Summary: India’s new Promotion and Regulation of Online Gaming Act, 2025 promotes e-sports and online social gaming, while prohibiting skill-based online money gaming. Now, with the accompanying draft rules, a new regulatory framework is in play with its own set of benefits and challenges. This [blog post] provides an overview of the new rules of the game, followed by insights on the new act and draft rules.

In August 2025, the Indian Parliament notified the Promotion and Regulation of Online Gaming Act, 2025 (“Act”) to ban online skill-based money gaming. This caught off-guard a sector comprising unicorns, sizeable investments, soaring revenues, and millions of users.

The distinction between “games of skill” and “games of chance” was erased overnight. Yet, the industry reacted with resilience, almost instantaneously retooling their platforms and technology and pivoting to online social games and free-to-play games, even before the Act has become effective.

The Ministry of Electronics and Information Technology (“MeitY”) released the draft Promotion and Regulation of Online Gaming Rules 2025 (“Draft Rules”) on October 2, 2025, leaving it open for public consultation until October 31, 2025. The Draft Rules will operationalise various key elements of the Act and introduce the Online Gaming Authority of India (“Authority”), ushering in a new era of regulation for the online gaming ecosystem.

This article provides an overview of the new rules of the game, followed by insights on the Act and the Draft Rules.

Objective of the New Legislation

The new legislation aims to:

• Encourage structured growth of legitimate e-sports and social gaming ecosystems;
• Establish clear criteria for determination of an online game as online money game or otherwise;
• Prescribe the framework for recognition, categorisation, and registration of legitimate e-sports and online social games;
• Mandate maintenance of National Online Social Games and E-sports Registry; and
• Create a transparent, digital, and accountable regulatory framework with a robust grievance redressal mechanism to safeguard users.

What’s Allowed and What’s Not!

Activity	E-sports[1]	Online Social Games[2]	Online Money Games[3]
Definition	Skill-based multiplayer, multi-sport events;To be recognised under the National Sports Governance Act, 2025 (“NSGA”);To be registered with the Authority;May charge participation/ registration fee and award prize money; andDoes not involve bets, wagers or other stakes.	Entertainment, recreational, or skill-based games;May involve a subscription/access fee;Does not involve staking money or other stakes;[4] andDoes not involve participation with expectation of winning any monetary gain in exchange for money or other stakes; andNot an online money game or e-sport.	Games of skill, chance or both;Played by paying user fee, depositing money or other stakes;Expectation of winnings in money or other enrichment in return for money; andDoes not include e-sports.
Permitted/Not Permitted	✅ Subject to mandatory recognition under the NSGA and registration under the Act.	✅ Subject to voluntary registration under the Act.	❌
Offering the Game (including hosting)	✅	✅	❌
Advertising (including endorsements)	✅	✅	❌
Financial / Payment Partners	✅	✅	❌
Offline Versions	✅ Subject to state laws, if any.	✅ Subject to state laws, if any.	✅ Subject to state laws, if any.

Other Stakes

A notable, and plausibly the more controversial, term defined under the Act is “other stakes”.

Defined as anything recognised as equivalent or convertible to money and includes credits, tokens, coins, or objects, or any other similar thing, whether virtual or real, purchased directly or indirectly, using money, or as a part of, or in relation to the online game. The interpretation of “other stakes” will have significant impact on the permissibility of various common “lawful” gaming models.

The State of Play: Legality Matrix

The following table describes the legality of various online social game formats, with and without different elements:

Subscription Fee / One-Time Fee	In-Game Purchases	Prizes/ Rewards (either in-game rewards such as skins, lives, etc., or cash-out rewards such as money, coupons, vouchers, etc.)	Legal Status
No	No	No	✅
No	No	Yes	✅ No money in/other stakes in = no staking or wagering.
Yes	No	No	✅
Yes	No	Yes	Requires fact-based review of the game.To be examined if use of the Subscription Fee / One Time Fee results in “other stakes”.
No	Yes	No	✅
No	Yes	Yes	Requires fact-based review of the game.To be examined if use of “other stakes” in-game is a wager to further receive “other stakes”.Could be lawful if the prize won is in the form of in-game rewards, with no cash out option.

Whether an Online Game is an Online Money Game

As per the Draft Rules, the Authority may determine whether an online game is an online money game or otherwise, either suo moto or based on an application made by the online game service provider[5] to the Authority.

The Authority may inter alia use the following baseline principles (independently or together) for such determination:

• Does the online game involve money or other stakes (in the form of fees, deposits, in-game purchases) that function as a stake or wager?
• Are user payments (fees / deposits) treated as participation fee, or as a stake / wager, or consideration for winnings?
• Is participation in the online game contingent on a prior deposit of money or other stakes?
• Does the online game offer rewards, or payouts in money or equivalent/convertible to money that can be redeemed or encashed?
• Any other relevant factors that the Authority may deem necessary to consider. [6]

Registration

Registration is mandatory for e-sports but optional for online social games. The process, requirements, and timelines are as follows:

Game Type	Application Details	Determination Requirements	Timelines for Registration	Material Change Notification
E-Sports	Application to include: Name and contact details,Description of game,Category of game,Age group,Revenue model,User safety features,Internal grievance redressal mechanism,An undertaking confirming that no prohibited activity is/ being undertaken, andAny other details as deemed necessary by the Authority.	Determination of an online game as an e-sport is done by the Authority.Recognition to be first obtained under the NSGA, followed by registration under the Act.	90 days from date of submission of the application, with the Authority. Time taken to obtain recognition under NSGA is excluded from the aforementioned timeline.	Material Change[7] to the registered e-sport or change in status of recognition of such e-sport under the NSGA needs to be informed to the Authority.
Online Social Games		Authority to assess if the online game qualifies as an online social game. Authority may engage in such determination suo moto or upon receiving an application.	No longer than 90 days from date of submission of the application.	Material change to the registered online social game needs to be informed to the Authority.

