Tech + Gaming hotline: Draft Online Gaming Rules Issued for Public Comment: Spotlight on E-Sports and Online Social Games

Draft Online Gaming Rules Issued for Public Comment: Spotlight on E-Sports and Online Social Games

This article was first published on lexology.com (October 8, 2025).

• Draft Rules under the Promotion and Regulation of Online Gaming Act, 2025 out for public feedback, until October 31.
• Registration not mandatory for Online Social Games, unlike for E-sports.
• Clarity provided on determination of Online Money Games which are prohibited, based on pay-ins and pay-outs – though element of confusion with Online Social Games continues.
• Online Gaming Authority to be set up with broad powers and functions.
• Three-tier grievance redressal mechanism for online social games and E-sports.
• Banks and fintechs to facilitate return of user funds for online games prior to commencement of the new law.

Background

The Indian Government passed the Promotion and Regulation of Online Gaming Act, 2025 (‘Act’) on August 22, 2025, which outright bans chance-based and skill—based online money games (‘OMGs’)¹ and seeks to regulate E-sports² and online social games (‘OSGs’).³ Our analysis of the Act is available at the link in the footnote.⁴

Going a step closer to bringing the Act into the force of law, the Government recently released the draft ‘Promotion and Regulation of Online Gaming Rules, 2025’ (‘Draft Rules’) for public consultation until October 31, 2025. The Draft Rules (i) clarify factors for determination of online games; (ii) provide the framework for the recognition and registration of OSGs, and registration of E-sports; (iii) seek to establish the Online Gaming Authority of India (‘Authority’) to discharge functions such as determination, categorization, and registration of online games; and (iv) provide for a grievance redressal mechanism to be implemented by online game service providers (each, an ‘OGSP’).

E-sports

• The Ministry of Youth Affairs and Sports will be the nodal ministry for the recognition and promotion of E-sports.⁵ However, registration of an E-sport would be done by the Authority.⁶
• Prior to grant of registration, the E-sport should be recognized under the National Sports Governance Act, 2025.⁷
• E-sports should only be offered after registration,⁸ which may be obtained through an application to the Authority.⁹ Registration would make the online gaming service provider eligible to avail support or incentives for promotion and development of such online game.

Online Social Games / OSGs

• The Ministry of Information and Broadcasting (‘MIB’) will be the nodal ministry for the promotion of OSGs.¹⁰ However, registration of an OSG would be done by the Authority.
• MIB is entasked with issuing codes of practices (‘CoPs’) for the categorisation of OSGs such as for recreational, educational, skill development or other purposes, to ensure safe and age-appropriate social gaming content.¹¹
• OSGs may be offered without registration with the Authority.¹² However, registration would make the online gaming service provider eligible to avail support or incentives for promotion and development of such game. For an online game to be an OSG: (i) the online game should not involve staking of money or ‘other stakes’¹³ with the expectation of winning (however payment of subscription fees or one time access fees which are not in the nature of a stake or a wager are permissible); (ii) the online game must be offered solely for entertainment, recreation or skill-development purposes; and (iii) the online game should not be an OMG or an E-sport.¹⁴

Registration of Online Games

The Authority may suo moto (on its own accord) or based on an application, determine that an online game is an OSG or an E-sport.¹⁵ If suo moto determined, the applicant may choose to make an application for registration of the OSG.¹⁶ In the case of E-sports, registration is mandatory.¹⁷

Applications may be made digitally to the Authority for registration of OSGs and E-sports.¹⁸ Details may be sought from the applicant such as relevant statutory registrations applicable to the applicant, name and description of the online game, category of the game (such as recreational or educational), age groups to whom the online game is intended to be offered, revenue model (including ad-based revenue, subscription or one-time access fee models, or other models not involving staking or wagering), user safety features, and grievance redressal mechanism.¹⁹

Upon registration of the OSG or E-sport, a certificate of registration (‘CoR’) will be issued to the OGSP²⁰ which will be valid and subsisting for up to 5 years, unless surrendered, suspended, or cancelled earlier.²¹

The CoR may be cancelled if: (i) there is a material change in the OSG or E-sport for which the CoR was granted;²² (ii) there are repeated or continued violations of directions issued by the Government or Authority to persons offering an online game;²³ (iii) the OGSP has failed to confirm the validity of recognition of the E-sport under the National Sports Governance Act, 2025 (in case of E-sports),²⁴ or (iv) in case of other violations under the Act or Draft Rules. In certain cases, the CoR may be suspended until further review.²⁵

