India Bans Real-Money Online Games and Clears a Path for Esports

India’s new federal online gaming regime took effect on 1 May, and the key point for payments people is simple: real-money online gambling is now off the table, while esports and social games are carved out under tighter definitions. For PSPs, acquirers, and banks, that means payment flows into gaming in India now need a much sharper filter.

1. The regime consists of the Promotion and Regulation of Online Gaming Act, 2025 (PROG Act) and the Online Gaming Rules, 2026. It bans online games of chance with real money, following the Supreme Court ban issued in August 2025.
2. The law splits online games in India into three buckets: online games of chance, esports, and online social games. A real-money game is one where the user pays, deposits, or stakes money or other value to obtain a monetary return, regardless of whether skill, chance, or both are involved.
3. Esports are defined as organised competitive events. They must be recognized under the National Sports Governance Act, 2025, cannot involve betting, and require registration. Social games are meant for recreation or skill development and cannot involve financial risk.
4. The old Indian line between skill and chance has lost force. Before the PROG Act, Indian courts treated games with substantial skill as protected commercial activity, and courts in Punjab and Haryana and in Bombay held that Dream11’s fantasy sports format was mainly skill-based. Aaron Kamath, co-head of Technology, Digital and Commercial Law at Nishith Desai Associates, says that almost any format with an entry fee and cash prize now falls under the rule. Even credits, coins, or chips bought with money can count as “other stakes.”
5. The ban reaches beyond operators. Advertising a gambling game or enabling its payments can be a criminal offence, with penalties of up to three years in prison or fines of up to $106,000, and higher penalties for repeat offenders. The law also applies to foreign operators offering games to users in India, and the regulator can instruct banks and payment providers to stop transactions and block websites and apps.
6. There is still commercial room, just not for gambling flows. Social games can charge subscriptions, access fees, advertising, and in-game purchases, as long as no payment functions as a stake. Registered esports can charge entry fees and award cash prizes based on performance. The market moved early: Dream11, MPL, Zupee, and PokerBaazi suspended their real-money games within days of the law’s approval in August 2025, and several, including Dream11, shifted to ad-supported free-to-play models.

For high-risk payment providers, the practical takeaway is that India now needs product-level segmentation, not just merchant-level screening. Real-money gaming is prohibited; esports and social gaming are still processable, but only if the payment flow does not start looking like a bet in disguise.