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A National Reset for Online Gaming
India has now enacted the Promotion and Regulation of Online Gaming Act, 2025, creating a single nationwide law that redefines the future of gaming. The landmark regulation bans all online “money games” (whether skill or chance) where users pay stakes in expectation of monetary gain, while promoting e-sports, social gaming, and gamified learning as legitimate industries.
The law comes after years of debate around skill vs chance and several high-profile disputes over GST. For the first time, it creates a central Authority on Online Gaming to regulate and recognize social and e-sports platforms.
Key Features of the Law
Ban on money games: Any game involving stakes, deposits, or winnings in cash or equivalent is prohibited.
Advertising prohibition: Promotions, influencer endorsements, and ads for money games are criminal offences.
Payments cut off: Banks, wallets, and UPI cannot process such transactions.
Authority framework: A new regulatory body will classify games, register compliant platforms, and set codes of conduct.
Penalties: Up to 3 years in prison and ₹1 crore fine for violations; repeat offences attract harsher punishments.
Extraterritorial reach: Offshore platforms targeting Indian users also fall under the law.
What’s Happening on the Ground
Major fantasy and RMG platforms (Dream11, WinZO, MPL, Zupee) have begun shutting down cash formats, pivoting towards free-to-play or e-sports ecosystems. Payment gateways are already preparing to block transactions linked to prohibited games, while ad platforms are cleansing inventory of such campaigns.
This transition is not only legal but also reputational—brands and celebrities have been warned against endorsing money games.
The GST Shadow Still Looms
While the new law bans money gaming moving forward, legacy GST disputes (notably the 28% levy on face value adopted in 2023) continue in the Supreme Court. Companies must therefore prepare for two tracks:
Forward-looking compliance with the new Act.
Backward litigation or settlement on GST liabilities.
Users too must reconcile past winnings with their income-tax filings for FY 2024-25, as the IT department has reminded taxpayers.
Implications for MSMEs, Startups & Advertisers
Immediate compliance reset – Remove all money-game offerings, ads, and affiliate promotions.
Shift to permitted models – Build subscription-based social games, e-sports competitions, or ed-gaming modules.
Future growth lanes – Invest in gamified education, brand-safe loyalty games, and India’s growing e-sports infrastructure.
SMEStreet’s Exclusive Insight
At SMEStreet, we see this as a compliance reset and innovation opportunity. For India’s MSMEs, startups, and digital advertisers, the ban on money games will force a strategic pivot, but it also opens a window for new categories like:
E-sports leagues and infrastructure with government support.
Gamified education & skilling platforms—a natural fit for India’s youth and workforce.
Ad-supported social games with brand-safe engagement models.
This is not the end of India’s gaming economy—it is the beginning of a regulated, globally competitive e-sports and ed-gaming ecosystem. Those who adapt quickly will gain first-mover advantage in this new landscape.
Outlook: Short Pain, Long-Term Realignment
In the short term, revenue from RMG in India goes to zero, with potential shutdowns and consolidations. But in the medium to long term, India could emerge as a hub for e-sports and social gaming, with policy clarity and formal recognition of new models.
For entrepreneurs and MSMEs, the playbook is clear: pivot fast, de-risk your legal exposure, and build in categories that the government is explicitly encouraging.