Material Changes to Online Games

OGSPs are required to inform the Authority of any ‘material change’ in OSGs or E-sports, post receipt of registration.²⁶ ‘Material change’ means any “change in the manner of offering a registered online social game or e-sport, including a modification in features of the online game or its revenue model, which is reasonably likely to change the nature of such online social game or e-sport as an online money game or where there is any change in the manner in which money or anything recognized as equivalent or convertible to money is transacted for the online game” (emphasis supplied).²⁷Essentially, changes to the online game that may tip the needle in the game being considered an OMG are not permitted. Where a change results in the game constituting an OMG, the CoR of the online game may be cancelled.²⁸ For E-sports, a change in the status of recognition under the National Sports Governance Act, 2025 will also be a ‘material change’.²⁹

It appears that variations, modifications, enhancements do not need to be reported to the Authority unless there is a reasonable likelihood such changes may result in the online game may be categorized as an OMG. For example, change in revenue model of the game from an ad-based game to premium membership to unlock ad-free play may not qualify as a material change because such online game may not result in an OMG.

Determination of Online Money Games / OMGs

The Authority may, suo moto, or based on an application, determine whether an online game is an OMG (and hence prohibited).³⁰ The Authority may consider any or all of the following factors (which have been reproduced verbatim), among other factors, to determine whether an online game is an OMG:

“…(a) whether the online game involves any element of money or other stakes by whatever name called, including payment of fees, deposit of money or other stakes, or making any purchase during game play at any point of time in the online game and such money is in the nature of a stake or wager;³¹

(b) whether the payment of fees or deposits made by users is used as consideration for participating in the online game or is used as stake or wager or a consideration for winning;³²

(c) whether participation in the online game by a user is contingent on or a precondition for participation on a prior deposit of money or other stakes by such user;³³

(d) whether the online game for which payment of fees or deposits made by users provides for winnings, rewards, or payouts in the form of money or other enrichment which is redeemable, convertible to or can be encashed as money, at any point of time in the online game…”³⁴ (emphasis supplied).

If the Authority determines that an online game is an OMG, the Authority may direct the concerned OGSP to cease offering the game, prohibit the advertising, promotion and facilitation of the OMG.³⁵ The Authority may also initiate action to block access to the OMG³⁶ and blacklist such OMGs by publishing a list of OMGs on its website.³⁷

The criteria stipulated at clauses (b) and (c) above are broad and could potentially overlap with the description of OSGs under the Act.³⁸ Models that intend to charge a subscription fee or a one-time access fee for participation in their online games (which is specifically permitted per the definition under the Act) could fall within the factors that determine an OMG, though that may not be the intent behind the Draft Rules. Given that the Authority may consider any or all of the criteria above, it is possible that OSGs using the subscription fee or one time access fee models could be misclassified as OMGs due to the direct conflict between the definition of ‘OSG’ under the Act, and the criteria for determining an OMG as set out above.

User Grievance Redressal

The Draft Rules provide for a three-tiered grievance redressal mechanism for users of registered OSGs and E-sports. At the first level, OGSPs offering registered OSGs and E-sports are required to provide an internal grievance redressal mechanism to address the grievances of their users.³⁹ If users are dissatisfied with the resolution provided by such OGSP, they may approach the ‘Grievance Appellate Committee’ (‘GAC’) within 30 days of the OGSP’s decision.⁴⁰ If the aggrieved user is dissatisfied with the resolution provided by the GAC, she may appeal to the Authority within 30 days of the GAC’s order.⁴¹

The GAC refers to the committee established under the (‘IT Rules, 2021’) for dealing with appeals against decisions of grievance officers of intermediaries.⁴² Since the GACs⁴³ were set up to redress grievances of users against intermediaries, it is unclear whether they are equipped to address grievances pertaining to online games. This is also relevant since the provisions pertaining to ‘online gaming intermediaries’ under the IT Rules, 2021 were never enforced.⁴⁴

Online Gaming Authority of India

The Draft Rules stipulate for the setting up of the Authority, which may function as a digital office.⁴⁵ The Authority will have the same powers as vested in a civil court under the Code of Civil Procedure, 1908, including the power to summon and enforce attendance of any person and examining them under oath, receiving evidence on affidavit, requiring discovery and production of documents, inspecting any data, book, document, register,  books of account etc., and issuing commissions for the examination of witnesses or documents.⁴⁶

