually drawn a clear line versus real-money video gaming, closing the door on the longstanding skill-versus-chance difference while producing regulated paths for esports and online social video games.
For services browsing what comes next, the structure is not yet a completed rulebook. Experts see “a variety of locations of unpredictability”, from the limits of what makes up a video game and who bears compliance commitments, to esports acknowledgment, payment plans and developing monetisation designs.
More regulative assistance is anticipated to provide operators higher clearness and decrease the danger of unintended non-compliance.
On 1 May, India’s brand-new federal structure governing online video gaming entered into force, essentially improving the nation’s digital video gaming landscape. The Promotion and Regulation of Online Gaming Act, 2025 (PROG Act), together with the Online Gaming Rules 2026, forbid online cash video gaming, following a Supreme Court restriction in August 2025.
Comparing esports, social and real-money video gaming
Under Section 2 of the PROG Act, the law develops 3 unique classifications in the digital video gaming sphere: online cash video games, esports and online social video games.
Aaron Kamath, co-head of the Tech, Digital and Commercial Law Practice at Nishith Desai Associates, thinks the meaning of an online cash video game within PROG is intentionally broad. “‘Other stakes’ is itself large and covers credits, coins, tokens and comparable products, genuine or virtual, purchased straight or indirectly with cash,” he states.
“In useful terms, nearly any format that integrates a paid entry with a financial or money-equivalent benefit is now captured,” Kamath includes, “which is why the long-running skill-versus-chance dispute has actually lost its importance for these items.”
An online real-money video game is specified as a video game in which users pay, deposit or stake cash or other worth with the expectation of financial return or other enrichment, “regardless of ability, opportunity or both”.
Esports comes under arranged, competitive multiplayer occasions including physical mastery, imagination and tactical thinking. Games should be identified under the National Sports Governance Act, 2025, include no wagering, betting or staking, and undergo registration requirements under the 2026 Rules.
Online social video games, on the other hand, are mostly used for leisure, home entertainment or ability advancement and can not include financial stakes or monetary danger to users, although allowed gain access to charges, memberships, marketing and in-game purchases can offer alternative income designs.
A sweeping restriction on ability & & possibility video games
Before the PROG Act, India’s legal structure mainly prominent in between video games of ability and video games of possibility. In landmark judgments in 1957, the Supreme Court promoted that competitors including significant ability might make up organization activities secured under Article 19( 1 )(g) of the Constitution, while gaming was not managed the very same constitutional defense.
The difference consequently ended up being a crucial concept in Indian video gaming jurisprudence, consisting of in the treatment of dream sports.
Before the PROG Act, courts consisting of the Punjab & & Haryana High Court and Bombay High Court held that the specific dream sports format used by Dream11 was primarily a video game of ability instead of betting. The judgments did not develop a blanket exemption for all dream sports, however showed the significance of the skill-versus-chance difference under the previous structure.
The PROG Act essentially alters that position for real-money video gaming. Where users stake cash or other worth with an expectation of financial or other enrichment, the activity can make up an online cash video game despite whether it includes ability, opportunity or both.
The restriction likewise extends beyond operators themselves. Marketing an online cash video game or helping with payments for one can each make up a criminal offense. Providing or assisting in payments can draw in jail time of approximately 3 years and/or a fine of approximately INR 1 crore (around $106,000), with greater charges for repeat offenses.
The arrangements likewise use to overseas operators making such video games offered to users in India, while the regulator can direct banks and payment service providers to stop processing associated deals and obstruct non-compliant sites and apps.
Is there any part of the online video gaming market left practical under the strict brand-new law? Yes– just a choose couple of, however they still represent “significant, industrial area”, states Kamath.
Online social video games can be monetised through memberships, one-time gain access to costs, marketing and in-game purchases, offered no payment works as a stake or wager. Registered esports video games can likewise charge involvement or registration charges and provide performance-based cash prize, supplied no wagering or betting is included.
The marketplace had actually currently started changing before the structure worked, Kamath notes.
“Leading real-money operators such as Dream11, MPL, Zupee and PokerBaazi suspended their money video games within days of the Act being passed in August 2025– well before it entered into force in May– and a number of, consisting of Dream11, have actually considering that relocated to free-to-play, marketing- and sponsorship-led designs,” he states.
Independently, Kamath indicates the Supreme Court’s 27 May judgment maintaining the 28% GST (sales tax) on the amount of deposits on real-money video gaming platforms, consisting of for previous durations, as sending out “the very same signal from a tax point of view”. Where cash is staked, he states, “the ability component provides little security.”
The constitutional obstacle to the Act stays pending before the Supreme Court, however the law stays in force and services need to intend on that basis.
Locations in the law stay ‘available to argument’
Kamath states the scope for “innovative structuring” to stay lawfully certified is “extremely minimal”, worrying that “services need to not deal with any of the following as a safe harbour”.
The Act, he describes, takes a look at the hidden financial characteristics of a video game instead of merely how it is identified, consisting of how cash goes into the system and whether users have an expectation of financial or other enrichment.
