Overview of the Online Gaming Sector and the New Legislation
The Promotion and Regulation of Online Gaming Act, 2025, has caused significant upheaval in India's investment landscape by enforcing a comprehensive ban on "online money gaming," which includes real-money gaming, its advertising, and financial transactions. The move marks a dramatic policy shift from an earlier framework that encouraged self-regulation and differentiated between games of skill and chance.
Impact on the Gaming Industry
- Approximately 155 million of India's 488 million gamers engage in online money gaming, making it a major component of the gaming economy, with a notable 10% annual growth as per the 2025 EY Media & Entertainment report.
- A significant financial loss of ₹20,000 crore is estimated by gaming companies due to the ban.
- Beyond direct losses, the sector funneled ₹7,000 crore annually into critical areas like advertising, data centers, and cybersecurity.
- The FICCI-EY report underscores how the sector contributed over ₹50,000 crore in indirect job creation across various fields like digital marketing and event management.
Government's Involvement and Policy U-Turn
Historically, the government had championed this sector through several supportive measures:
- The Ministry of Electronics and IT had integrated online gaming into its digital economy roadmap in 2022.
- In 2023, a light-touch regulatory framework was introduced, favoring self-regulation over prohibitions.
- The Animation, Visual Effects, Gaming and Comics Promotion Task Force was established to promote the sector, recommending tax incentives and skill-building initiatives.
- The abrupt legislative change has cast doubt on the stability of policy commitments, potentially affecting other emerging sectors like drones, e-commerce, and AI.
Investor Confidence and Sectoral Impact
The rushed passage of the law, with minimal debate and lack of industry consultation, has damaged investor trust. This could affect future investments in legal gaming sectors such as e-sports and online social gaming.
Recommendations and Future Steps
The government is encouraged to:
- Release detailed FAQs and clarifications regarding the legality of different game types and features.
- Organize government-backed events like gaming showcases and summits to rebuild investor confidence.
- Act with urgency to demonstrate commitment to supporting the growth of e-sports and online social gaming.
Conclusion
To preserve its status as a hub for digital innovation, India must work to restore investor confidence, not only within the gaming sector but also in its broader regulatory framework. The stability and predictability of India's regulatory environment are critical to maintaining the "India growth story."
Authored by Nehaa Chaudhari and Rutuja Pol of Ikigai Law, with research assistance from Shambhavi Ravishankar. The views expressed are personal.