The Authority has several functions such as (i) determining whether an online game is an OMG or a permissible game; (ii) upon determination, categorizing such game; (iii) maintaining and publishing a National Online Social Games and E-Sports Registry with a list of registered OSGs and E-sports, and a list of OMGs that are prohibited; (iv) issuing directions to stakeholders offering or facilitating online games (or their advertisements) and facilitating financial transactions or authorization of funds towards payments for online games; (v) issuing CoPs for E-sports and OSGs in consultation with the Government; (vi) imposing penalties and cancelling and suspending registration of OGSPs; (vii) entertaining appeals from the GAC; and (viii) co-ordinating with financial institutions, law enforcement agencies and Government agencies.⁴⁷

The Authority has the power to modify, suspend, or cancel a direction⁴⁸ issued by itself, or the Central Government, against any person offering, organizing, or facilitating any online game under the Act, upon: (i) receiving a representation made by the affected person; (ii) reference being made by the Central Government; or (iii) receipt of an order from a court of competent jurisdiction.⁴⁹ This appears to bestow wide powers to the Authority to overrule/ disregard the reference of the Central Government and the order of a competent court.

Appellate Authority

Appeals from the decision of the Authority relating to determination of an online game, registration of an OSG or E-sport, cancellation of registration of an OSG or E-sport, or imposition of a penalty can be appealed to the ‘Appellate Authority’,⁵⁰ which is the Secretary to the Government of India in MeitY.⁵¹ While this appears to be a conflict of interest and may result in a lack of independent decision making, an aggrieved OGSP should presumably be able to seek judicial review of the order of the Appellate Authority before the Courts by way of a writ.⁵²

Investigation for Non-Compliance

Upon receiving a complaint, or suo moto,the Authority may issue a notice against an OGSP containing particulars of the non-compliance and fix a date and time for the OGSP to admit to the non-compliance or show cause as to why an inquiry should not be held.⁵³

Notably, the Draft Rules empower the Authority, ‘any time or on receipt of a report of non-compliance’ from an aggrieved person, a government agency, a court of competent jurisdiction, or suo moto, to have the matter investigated by the authorized officers under the Act.⁵⁴ The authorized officers have been vested with wide powers, including entering any physical or digital premises, conducting search and seizure, and arresting, without a warrant, any person reasonably suspected of committing or about to commit an offence under the Act.⁵⁵

This investigative power appears to be independent of the requirement to provide notice and an opportunity of being heard to OGSPs. Accordingly, these broad investigative powers may result in an arbitrary exercise of such powers.

Repayment of User Funds

The Draft Rules clarify that funds pertaining to online games should be returned to users prior to enforcement of the Act.⁵⁶ This is an obligation placed on banks, financial institutions, and other persons facilitating financial transactions or authorization of funds prior to the Act. However, it is unclear whether the user is entitled to the return of just their winnings or also to their wallet deposits on the platform. Further, it is unclear whether users would only be entitled to a refund where the OMG platform’s terms and conditions allow for it, or in all cases where users have deposited money into any OMG.

Call to Action

The Draft Rules stipulating: (i) the manner in which OSGs and E-sports may be categorized and registered; (ii) the criterion for determining an OMG; (iii) the grievance redressal mechanism for users; and (iv) the relaxation for banks and financial institutions to process repayment of funds to users, provide some clarity for the industry. However, it is important for the industry to consolidate and ensure that there is active engagement with the Government during the consultation period and thereafter to ensure that the regulatory uncertainties and the operational concerns are meaningfully addressed and clarified. A few preliminary concerns and takeaways from the Draft Rules are summarized under:

• The broad parameters contemplated under assessment of OMGs may result in the misclassification of OSGs adopting the subscription fee/ one-time fee models. In the absence of such clarity, it may be advisable for OSGs to seek registration under the Act to ensure that the model is acceptable to the Authority and to avoid being misclassified as an OMG under the Act. Additionally, clarity may be sought on what may be considered as ‘other enrichment’ that may be awarded to users and whether such ‘other enrichment’ may include in-game features or would be limited to money or rewards with money’s worth.
• It is unclear how banks and fintechs may determine whether a transaction in an online game is permitted or prohibited (as an OMG). Given the uncertainty and criminal liability attached to facilitating financial transactions in OMGs, banks and fintechs may be less inclined to onboard OGSPs and process payments. Clarifications should be sought to clarify this position for banks and fintechs.
• The 90-day timeline prescribed for the Authority to decide on an application for registration of an online game is excessive and may result in operational issues for OGSPs. Further, it is unclear why CoRs are only valid for a period of 5 years which may hamper continuity of business operations. It would be beneficial for OGSPs if the CoRs are valid in perpetuity, with periodic audits or self-reporting requirements by the OGSP to the Authority. Alternatively, a simplified renewal process should be adopted.⁵⁷
• CoPs issued by the Authority or the Government may take into consideration international best practices followed by renowned foreign operators of online games to ensure that the regulatory environment is supportive for such operators, and to ensure that overly prescriptive requirements are not stipulated for in the CoPs which may dissuade foreign operators offering their online games in India.

