India’s new online gaming framework has prohibited real-money gaming while establishing separate regulatory categories for esports and social games. However, legal expert Aaron Kamath of Nishith Desai Associates says uncertainty remains over how the rules will apply to different products, payment systems and business models.
Real-Money Gaming Ban Changes the Legal Framework
The Promotion and Regulation of Online Gaming Act 2025 (PROG Act), together with the Online Gaming Rules 2026, came into force on 1 May 2026. The framework defines online money games broadly, covering activities in which users pay, deposit or stake money or money-equivalent value with the expectation of a financial return, regardless of whether skill, chance or both determine the outcome.
This approach removes the previous distinction between games of skill and games of chance for the purposes of the real-money gaming prohibition.
Compliance Questions Remain
Kamath identifies uncertainty around the definition of a game, the treatment of virtual currencies and the boundaries between permitted social games and prohibited real-money products. Tokens and credits may still fall within the ban if they function as stakes, even when they cannot be directly converted into cash.
The rules establish procedures for classifying games and registering those that require formal recognition. Registration applies to individual games and service providers rather than automatically covering an operator’s entire portfolio.
A constitutional challenge to the Act remains pending before India’s Supreme Court, but the legislation continues to apply. Kamath expects further regulatory guidance to be important for clarifying areas such as esports recognition, payment verification and data retention.
Free-to-play gaming, advertising-funded products, subscriptions and compliant esports will provide the clearest routes forward.
Aaron Kamath, Legal Expert at Nishith Desai Associates
Established operators may be better placed to absorb compliance costs, while other businesses could restructure, consolidate or leave the market.
