New online gaming rules in India

A practical note on the implications of the Promotion and Regulation of Online Gaming Act, 2025, read with its rules

Introduction:

Online gaming in India has evolved rapidly over the last few years and is no longer limited to mere entertainment or recreational activity. With the growth of smartphones, digital payments, and internet accessibility, several online gaming platforms began operating across the country, offering fantasy sports, poker, rummy, prediction-based games, and other forms of online games involving monetary stakes.

The sector witnessed massive growth with platforms such as Dream11, Rummy-Circle, and several betting and prediction applications attracting millions of users. However, the rise of online gaming has also led to growing concerns regarding addiction, financial losses, gambling, illegal betting, money laundering, and exploitation of users, particularly the youth and vulnerable sections of society.

Government sources estimate that nearly 45 crore individuals in India collectively lose approximately INR 20,000 crore through participation in online gaming activities, including online gambling and betting platforms[1]. These figures have been cited as one of the key policy considerations prompting increased governmental scrutiny of the online gaming sector and the introduction of stricter regulatory mechanisms under the PROG Act.

The substantial financial outflow associated with online money gaming has raised concerns regarding consumer protection, addiction, financial distress, and the proliferation of unregulated betting applications, particularly among young users and vulnerable sections of society. Consequently, the Government has emphasized the need for a comprehensive regulatory framework to ensure responsible gaming practices, financial transparency, and effective oversight of online gaming intermediaries operating in India.

To regulate this rapidly growing sector, the Union Government enacted the Promotion and Regulation of Online Gaming Act, 2025 (“PROG Act”). The PROG Act has now become law after being passed by both Houses of Parliament and receiving the assent of the President. Further, on April 22, 2026, the government introduced the Promotion and Regulation of Online Gaming Rules, 2026 (“PROG Rules”), which provide the operational and regulatory framework for the implementation of the PROG Act throughout India.

The PROG Act and the PROG Rules together create a comprehensive framework regulating online gaming in India. One of the most significant features of this framework is the nationwide prohibition on online money games, irrespective of whether such games are classified as ‘games of skill’ or ‘games of chance’.

Position of online gaming applications before the PROG Act

Prior to the PROG Act, online gaming applications in India functioned under a decentralized and jurisprudence-driven regime, where games predominantly involving skill were generally considered permissible, while games of chance and betting activities remained prohibited under applicable gambling laws. Courts in cases like Varun Gumber v. Union Territory of Chandigarh[2] and Gurdeep Singh Sachar v. Union of India[3] recognized that games requiring substantial skill could not automatically be treated as gambling. However, the lack of a centralized statutory framework resulted in regulatory inconsistency, enforcement ambiguity, and divergent state-level approaches toward online gaming activities.

Key objectives of the PROG Act

The PROG Act aims to achieve multiple regulatory and policy objectives, including:

• establishing a uniform legal framework for online gaming activities;
• protecting users from fraudulent or exploitative gaming practices;
• introducing safeguards against addiction and excessive gaming;
• strengthening transparency and accountability obligations for gaming platforms;
• curbing unlawful betting and gambling activities conducted through digital platforms;
• facilitating responsible growth of the online gaming industry; and
• promoting investment, innovation, and employment opportunities within the digital gaming ecosystem.

The PROG Act reflects a shift from the earlier jurisprudence-driven framework toward a centralized statutory compliance model.

Establishment of the Online Gaming Authority of India

One of the most significant institutional reforms introduced under the PROG Act is the establishment of the Online Gaming Authority of India (“OGAI”), which serves as the principal regulatory authority for the online gaming sector.

The OGAI has been constituted as a statutory authority entrusted with powers relating to regulation, supervision, licensing, monitoring, investigation, and enforcement concerning online gaming activities throughout India.

The OGAI is responsible for:

• granting, renewing, suspending, or cancelling registrations and licenses of online gaming operators;
• classifying and recognizing permissible categories of online games;
• monitoring compliance with responsible gaming obligations;
• issuing directions, codes of conduct, and compliance standards for gaming intermediaries;
• investigating unlawful online gaming or betting activities;
• coordinating with payment intermediaries, telecom service providers, and law enforcement agencies;
• blocking or restricting access to prohibited gaming platforms; and
• adjudicating certain regulatory violations and imposing penalties.

The establishment of OGAI represents a shift toward centralized regulatory oversight similar to sectoral regulators operating in other heavily regulated industries.

Comprehensive Regulation of Online Gaming

Online Money Gaming

The PROG Act defines an ‘online money game’ as any online game, irrespective of whether it is based on skill, chance, or a combination of both, where a user participates by paying fees, depositing money, or placing other stakes with the expectation of winning monetary rewards or other forms of enrichment in return.

The definition adopts a broad approach and includes not only direct cash stakes, but also ‘other stakes’ such as virtual coins, credits, tokens, or digital objects capable of being converted into monetary or economic value. The PROG Act expressly prohibits the offering, operation, facilitation, and promotion of online money games and online money gaming services in India.

