Gaming Law
India’s Online Money Gaming Ban: How Social Gaming gains traction, but doesn’t escape regulation
The Promotion and Regulation of Online Gaming Bill, 2025 swiftly received approval from both houses of the Indian Parliament, following its introduction (on August 20, 2025) by the Indian IT Ministry. The Bill marks a significant departure from the prevailing legal framework governing online gaming in India (comprising legislation at both the national and state level).
The existing legal regime in India, albeit fragmented (due to non-uniform regulation of gaming of the national and state legislatures), largely permits operation of online “Real-Money Games” (RMGs) which are based on skill or involve substantial elements of skill. However, the Billseeks to rehaul existing law to establish a uniform (national level) legal framework for promoting and regulating the online gaming sector – to the extent that this concerns E-sports and Social Gaming. Further, and in stark contrast to the existing regime, the Bill imposes blanket prohibition on the operation or promotion of Online Money Games (involving stakes) – irrespective of whether or not these involve skill.
As of August 22, 2025, the draft Bill has secured Presidential assent to be enacted as law. The newly enacted Promotion and Regulation of Online Gaming Act, 2025 (“Act”) effectively overrides the existing legal regime governing online gaming in India with immediate effect. Thisarticle explores the eminent ramifications and opportunities concerning the social gaming industry (in the wake of the India’s RMG ban) subject to the Act.
Classification of Social Games (and relative ambiguities)
The Act defines an “Online Social Game” as a game which doesn’t comprise either an “Online Money Game” (involving monetary stakes) or “E-Sports” and necessarily encompasses the following key parameters:
doesn’t involve staking of money or “other stakes”, or participation based on expectation of winnings “by way of monetary gain” in lieu of money or “other stakes”;
is offered solely for entertainment, recreation or skill-development purposes
Interestingly, as a qualifier to the above, the Act provides that an “Online Social Game” can allow users access subject to payment in the form of a “subscription fee” or “one-time access fee” – provided that such payment isn’t of the nature of a stake or wager.
The Act thus establishes strict criteria for an online game to be statutorily deemed an Online Social Game – even though such game may not statutorily qualify or be categorized as an RMG. Specifically, a clear limitation is set in terms of the format, purpose as well as fee models that social games should follow to be deemed legally permissible.
Key Observations
Namely, in terms of format, the Act mandates that a Social Game cannot involve staking in any form, whether of money or “other stakes”. Importantly, the term “other stakes” is defined asincluding “…anything recognised as equivalent or convertible to money…” including any virtual or actual “…credits, coins, token or objects or any other similar thing…” which users/players purchase through making payment of money (whether directly or indirectly) in relation to or as part of an Online Game.
The above mandate firmly limits Social Games from offering of in-game credits, virtual currency or other similar assets or in-game payments in any form which could be perceived as a wager or stakes. In furtherance, the Act also dictates that user participation in a Social Game cannot be based on expectation of winnings in return for money or other stakes (which are akin to money).In light of this, the following prescriptions are made clear:
Social Games cannot facilitate staking of money nor other stakes by users;
Users’ participation in Social Games cannot be based on their expectation of some monetary winnings or monetary gain in return of staking of money or stakes
However, the broad nature of the above prescription gives rise to a series of interpretations as regards what would qualify as a statutorily permissible format (or offering) in respect of a Social Game. Illustratively, the above prescriptions don’t limit the offering of in-game objects in entirety as part of Social Gaming. Social Gaming operators are simply barred from offering any objects that could be perceived as stakes – which doesn’t include in-game objects havingaesthetic nature or utility other than stakes (such as character skins or weapons) within the game.An inference that may thus be drawn that a Social Game can proceed to offer certain in-game items for purchase provided these items cannot be staked by users and provided the user is not purchasing such items in expectation of some “monetary gain”. In connection, it is worthwhile to add the term “monetary gain” can be interpreted as both gain of actual money and/or gain of rewards akin to money (such as trips or vouchers) under the Act. Accordingly, Social Gaming operators will require to be mindful of various factors to ensure the format of their game is in compliance with the Act – for which purpose each proposed format (of Social Game) wouldideally require legal analysis on a case-to-case basis. Further, in terms of fees, while the Act doesn’t entirely restrict Social Gaming operators from collecting payment from users, it mandates that fees be charged from users in a manner that wouldn’t constitute stake or wager. In this regard, the Act mentions that operators may charge their users a “subscription fee” or “one-time access fee” for “access” to a Social Game. Notably, the Act doesn’t specify at what time or in what manner exactly such fees ought to be levied, nor the duration for which “access” is to be granted in respect a Social Game. However, it seems to imply that charging fee in relation to a Social Game is acceptable provided fee is charged for the purpose of granting access, whether charged in-game (as part of the game) or outside the game (ahead of gameplay).
Meanwhile, in terms of purpose limitation, the Act effectively provides that Social Games can be offered to users only for the object of their entertainment, recreation or skill-development.
Regulatory Approach to Social Gaming
Gaming laws in India have long distinguished a “game of skill” or “game of chance” for the purpose of regulation. Illustratively, the Public Gambling Act, 1867 regulates and prohibits games of chance played for stakes – but not games of skill. This influence has carried over in the gaming/gambling legislation implemented by individual States in India within their respective territories – the majority of which do not seek to regulate (or at least prohibit) games based on skill, even if these may involve stakes. Further, Courts in India have repeatedly affirmed, in a series of pronouncements, that conduct of games of skill does not amount to gambling and is alegally permissible activity (entitled to protection under the Constitution of India).
Likewise, the IT (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 have also sought to establish a self-regulatory model to distinguish “online real money games” involving stakes (which the statute prohibits) and “permissible online real money games”(which aren’t in the nature of gambling or based on chance).
Under the above approach, it is clear that Social Gaming as a sector has largely remained outside the scope of regulatory oversight. The Act, however, disrupts the existing legal regime by establishing statutory categorization for Online Social Games.
Notably, the Act empowers the Indian Government to establish a Gaming Authority for recognition, categorization and registration of Online Social Games as well as to provide for their development and availability for recreational and educational purposes.
As part of this, the Central Government is empowered to undertake a variety of targeted measures for promotion of the Online Social Gaming sector – ranging from creation of platforms and programmes to support their development and distribution; implementation of initiatives forincreasing public access to safe and age-appropriate Social Games; running awareness campaigns that underscore benefits of such games; and collaborating with State Governments for wider promotion of the Social Gaming Sector.
Conclusion
In view of the above developments, it becomes clear that the Social Gaming sector (along with the E-Sports industry) may have escaped the ban imposed under the Act but hasn’t escaped statutory purview.
The Act introduces new and distinct categorization for Online Social Games, requiring them to adhere to certain criteria to be deemed legally permissible. While the Act doesn’t fully embellish upon certain criteria (such as the format or fee structure) required to be met by games for qualifying as Social Games, further clarity on this aspect can be expected in due course – as and when the Government frames and releases rules (and relevant clarifications) for implementation of the Act.
The regulation model proposed under the Act may require the gaming industry (including Social Gaming operators) to adapt and conform to new benchmarks and standards for meeting statutory requirements in the short run. However, for games which meet the relevant criteria (and qualify as Social Games), there are undeniable benefits – including in the form of Government backed initiatives and opportunities for significant promotion and development.
Authors:
Mr. Gaurav Bhalla (Partner at Ahlawat & Associates)
Ashneet Hanspal (Senior Associate at Ahlawat & Associates)
04 September 2025