On October 02, 2025, the Ministry of Electronics and Information Technology (“MEITY”) unveiled the draft Promotion and Regulation of Online Gaming Rules, 2025 (“Draft Rules”) pursuant to the Promotion and Regulation of Online Gaming Act, 2025 (“Gaming Act”). The stated objective of these Draft Rules is to cultivate a legitimate, transparent, and robust e-sports and social gaming ecosystem in India, while simultaneously addressing a spectrum of regulatory, operational, and consumer protection concerns. The Draft Rules are currently open for public consultation, with stakeholders invited to submit their comments by October 31, 2025.

While the online gaming industry is still grappling and coming to terms with the impact of the Gaming Act (though the Gaming Act is yet to be made effective), the Draft Rules were expected to either further impact the industry or help bringing some much-needed clarity and interpretive guidance pertaining to some of the terminology used in the Gaming Act and the classification of online games. While the Government has asked all stakeholders to provide their feedback, we provide our initial analysis of the Draft Rules, highlighting the key features, strengths, and areas where further clarification or improvement may be necessary, including practical considerations for industry stakeholders.

A. Key Features of the Draft Rules

1. Establishment of the Online Gaming Authority of India

The Draft Rules propose the establishment of the Online Gaming Authority of India (“Authority”), which is envisaged as the central regulatory body for the online gaming sector. The Authority’s core functions include:

• Determining whether an online game qualifies as an ‘online money game’;
• Recognizing, categorizing, and registering online games, including e-sports and online social games;
• Investigating complaints and issuing guidelines or codes of practice;
• Regulating advertisements and financial transactions related to online games and issuing directions to the entities involved in such activities; etc.

Any appeals from the decision of the Online Gaming Authority lies to the ‘Appellate Authority’  which is designated as the Secretary to the Government of India in MEITY.

2. Determination of Online Money Games

The Authority is empowered to determine, either suo moto or upon application for registration, whether an online game constitutes an ‘online money game’. The determination is based on several indicative factors, including:

• The involvement of any element of money or other stakes, such as payment of fees, deposit of money or other stakes, or in-game purchases, where such money is in the nature of a stake or wager;
• Whether user payments serve as consideration for participation, or is used as a stake or wager or as consideration for winning;
• Whether participation is contingent upon a prior deposit of money or other stakes;
• Whether the game (for which user deposits have been accepted) offers winnings, rewards, or payouts in the form of money or other enrichment that is redeemable, convertible, or can be encashed as real money at any point;
• Any other relevant factors deemed necessary by the Authority.

It’s important to note that these parameters are indicative, not exhaustive, and the Authority retains discretion to consider additional factors as appropriate. That said, these parameters do bring in some further clarity on how an online money game will be examined.

3. Registration of ‘Online Social Games’

The Draft Rules clarify that an ‘online social game’ (as defined under the Gaming Act) may be offered to users without obtaining a registration under the Gaming Act. However, online game service providers (“Service Providers”) may voluntarily apply to the Authority for recognition and registration of their online social game. While the Gaming Act had provided for a registration requirement for online social games, the Draft Rules provide some relief by making such registration voluntary.

Upon receipt of such an application, the Authority is required to process and grant registration within ninety (90) days, issuing a certificate valid for up to five (5) years. Additionally, the Authority may, on its own initiative, determine whether a game qualifies as a social game and may direct the service provider to seek registration accordingly.

4. Grievance Redressal Mechanism

Every Service Provider offering a registered ‘online social game’ or an ‘e-sport’ must establish and maintain an internal grievance redressal mechanism to address user complaints. If a user is dissatisfied with the outcome, they may escalate the matter to the Grievance Appellate Committee, as constituted under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. Further appeals from the Committee’s decision may be made to the Authority within thirty (30) days.

5. Penalties for Non-Compliance

The Authority is vested with the power to investigate alleged non-compliance, either suo moto or upon receiving a complaint. Upon finding non-compliance, the Authority may:

• Direct the service provider to remedy the non-compliance;
• Impose penalties as deemed appropriate;
• Suspend or cancel the certificate of registration;
• Prohibit the service provider from offering, facilitating, or promoting the relevant games for a specified period.

In determining the appropriate penalty, the Authority will consider factors such as the quantum of unfair advantage gained, the loss caused to any person, the repetitive nature, gravity, and duration of the non-compliance, the number of users affected, and the level of harm suffered.