The legislative framework reflects the Government’s policy position that online money gaming poses significant social, financial, and public health concerns, particularly due to risks associated with addiction, financial distress, unlawful betting, fraud, and money laundering.

E-Sport

Under the PROG Act, ‘e-sport’ refers to an organized competitive online game played in multiplayer formats under predefined rules and recognized under the National Sports Governance Act, 2025.

The PROG Act recognizes e-sports as a legitimate form of competitive sport where outcomes are determined predominantly through physical dexterity, mental agility, strategic thinking, or similar player skills. While participation or registration fees may be charged for administrative purposes and prize money may be awarded based on performance, e-sports cannot involve betting, wagering, or staking activities by participants or third parties.

Further, the PROG Act mandates the Central Government to promote and develop the e-sports sector through establishment of guidelines, training academies, research centres, incentive schemes, and coordination with State Governments and sporting federations.

Online Social Game

The PROG Act defines an ‘online social game’ as an online game that does not involve staking of money or participation with the expectation of monetary gain or economic enrichment. Such games may permit users to access the platform upon payment of a subscription fee or one-time access fee, provided that the payment is not in the nature of a wager or stake.

Online social games are intended to be offered solely for entertainment, recreation, educational, or skill-development purposes and must not qualify as either an online money game or an e-sport.

The PROG Act also empowers the Central Government to recognize, categorize, and promote online social games through registration mechanisms, public awareness programmes, and initiatives aimed at encouraging safe and age-appropriate digital gaming content.

Penalties under the PROG Act

The PROG Act prescribes stringent penalties to ensure strict compliance with its prohibition on online money gaming and related activities, as mentioned below:

• Offering online money gaming services: Any person offering or facilitating online money gaming in contravention of Section 5 is punishable with imprisonment of up to 3 (Three) years, or fine up to INR 1 crore, or both.
• Advertisement of online money games: Any person directly or indirectly promoting or advertising online money games may face imprisonment of up to 2 (Two) years, or a fine of up to INR 50 lakh, or both.
• Facilitating financial transactions: Banks, payment gateways, financial institutions, or any person facilitating payments toward online money gaming services are punishable with imprisonment of up to 3 (Three) years, or fine up to INR 1 crore, or both.
• Repeat offences: Repeat violations (with respect to ‘offering online money gaming services’ and ‘facilitating financial transactions’) shall attract enhanced punishment of 3 (Three) to 5 (Five) years of imprisonment and fines between INR 1 crore and INR 2 crore. Further, advertisement-related repeat offences shall attract 2 (Two) to 3 (Three) years’ imprisonment and fines between INR 50 lakh and INR 1 crore.
• Company liability: Directors, officers, and persons in charge of business operations may be held personally liable where offences are committed with their consent, connivance, or negligence.
• Non-compliance with Authority directions: Failure to comply with directions of the Central Government or the Online Gaming Authority may attract penalties up to INR 10 lakh, including suspension or cancellation of registration.
• Cognizable and non-bailable offences: Offences relating to the operation of online money gaming services and prohibited financial transactions are cognizable and non-bailable.
• Blocking and enforcement powers: Authorities may block online gaming platforms, investigate offences, conduct searches and seizures, and arrest offenders without a warrant in specified circumstances.

Impact on the online gaming industry

The PROG Act is expected to significantly reshape India’s online gaming ecosystem. For legitimate gaming operators, the legislation may provide greater regulatory clarity and long-term legal certainty, thereby encouraging institutional investment and industry formalization. At the same time, the compliance burden under the PROG Act is likely to increase operational costs for gaming companies. Smaller platforms and start-ups may face challenges in meeting licensing, technological, and reporting requirements imposed under the framework. The PROG Act may also lead to industry consolidation, as only entities capable of complying with enhanced regulatory standards may continue operating lawfully within India.

Conclusion

The PROG Act represents a landmark shift in India’s approach toward governance of online gaming activities. By establishing a centralized regulatory framework and creating the OGAI, the legislation seeks to balance innovation and industry growth with consumer protection, financial integrity, and responsible gaming principles. The PROG Act moves India away from the earlier fragmented and litigation-driven regime toward a structured, compliance-oriented regulatory ecosystem. Although several aspects of the framework will depend upon future rules, notifications, and implementation measures, the legislation undoubtedly lays the foundation for a new era of online gaming regulation in India.

[1] https://www.pib.gov.in/PressReleasePage.aspx?PRID=2256973&reg=3&lang=2

[2] 2017 SCC Online P&H 5372

[3] 2019 SCC Online Bom 13059

Disclaimer – This update is intended solely for general informational purposes and does not constitute legal advice or a legal opinion. Readers are advised to seek specific legal advice before acting on the basis of any information contained herein. The authors and the firm disclaim any liability arising from reliance on this update.