India's PROG Act 2025: A Complete Guide to the New Online Gaming Regulations

By jili tutorial · October 10, 2026

India’s PROG Act 2025: A Complete Guide to the New Online Gaming Regulations

Introduction: India’s Digital Gaming Reset

India’s digital gaming landscape underwent a seismic shift on May 1, 2026, with the implementation of the Promotion and Regulation of Online Gaming Act (PROG Act) and accompanying Online Gaming Rules 2026. This comprehensive framework represents the most significant regulatory intervention in India’s online gaming sector to date, introducing sweeping changes that affect operators, players, and investors alike.

Understanding the Three-Tier Classification System

1. Online Money Games: The Forbidden Category

Definition: Any game where users stake money (or money equivalents) with expectation of financial returns, regardless of skill/chance components.

Key Characteristics:

Includes credits, tokens, virtual coins purchased directly/indirectly with money
Covers both skill-based (like poker) and chance-based games (like roulette)
Prohibits all forms of monetization where value is staked against potential winnings

Example: Fantasy sports platforms that required entry fees for cash prizes would now clearly fall under this prohibited category.

2. Esports: The Regulated Competitive Space

Definition: Structured competitions requiring physical dexterity, mental agility or strategic thinking between registered players/teams.

Permitted Monetization:

Participation/registration fees (not tied to performance)
Sponsorships and advertising
Performance-based prize money (no betting/wagering allowed)

Compliance Requirements:

Must be recognized under National Sports Governance Act 2025
Requires formal registration for each game title
Operators must implement strict anti-betting measures

Definition: Games primarily for entertainment/recreation without monetary stakes.

Allowed Revenue Models:

One-time access fees
Subscriptions
Advertising
In-game purchases (non-convertible to cash)

Prohibited Elements:

Any mechanism allowing conversion of in-game items to real money
Hidden staking mechanisms disguised as purchases

The Death of the Skill vs. Chance Debate (And Why It Matters)

Judicial History

1957: SC established differential treatment for games of skill (protected under Article 19(1)(g))
2020s: Multiple High Courts upheld skill-based gaming models (e.g., Dream11 fantasy sports)
2025: Supreme Court ban overturned this precedent for real-money formats

Practical Implications

Previously lawful models like skill-based rummy or poker now prohibited if involving money stakes
No distinction between chess tournaments with entry fees/payouts and casino games
Constitutional challenge pending but law currently enforceable

Compliance Landmines: What Operators Must Know

1. Expanded Liability

Primary Offenses: Operating money gaming platforms (3 yrs imprisonment + ₹1Cr fine)
Ancillary Offenses: Advertising (including influencers) or payment processing for banned games
Extraterritorial Reach: Applies to offshore operators serving Indian users

2. Enforcement Mechanisms

Payment blocking mandates for banks/financial institutions
App store takedowns and website blocking
Joint operations with state police forces

3. The Authority’s Broad Discretion

The newly constituted Online Gaming Regulatory Authority can examine:

Game mechanics and reward structures
Revenue models and fee utilization
Technical architecture and UI/UX design
Methods for cashing out virtual items

Strategic Pivots in the Industry

Case Studies of Adaptation

Dream11: Shifted to pure advertising model with free-to-play contests
MPL: Introduced subscription-based “Pro Pass” replacing paid contests
PokerBaazi: Transitioned to tutorial-based model with educational content

Persistent Grey Areas

Virtual Economies: Where in-game tokens can purchase premium content
Hybrid Models: Subscription services offering “bonus credits”
Skill Certification: Platforms charging for skill rating certificates

The Registration Framework Explained

Two-Tier Process

Determination Process
- Classifies games into the three categories
- Can be initiated by regulator, operator, or government
- Considers economic substance over legal form
Registration Requirement
- Mandatory for all esports titles
- Potential future expansion to social games
- Game-specific (not company-wide) approval

Example: An operator would need separate registrations for each esports title like Valorant or BGMI.

Looking Ahead: Unresolved Questions

Game Definition: How does opinion trading (e.g., “predict X stock’s movement”) qualify?
Prize Quizzes: Are educational platforms with cash rewards permissible?
Social Gambling: Private groups playing poker with virtual chips?

Expert Recommendations for Sustainable Models

Pure Advertising: Fully free-to-play with brand integrations
Premium Features: Paid cosmetic items that don’t affect gameplay
Subscription Walls: Paywalls for enhanced content (not tied to winnings)
Esports Ecosystem: Building around organized competitions

Critical Warning: “Token systems that allow indirect monetization through secondary markets may still qualify as prohibited stakes,” cautions Aaron Kamath.

Conclusion: A Work in Progress

While the PROG framework provides unprecedented clarity on prohibited activities, the lack of granular definitions creates compliance challenges. With the industry expected to contract by 60% in real-money segments, adaptation to permitted monetization models becomes essential for survival. Regulatory updates are anticipated to address ambiguities, but operators must prioritize conservative interpretations in the interim.