6. Material Change Notification

Service Providers holding a certificate of registration for an ‘online social game’ are required to notify the Authority of any ”material change” in the nature of the registered game. ”Material change” is defined as:

• Any modification in the features or revenue model of the game that is reasonably likely to alter its classification to an online money game; or
• Any change in the way money (or its equivalent) is transacted for the game.

7. Repayment of User Funds

The Draft Rules provide that any funds relating to online games, which are due to be returned to users and are in the custody of banks or financial institutions prior to the enforcement of the Gaming Act, must be remitted to the eligible users within one hundred and eighty (180) days from the date of enforcement.

B. Positives – Draft Rules

1. The Draft Rules establish a clear and structured regulatory regime, delineating the roles and responsibilities of the Authority and setting out defined processes for registration, classification, and enforcement.
2. The mandatory grievance redressal mechanisms, coupled with the right to escalate complaints, significantly bolster user protection and accountability.
3. The option for voluntary registration of online social games provides Service Providers with the flexibility to seek formal recognition without imposing unnecessary regulatory burdens.
4. The requirement to notify the Authority of material changes ensures ongoing regulatory oversight and adaptability to evolving game formats and business models.
   
   C. Areas Requiring Clarification and Improvements

1. Definition of ”Stake or Wager” and ”Other Stakes”

The Draft Rules offer only indicative factors for classifying ‘online money games’, without providing a precise definition of a ”stake or wager”. This lack of clarity may result in interpretational ambiguities and regulatory uncertainty. The broad definition of “other stakes” under the Gaming Act is not sufficiently clarified or further elaborated in the Draft Rules, particularly in the context of in-game currencies or rewards. Further guidance is necessary to help Service Providers understand what may be considered as stakes or wagers, especially regarding digital assets and in-game economies.

2. Consultative Approach with the Authority

The current framework emphasizes formal applications for registration or clarification. A more consultative, inspector-cum-facilitator approach, whereunder the Service Providers can seek informal feedback from the Authority (or any official representative thereof) would foster compliance and reduce the risk of adverse regulatory actions. Such a mechanism would enable collaborative assessment of registration requirements and compliance obligations, mirroring the best practices in other regulatory domains. This would also mitigate the potential chilling effect of formal applications, which may inadvertently trigger a broader regulatory scrutiny.

3. Validity Period of Registration

The Draft Rules permit applicants to select a registration validity period of up to five years. However, the rationale for imposing a fixed outer validity period is unclear, particularly since Service Providers are already obligated to notify the Authority of ‘material changes’. Requiring renewal solely based on the passage of time may duplicate oversight mechanisms and create unnecessary administrative burdens. A more flexible approach, where registration remains valid unless there is a ‘material change’ or non-compliance, could be considered in order to streamline the regulatory processes.

4. Information Disclosure and Regulatory Burden

The registration or clarification process may require Service Providers to disclose detailed information about their games, including revenue models and monetization strategies. While transparency is essential, there is a risk that such disclosures could lead to increased regulatory scrutiny or unintended consequences for innovative business models. The Draft Rules would benefit from clearer guidelines on the scope and limits of information required, balancing regulatory objectives with the need to foster innovation and protect proprietary business information.

5. Impact of Material Change Provisions

The requirement to notify the Authority of any material change in a registered online social game is a positive step for ongoing oversight. However, the definition of ‘material change’ could be further refined to avoid ambiguity and ensure that only significant modifications (that may, in essence, change the nature of the online game as an online social game) trigger the notification requirement, thereby preventing unnecessary regulatory interventions for minor or routine updates.

6. Practical Considerations for Industry Stakeholders

• The lack of clarity on the key definitions and the absence of a process for informal consultation may create uncertainty for game developers and Service Providers.
• The potential for increased regulatory scrutiny following formal applications for registration or clarification could have a chilling effect on innovation and investment.
• The industry would benefit from clear, practical guidance on compliance expectations and the opportunity for pre-emptive, informal engagement with the Authority.

 Conclusion

The Draft Rules represent a significant and progressive step towards establishing a comprehensive regulatory framework for online gaming in India. The Draft Rules seek to balance the twin objectives of enabling industry growth and safeguarding user interests. However, certain aspects, particularly the definitions of key terms, the approach to regulatory engagement, the rationale for registration validity, and the scope of information disclosure etc., require further clarification to ensure effective, fair, and innovation-friendly implementation.

A more consultative and flexible regulatory approach, coupled with clearer definitions and practical guidance, would help create a forward-looking and responsive environment for the online gaming industry. Industry stakeholders are strongly encouraged to provide detailed and constructive feedback during the consultation period to help shape a regulatory regime that is both robust and attuned to the realities of this dynamic sector.