India's PROG Act and 2026 Rules ban real-money gaming, leaving open questions for esports and social games

India's new federal online gaming regime, made up of the Promotion and Regulation of Online Gaming Act, 2025 (PROG Act) and the Online Gaming Rules 2026, came into force on 1 May. It prohibits online money gaming and follows a Supreme Court ban in August 2025. Analysts quoted by iGaming Business say the framework is not yet a finished rulebook and point to several areas of uncertainty, including what counts as a game, who bears compliance obligations, esports recognition, payment arrangements and evolving monetisation models.

Section 2 of the Act creates three categories: online money games, esports and online social games. Aaron Kamath, co-head of the Tech, Digital and Commercial Law Practice at Nishith Desai Associates, says the money game definition is deliberately broad. Because "other stakes" covers credits, coins, tokens and similar items bought with money, almost any format that combines a paid entry with a monetary or money-equivalent reward is caught. A game qualifies irrespective of skill, chance or both, so the long-running skill-versus-chance debate has lost its relevance for these products.

That debate had shaped Indian case law since Supreme Court rulings in 1957, and courts including the Punjab & Haryana High Court and Bombay High Court had found Dream11's fantasy sports format to be predominantly a game of skill. The new law changes that position for real-money gaming.

The prohibition reaches beyond operators. Advertising an online money game or facilitating payments for one can be a criminal offence, with payment-related offences carrying up to three years in prison and/or a fine of up to INR 1 crore, about $106,000, and higher penalties for repeat offences. The rules also apply to offshore operators serving users in India, and the regulator can direct banks and payment providers to stop processing transactions and can block non-compliant websites and apps.

Some commercial space remains. Online social games may earn revenue from subscriptions, one-time access fees, advertising and in-game purchases, provided no payment works as a stake or wager. Esports titles must be recognised under the National Sports Governance Act, 2025, and registered under the 2026 Rules; they may charge participation fees and offer performance-based prizes if no betting is involved.

The market adjusted early. Kamath notes that Dream11, MPL, Zupee and PokerBaazi suspended cash games within days of the Act's passage in August 2025, and several have moved to free-to-play, advertising- and sponsorship-led models. On 27 May the Supreme Court upheld the 28% GST on the full value of deposits on real-money platforms, including for past periods. A constitutional challenge to the Act is still pending, but the law remains in force, and Kamath says the scope for creative structuring is very limited.