PROG Act 2025 and Online Gaming Rules 2026 Ban Real-Money Gaming in India

India’s new federal framework for online gaming took effect on 1 May, prohibiting online money gaming following a Supreme Court ban in August 2025. The Promotion and Regulation of Online Gaming Act, 2025 (PROG Act) and the Online Gaming Rules 2026 establish three distinct categories: online money games, esports, and online social games. This ends the longstanding skill-versus-chance distinction that once shielded formats such as fantasy sports.

The PROG Act defines an online real-money game as one in which users pay, deposit or stake money or other value with the expectation of monetary return or enrichment, irrespective of skill, chance or both. Aaron Kamath, co-head of the Tech, Digital and Commercial Law Practice at Nishith Desai Associates, said the definition is deliberately broad. “‘Other stakes’ is itself wide and covers credits, coins, tokens and similar items, real or virtual, bought directly or indirectly with money.”

Kamath adds, “In practical terms, almost any format that combines a paid entry with a monetary or money-equivalent reward is now caught.” The prohibition reaches beyond operators to advertising and payment facilitation. Violations can bring imprisonment of up to three years and/or a fine of up to INR 1 crore (approximately $106,000), with higher penalties for repeat offences. Offshore operators face the same exposure, and regulators may direct banks to block related transactions.

Unresolved Compliance and Classification Questions

Kamath identifies multiple areas of uncertainty that could lead to inadvertent non-compliance. The Act does not define what constitutes a “game” or “gameplay,” leaving the outer boundaries unclear for opinion trading, lotteries, promotional contests and prize-based quizzes. The compliance burden is also unsettled: while the better view places obligations on the business actually offering the game, a literal reading could extend to app stores and platform aggregators.

Esports registration requires recognition under the National Sports Governance Act, 2025, yet the criteria and process had not been prescribed when the rules entered force. Payment rules require notification of any change before implementation, a standard that could capture routine additions of new partners. The government holds broad discretion to mandate registration for categories of social games based on risk, participation levels, transaction volumes or even the provider’s country of origin.

What Clarity Operators Need Next

Sustainable models under the framework remove the stake entirely. Permitted approaches include subscriptions, one-time access fees, advertising, in-game purchases and registered esports with entry fees or performance prizes, provided no wagering occurs. The regime is expected to favor larger, well-capitalised operators better equipped to handle user safety, grievance redressal and data retention obligations. Consolidation among former real-money businesses is likely as some exit and others repurpose technology for free-to-play and esports products.

Further guidance from the Authority on classification, esports recognition, payment verification and data retention will determine how readily investment returns to the sector. Without it, the risk of unintended breaches remains material even for operators seeking compliant paths.

Reporting: iGaming Business (iGB)

Generated by SCCG’s automated editorial system from published source reporting. SCCG Management holds editorial responsibility.