India’s online gaming industry is facing widespread disruption after a new federal law imposed a blanket ban on all real-money games, a move a legal expert says has halted a major driver of the country’s digital economy.
The Promotion and Regulation of Online Gaming Act 2025 (PROGA) prohibits “online money games” regardless of whether they involve skill or chance. The measure has triggered an “abrupt cessation of all online real-money gaming operations”, said Ranjana Adhikari, a partner at Shardul Amarchand Mangaldas who specializes in technology and gaming law.
RMG accounted for about 80 percent of sector revenues, according to industry estimates. “The skill-based RMG vertical not only attracted investments but also created jobs, generated substantial tax revenues, and nurtured entrepreneurs”, Adhikari told AGB. She said leading operators had already shut down India operations and were considering shifts to foreign markets or new business lines.
The government has promoted Esports and educational titles as alternatives, but industry players warn the transition will take time. PROGA offers room for growth in these segments, yet only under strict conditions.
“Esports would qualify as such under PROGA only if stringent requirements are met, including recognition under the National Sports Governance Act 2025 and registration with the Authority”, Adhikari said. Social and casual games may use subscription or advertising models, but the law’s “harsh criminal penalties” could make banks and advertisers cautious, she added.
Market research before PROGA indicated strong growth in Esports and casual gaming. Adhikari said demand could scale further “with regulatory clarity and support from the government and the Authority.”
Risk of offshore gambling
Critics fear the ban may push players towards offshore gambling sites. Adhikari said evidence from previous state-level bans suggests that prohibitions “rarely eliminate demand but simply displace it towards illegal or unregulated platforms.”
Before the ban, India’s RMG industry had created more than 200,000 jobs, supported over 400 startups and generated around 2.3 billion dollars in taxes, according to industry data.
Regulation over prohibition
Adhikari argues that a “risk-based, co-regulatory framework” would have better protected consumers while supporting innovation. She pointed to the amended IT Rules of 2021, which outlined a multi-tier regulatory system and recognized self-regulatory bodies, but “were never operationalized.”
“This approach could have ensured that regulation kept pace with novel offerings without having to shut down innovation in the RMG vertical”, she said.
Despite the uncertainty, PROGA may accelerate the development of non-gambling games. Adhikari said the law directs innovation towards social, educational and skill-development formats supported by subscription or advertising models. India’s engineering talent also positions it to become a global hub for gaming infrastructure and services.
Clear guidelines from the new Online Gaming Authority will be critical. “If the Authority publishes dedicated and clear guidelines on permissible conduct, investors can underwrite social gaming and Esports projects with greater confidence”, Adhikari indicated.
