India’s online gaming industry is recalibrating its business models after the government notified rules under the Promotion and Regulation of Online Gaming Act, 2025, formalising a ban on real-money formats while allowing non-monetised games to operate under a lighter regulatory regime from 1 May.
The rules draw a clear distinction between games involving monetary stakes and those that do not, excluding real-money platforms from registration or recognition. “It is very clear that online money gaming is banned and they cannot be registered or determined under the Act,” Electronics and IT Secretary S Krishnan said.
“This creates a very different market structure for India,” Rohit Agarwal, Founder and Director, Alpha Zegus told BW Businessworld noting that the removal of real-money layers is pushing the market towards “a consumption-led, entertainment-first gaming ecosystem rather than a monetisation-heavy one.”
For the industry, this is a structural shift away from high-monetisation formats towards what stakeholders describe as a smaller but more stable ecosystem. The shift sharply diverges from global markets, where real-money gaming accounts for a dominant share of industry revenues.
“This is the final nail in the coffin of skill-based online real money games in India,” said Sudipta Bhattacharjee, Partner, Khaitan & Co, describing the rules as a “conscious policy choice” to prohibit the segment and bolster esports and social gaming.
“In most developed jurisdictions, the majority of gaming revenues come from real money formats. In contrast, India has chosen a path similar to countries like South Korea and China, foregoing the highest revenue segment while providing regulatory certainty for scale in e-sports and online social games,” he added.
Smaller Market, Greater Stability
Industry and legal experts say the immediate impact will be a reset in market size and revenue expectations. “The total market size in the next 4-5 years is likely to be much smaller (than what it would have been had real money games of skill been allowed) but hopefully, it will be lot more stable and low on legal risk,” Bhattacharjee said.
With the highest-ARPU segment effectively removed, the framework is expected to create a more predictable but structurally constrained market.
“Given that the highest-ARPU segment of gaming is gone, the current framework may lead to high stability but a limited low-to-medium scale ecosystem,” he added.
Even before the rules were notified, platforms such as Dream11, PokerBaazi, WinZO and Mobile Premier League (MPL) had begun recalibrating their operations following the law’s passage last year.
While regulatory clarity could attract long-term capital into non-monetised gaming and e-sports, Bhattacharjee cautioned that interpretation of key terms will be critical. “It would be crucial to have very clear guidelines for interpretation of the phrase “expectation of monetary winnings’ as that could be prone to overbroad interpretations and consequent avoidable disputes,” he said.
Regulator, Classification And Compliance
A key feature of the framework is the creation of the Online Gaming Authority of India (OGAI), a six-member body under the IT ministry that will oversee classification, compliance and enforcement.
The rules adopt a selective “determination and registration” model rather than blanket approval. Most non-monetised games can operate without mandatory classification unless specifically directed—such as in cases involving e-sports, scale, or transaction thresholds.
Classification can be triggered through three routes: suo motu action by the authority, applications from recognised e-sports bodies, or direct government notification. A 90-day timeline has been prescribed.
“Most games which are not money games should be able to operate with no obligation to necessarily either be determined or registered,” Krishnan said, reinforcing the government’s “light-touch” approach.
User Safeguards, But Gaps Remain
The framework introduces structured user protection measures, including age verification, parental controls, gameplay limits, reporting tools, counselling support and fair-play monitoring systems. A two-tier grievance redressal mechanism has also been mandated.
However, industry stakeholders say gaps persist, particularly in esports.
“There are still important gaps that need to be addressed. Esports teams and players continue to face a lack of clarity on financial frameworks, with ongoing challenges in how banks differentiate between esports earnings and real money gaming. There is also no clear pathway today to formally register esports teams as entities within a defined structure,” said Animesh Agarwal, Co-founder and CEO, S8UL.
“More importantly, players and organisations still lack comprehensive protections under a clear regulatory framework. Addressing these areas will be critical for the ecosystem to move from early structure to full legitimacy and long-term sustainability,” he added.
Bhattacharjee said that the short transition window may create uncertainty for compliant operators. “An advance ruling or deemed approval mechanism for existing non-real money gaming apps would have enhanced regulatory certainty, especially given the limited transition period,” he said.
He also flagged ambiguity around emerging formats. “There is a lack of clarity on the future of Web3 games with NFT or cash-out mechanics. A formal clarification in this regard would be welcome,” he added.
Data Oversight And Financial Enforcement
The rules expand oversight to both platforms and the financial ecosystem. Authorities can mandate localisation of traffic data and metadata on Indian servers in specific cases.
“There is no specific requirement under this Act but there could be… a direction can be given by the authority,” Krishnan said.
Banks, payment intermediaries and gateways will play a central enforcement role, required to verify a platform’s regulatory status and block transactions linked to illegal operators.
“The enforcement will largely be through the banking and the financial system,” he added.
Enforcement Limits And Evolving Risks
While banking-led enforcement is expected to significantly curb domestic real-money gaming, experts caution that it may not fully eliminate such activity.
“Since the enactment of the law, almost the entire legitimate skill-based real money gaming segment in India has been annihilated,” Bhattacharjee said, adding that enhanced enforcement powers, including those for state cyber cells and financial institutions, will strengthen oversight.
However, he noted that “it is very unlikely that offshore and grey-market operations will get completely wiped out,” with some activity continuing through crypto-linked systems, mule accounts and informal channels.
“Banking-linked enforcement can significantly disrupt domestic real-money gaming, but offshore and grey-market leakages may persist,” said Jeet Chandan, Managing Director, Shot Gum. “Effectiveness will depend on payment surveillance, app-store controls, intermediary accountability, and cross-border enforcement. Regulation alone is not enough; execution will determine the outcome.”
Rohit Agarwal echoed this view, saying enforcement through banking rails is a “strong lever” but unlikely to result in a complete shutdown.
From a cybersecurity perspective, Manish Chashta, Co-founder, Eventus Security, said restrictions typically displace rather than eliminate activity, with users moving to less traceable channels such as offshore routing and crypto systems.
He added that enforcement may need to evolve beyond financial controls towards intelligence-led monitoring, including behavioural analysis and cross-platform tracking.
Industry Pivots To New Growth Levers
With regulatory boundaries now clearly defined, companies are expected to pivot towards alternative growth models centred on advertising, intellectual property, esports and community-led engagement.
“India now has a chance to build a stronger pure-play gaming ecosystem around premium games across console, PC and mobile, as well as esports. Unlike markets driven by real-money gaming, this can push India toward IP creation, studios, and global exports rather than transaction-led gaming models," Chandan said. |