As on the date of this piece, feedback or comments on the Draft Rules may be submitted to MeitY via email by October 31, 2025.⁵⁸

Authors

Sanjana Shrivastav, Tanishq Gupta, Shashank Venkat and Aaron Kamath

You can direct your queries or comments to the relevant member.

¹Section 2 (g), the Act, “online money game” means an online game, irrespective of whether such game is based on skill, chance, or both, played by a user by paying fees, depositing money or other stakes in expectation of winning which entails monetary and other enrichment in return of money or other stakes; but shall not include any e-sports”.

²Section 2 (c), the Act, “e-sport” means an online game which– (i) is played as part of multi-sports events (ii) involves organised competitive events between individuals or teams, conducted in multiplayer formats governed by predefined rules; (iii) is duly recognised under the National Sports Governance Act, 2025, and registered with the Authority or agency under section 3; (iv) has outcome determined solely by factors such as physical dexterity, mental agility, strategic thinking or other similar skills of users as players; (v) may include payment of registration or participation fees solely for the purpose of entering the competition or covering administrative costs and may include performance-based prize money by the player; and (vi) shall not involve the placing of bets, wagers or any other stakes by any person, whether or not such person is a participant, including any winning out of such bets, wagers or any other stakes.

³Section 2 (i), the Act, “online social game”, means an online game which— (i) does not involve staking of money or other stakes or participation with the expectation of winning by way of monetary gain in return of money or other stakes; (ii) may allow access through payment of a subscription fee or one-time access fee, provided that such payment is not in the nature of a stake or wager; (iii) is offered solely for entertainment, recreation or skill-development purposes; and (iv) is not an online money game or e-sport.

⁴Nishith Desai Associates, Proposed Ban on India’s Multi-Billion Dollar Gaming Industry: Global Operators and Investors Impacted, available at: https://www.nishithdesai.com/Default.aspx?id=15427 (last accessed on October 08, 2025).

⁵Rule 3, Draft Rules.

⁶Rule 15(1), Draft Rules.

⁷Rule 13 (8) (b), Draft Rules.

⁸Rule 13 (7) (b) read with Rule 12 (2), Draft Rules.

⁹Rule 12(3) (a) of the Draft Rules states that the OGSP may be required to provide information including details of relevant appliable statutory registrations, name and description of the game, intended category, age-group the game intends to be offered to, revenue model not in the nature of stake or wager, user safety features and internal grievance mechanism for the application. Per Rule 12(4) of the Draft Rules, the OGSP must also furnish an undertaking to not indulge in prohibited activities.

¹⁰Rule 4 (1), Draft Rules.

¹¹Rule 4 (4), Draft Rules.

¹²Rule 4 (3), Draft Rules.

¹³Section 2 (j), the Act.

¹⁴Section 2 (i), the Act.

¹⁵Rule 13 (7) and (8), Draft Rules.

¹⁶Rule 13 (7) (a), Draft Rules.

¹⁷Rule 13 (7) (b), Draft Rules.

¹⁸Rule 12 (1), Draft Rules.

¹⁹Rule 12 (3), Draft Rules.

²⁰Rule 16 (1), Draft Rules.

²¹Rule 16 (2), Draft Rules.

²²Rule 18 (1) (a), Draft Rules.

²³Rules 18 (1) (b), Draft Rules.

²⁴Rule 18 (1) (c), Draft Rules.

²⁵Rule 19(1), Draft Rules provides for grounds for suspensions where – (a) an inquiry for cancellation is initiated, either suo moto or on a complaint; (b) a compliance direction remains unfulfilled to the Authority’s satisfaction, attracting possible penalty under Section 12; (c) the OGSP made a false or incorrect statement in its registration application; (d) the OGSP failed to pay a penalty under the Act or the National Sports Governance Act, 2025; (e) the OGSP violated directions, orders, codes of practice, or guidelines under the said Acts; (f) an e-sport OGSP did not timely confirm valid recognition under the National Sports Governance Act, 2025; or (g) there was a breach of any applicable law relating to online social games or e-sports.

²⁶Rule 17 (1), Draft Rules.

