What’s Changing
- In August 2025, India passed the Promotion & Regulation of Online Gaming (PROG) Act, which bans Real-Money Gaming (RMG)—platforms where users stake and win real money.
- The Act also explicitly classifies esports (competitive digital games in teams or individuals) as a legitimate sport, and separates “online social games” (entertainment, education, recreation) from RMG.
- Enforcement includes prohibition of advertising RMG, blocking of payment processing through financial institutions, and legal penalties—including fines up to ~INR 10 million (around USD $110-120k) or up to 3 years imprisonment for violations.
Implications for the Video Games Industry
1. Regulatory Clarity & Trust
With clear legal definitions distinguishing RMG, esports, and social games, companies in the AVGC-XR space gain greater visibility and legitimacy. This can improve investor confidence and consumer trust.
2. Shift of Spend & Participation
Users and spending previously directed to RMG platforms may migrate to non-RMG games—social, casual, esports formats. This could broaden the market size for “traditional” video games.
3. Challenges for Monetization
RMG companies will need new monetization models (in-app purchases, subscriptions, ad-based, esports events) as RMG is no longer legal. ARPU (Average Revenue Per User) remains low (~US$1.92) in many cases, so scaling will require smart strategy.
4. Increased Government Support for Esports & AVGC-XR
Because the Act recognizes esports and mandates support for “skills-based games” and games that build cultural values, there is strong potential for subsidies, infrastructure, and policy incentives to help studios and creators in these verticals.
5. Risk of Overregulation & Future Legislation
While RMG is now covered, other game-mechanics like loot boxes, gacha, free-to-play mechanics are omitted for now—but could become regulated later. Studios should watch policy developments closely.
Why It Matters for AVGC-XR Creators & Ecosystems
| Area | Takeaway |
|---|---|
| Content Strategy | More opportunities in social and esports games; less in RMG-style products. Prioritize retention and live-ops. |
| Investment & Expansion | More favorable regulatory climate may attract investment in gaming infrastructure, event ecosystems, and cross-border IP projects. |
| Legal & Compliance Planning | Studios must ensure products don’t violate the new law; compliance around payment, advertising, and categorization is critical. |
| Talent & Jobs | Growth in esports, game design, casual games could drive demand for creators, designers, community managers etc. |