In figuring out whether a video game is an online cash video game, the Authority can think about aspects including its profits design, how charges are utilized, whether in-game benefits can be redeemed, moved or monetised outside the video game, in addition to its technical architecture, gameplay mechanics and interface.
That stated, Kamath keeps in mind that “some locations stay open up to argument”.
The Act does not specify what makes up a “video game” or “gameplay”, leaving the “external border of the law” uncertain for surrounding formats such as viewpoint trading, lottos, advertising contests and prize-based tests.
Even if such activities can be argued not to make up real-money video games, Kamath worries that they ought to not immediately be considered as uncontrolled. Various legal programs might use depending upon the format.
For organizations searching for sustainable paths within the brand-new structure, Kamath’s recommendations is uncomplicated: “The more sustainable paths are those that eliminate the stake completely.”
He indicates really free-to-play formats moneyed by marketing or sponsorship, subscription-based gain access to where the charge is not connected to winning, and signed up esports.
He likewise warns that virtual currencies must not immediately be presumed to fall outside the Act, as tokens that can not be squandered however can be utilized to play other video games or purchase products otherwise readily available genuine cash might still make up “other stakes”.
Uncertainty for unintentional non-compliance
The 2026 guidelines develop 2 unique regulative procedures for online video games: decision and registration.
Decision is basically the Authority’s treatment for categorizing a specific video game, most notably choosing whether it makes up an online cash video game. The procedure can be started by the Authority itself, by an application from a company, or at the demand of the main federal government in relation to an online social video game or classification of social video games.
Elements thought about can consist of whether users pay costs or stakes, whether there is an expectation of financial jackpots, the video game’s income design and how benefits or in-game properties can be redeemed or monetised.
Registration, by contrast, is a type of official regulative acknowledgment that uses where the guidelines need it. Registration is obligatory for video games meant to be used as esports, while online video games or classifications of online social video games need to sign up when the main federal government informs them for registration.
Notably, registration specifies to each video game and each company, instead of offering blanket registration throughout an operator’s portfolio.
Along with the brand-new structure, Kamath sees “a number of locations of unpredictability” that might produce confusion for operators, video game suppliers and other stakeholders, possibly resulting in “unintentional non-compliance”.
Who brings the compliance concern?
There is unpredictability over who brings the compliance concern. The meaning of an online video game company is broad enough, if checked out actually, to possibly extend beyond designers and publishers to app shops and platform aggregators. “The much better view is that responsibilities sit with business really using the video game,” Kamath states, however includes that the problem still needs information.
The path to esports registration is another unsettled location. A video game can be signed up as esport just if it is identified under the National Sports Governance Act, 2025, however the requirements and procedure for such acknowledgment had actually not been recommended when PROG worked. This might produce specific unpredictability for competitions that charge entry costs and pay performance-based cash prize.
Kamath likewise highlights useful concerns around payments. The last guidelines need service providers to inform the Authority of “any modification” to how payments are assisted in before executing it. Check out actually, this might possibly catch regular functional modifications, such as including a brand-new payment partner.
The federal government likewise has broad discretion to need classifications of online social video games to execute registration, considering elements consisting of the threat of damage to users, involvement levels, deal volumes and even the supplier’s native land or head office. While this provides regulators versatility, Kamath states it can minimize predictability for services, especially foreign publishers.
The brand-new routine is not merely a binary concern of what is restricted and what is allowed. For operators and company, Kamath’s message is to tread thoroughly around category, monetisation, payments and registration while the regulative structure continues to establish.
For the Authority, the exact same locations indicate where more assistance might be required to close prospective spaces and decrease the danger of unintended breaches.
What lies ahead?
As video gaming organization designs progress, Kamath anticipates the border in between social and real-money video games to end up being a significant location of regulative examination in India.
The Act does not forbid virtual currencies or in-game products, however deals with credits, coins and comparable products purchased with cash as “other stakes” if they are utilized in betting. Cosmetic purchases such as skins and add-ons must normally stay allowable where there is no link in between payment and the possibility of winning.
He warns that regulative approval needs to not be considered as irreversible clearance. “A decision or registration is best viewed as a photo”, not a long-term thumbs-up, Kamath notes. He anticipates the Authority to concentrate on “the income design, how cash streams through the item and how benefits can be utilized”, recommending operators ought to develop regulative check out their monetisation strategies.
Kamath anticipates the structure to favour bigger, well-capitalised gamers in the near-term, as compliance requirements around user security, complaint redressal, information retention and other responsibilities might be much easier for recognized business to soak up.
Foreign operators might likewise deal with extra expenses and unpredictability around regional information storage, payments and other regulative requirements.
He likewise anticipates combination amongst previous real-money operators, with some business most likely to exit or restructure while others repurpose their innovation and user bases for free-to-play, casual and esports items.
Kamath states the outlook must not be seen exclusively through the lens of compliance.
India’s nationwide acknowledgment of online social video games and esports, integrated with a big video gaming audience and continued financial investment in the broader sector, stays a destination. “The secret to opening that financial investment will be functional clearness from the Authority,” especially around esports acknowledgment, payment confirmation and information retention, he states.
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