Other Key Provisions of the Act and Draft Rules

• Certificate of Registration: Upon registration, each e-sport or online social game will be given a unique registration number, which will remain valid for up to 5 (five) years (with renewal options), unless suspended, terminated, or removed.

• Grievance Redressal: The Draft Rules set up a three-tiered grievance redressal mechanism starting in-house to address user complaints.[8]
  • Step 1: Each online game service provider must maintain an internal grievance redressal mechanism for any games they offer.
  • Step 2: If a user remains dissatisfied, they may escalate to the Grievance Appellate Committee (established under rule 3A of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules”)) for further resolution.
  • Step 3: As a final recourse, unresolved disputes can be appealed to the Authority.

In addition, the Authority may act on any complaints filed, or initiate inquiries suo moto, and conduct hearings. Each case must be decided within 90 days. Factors to be considered during such inquiries inter alia include unfair advantage gained, user harm, losses caused, breach severity and recurrence, proportionality of the sanction, and any corrective measures attempted.[9]

Enforcement Actions:  

Offenses and Punishments:

Offense	Punishment
Offering access[10] or enabling fund transfers[11] for online money games.	3 years’ imprisonment or fines up to INR 1 crore.[12] Escalated punishments for repeat offenses.
Advertising or promoting (including by way of endorsements) online money games.	2 years’ imprisonment and fines up to INR 50 lakh.[13] Escalated punishments for repeat offenses.[14]
Non-compliance with the provisions of the Act.	Blocking access to the platform under the Information Technology Act, 2000.[15]

Powers of the Authority:  

Empowered as a civil court, the Authority can conduct inquiries, impose sanctions, cancel or suspend existing registrations, and authorise officers to search (physically or digitally) and arrest without warrant if offenses are suspected or about to be committed.[16] 

• Repayment of User Funds: User funds collected by online gaming platforms may be refunded to users within 180 (one hundred and eighty) days from enforcement of the Act.[17]

• Anticipated Changes in the Final Draft Rules

Although the Act arrived unexpectedly, the timely release of the Draft Rules signals a welcome step forward. The forthcoming public consultation will further enable constructive discussion on queries puzzling the industry.

In our view, some areas requiring further clarity include:

• The Draft Rules broadly define “material change” to mean any modifications to the features of the registered online game which may change the nature of the game. However, the parameters of what amounts to “material change” is subjective and will need to be determined on a case-to-case basis.
• The Draft Rules broadly define “online game service providers” to also include entities making the online games available, in addition to those operating or organising them. This should be revisited to ensure the obligations (grievance redressal, registration, etc.) are specific and identified to the operators / organisers, rather than any service providers of online games.
• The proposed Authority should have industry representation as well.
• The Draft Rules mandate NSGA recognition before the registration of e-sports under the Act, but fail to clarify what gets registered – is it the “e-sport” itself, the individual format, or the tournament? This ambiguity requires clarity. The release of application forms from the Authority could clarify this confusion.
• Appeals from the Authority’s decisions lie back to the Appellate Authority (i.e., Secretary to Government of India in the MeitY) rather than to a true appellate body. Moreover, since the Authority lacks judicial members even though entrusted with the judicial body powers, it is likely to invite judicial challenges and implementation delays. Hopefully, this will be addressed in the final rules.
• Clarifications on purchases (or rewards) involving purely in-game items not convertible into money may help payment platforms and advertisers get comfortable with such models, without insisting on a registration.

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[1] Section 2(1)(c) of the Act.

[2] Section 2(1)(i) of the Act.

[3] Section 2(1)(g) of the Act.

[4] Section 2(1)(j) of the Act defines “Other Stakes” to mean anything recognised as equivalent or convertible to money and includes credits, coins, token or objects or any other similar thing, by whatever name called and whether it is real or virtual, which is purchased by paying money directly or by indirect means or as part of, or in relation to, an online game.

[5] Rule 2(i) of the Draft Rules defines “Online Game Service Provider” to mean any person who alone or jointly with others, offers, operates, organises, manages, or makes available one or more online games.

[6] Rule 13 of the Draft Rules.

[7]Rule 2(1)(h) of the Draft Rules defines “Material Change” to mean any change in the manner of offering a registered online social game or e-sport, including a modification in features of the online game or its revenue model, which is reasonably likely to change the nature of such online social game or e-sport as an online money game or where there is any change in the manner in which money or anything recognised as equivalent or convertible to money is transacted for the online game.

[8] Section 23 of the Act.

[9] Rule 21 of the Draft Rules.

[10] Section 9(1) of the Act.

[11] Section 9(3) of the Act.

[12] Section 9(4) of the Act.

[13] Section 9(2) of the Act

[14] Section 9(5) of the Act.

[15] Section 14 of the Act.

[16] Section 16 of the Act.

[17] Rules 24 of the Draft Rules.