²⁷Rule 2 (h), Draft Rules.

²⁸Rule 18 (1) (a), Draft Rules.

²⁹Rule 17 (1) (a), Draft Rules.

³⁰Rule 13 (1), Draft Rules.

³¹Rule 13 (1) (a), Draft Rules.

³²Rule 13 (1) (b), Draft Rules.

³³Rule 13 (1) (c), Draft Rules.

³⁴Rule 13 (1) (d), Draft Rules.

³⁵Rule 13 (4) (a) & (b), Draft Rules.

³⁶Section 14 of the Act.

³⁷Rule 13 (4) (c) & (d), Draft Rules.

³⁸Section 2(1)(i) of the Act defines an OSG as an online game which (i) does not involve staking of money or other stakes or participation with the expectation of winning by way of monetary gain in return of money or other stakes; (ii) may allow access through payment of a subscription fee or one-time access fee, provided that such payment is not in the nature of a stake or wager; (iii) is offered solely for entertainment, recreation or skill-development purposes; and (iv) is not an online money game or e-sport.

³⁹Rule 23(1), Draft Rules.

⁴⁰Rule 23(3), Draft Rules.

⁴¹Rule 23(6), Draft Rules.

⁴²Rule 2(g), Draft Rules, and Rule 3A, IT Rules, 2021.

⁴³Rule 3A (2) of the IT Rules, 2021 states that a GAC shall consist of a Chairperson and two whole time members appointed by the Central Government, of which one shall be a member ex officio and two shall be independent members.

⁴⁴Rule 4-B, IT Rules, 2021; Hindustan Times, Online Gaming Rules are Not Enforceable Govt Tells Court (29 May, 2025), available at: https://www.hindustantimes.com/india-news/online-gaming-rules-are-not-enforceable-govt-tells-court-101743202910764.html (last accessed on October 04, 2025).

⁴⁵Rule 5(4), Draft Rules.

⁴⁶Rule 10 (3), Draft Rules.

⁴⁷Rule 10, Draft Rules.

⁴⁸Subject to conditions as may be specified.

⁴⁹Rule 10 (2), Draft Rules.

⁵⁰Rule 11 (1), Draft Rules.

⁵¹Rule 2(c), Draft Rules.

⁵²Articles 32 and 226, Constitution of India.

⁵³Rule 21 (3), Draft Rules.

⁵⁴Rule 21 (6), Draft Rules.

⁵⁵Sections 15 and 16, the Act.

⁵⁶Rule 24 (1), Draft Rules. This relaxation will cease to have effect upon the expiration of 180 days from the date of the enforcement of the Act.

⁵⁷For example, in 2020, RBI granted perpetual validity for payment system operators subject to certain conditions. This model can be emulated to obviate onerous licensing requirements for OGSPs with conditions like regular audit requirements and self-certifications/ representations for monitoring; Economic Times, RBI Allows Perpetual Validity of Licenses of Payment System Operators (October 09, 2020), available at: https://bfsi.economictimes.indiatimes.com/news/banking/rbi-allows-perpetual-validity-of-licenses-of-payment-system-operators/78569272#:~:text=Banking-,RBI%20allows%20perpetual%20validity%20of%20licenses%20of%20payment%20system%20operators,and%20technologies%20into%20value%20chains.%E2%80%9D (last accessed on October 07, 2025).

⁵⁸The feedback/comments on the draft rules may be submitted by email to ogrules.consultation@meity.gov.in in a rule wise manner, in MS Word or PDF format by 31st October, 2025.

Disclaimer

The contents of this hotline should not be construed as legal opinion. View detailed disclaimer.

This hotline does not constitute a legal opinion and may contain information generated using various artificial intelligence (AI) tools or assistants, including but not limited to our in-house tool, NaiDA. We strive to ensure the highest quality and accuracy of our content and services. Nishith Desai Associates is committed to the responsible use of AI tools, maintaining client confidentiality, and adhering to strict data protection policies to safeguard your information.

This hotline provides general information existing at the time of preparation. The Hotline is intended as a news update and Nishith Desai Associates neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this Hotline. It is recommended that professional advice be taken based on the specific facts and circumstances. This hotline does not substitute the need to refer to the original pronouncements.

This is not a spam email. You have received this email because you have either requested for it or someone must have suggested your name. Since India has no anti-spamming law, we refer to the US directive, which states that a email cannot be considered spam if it contains the sender’s contact information, which this email does. In case this email doesn’t concern you, please unsubscribe from mailing list.