The PROG Act 2025 — Part II: Bans, Penalties, and the Industry's Reckoning

India's online gaming industry grew from a niche to a mainstream force in a decade. In 2024, the market was valued at $3.7 billion, with projections to $9.1 billion by 2029. Over 400 million gamers. $2 billion raised by gaming start-ups between 2019 and 2024. Dream11 at an $8 billion valuation. MPL, Gameskraft, Nazara — a generation of Indian gaming companies built on the legal position that games of skill are constitutionally protected commerce, not gambling.

The Promotion and Regulation of Online Gaming Act, 2025 has fundamentally disrupted that position. This is Part II of our analysis — the restrictions, the penalties, and what they mean for the industry.

The Real Money Gaming Ban

The Act imposes a blanket ban on offering, operating, or facilitating online money games — defined as any game involving monetary stakes or convertible rewards, including real money deposits and digital tokens convertible to money. This covers fantasy sports, rummy for stakes, poker for stakes, prediction markets, and binary trading options. The Supreme Court's consistent position that games of skill are constitutionally protected commerce has not been overturned — but the Act effectively extinguishes the commercial model that was built on that protection.

The scale of disruption is significant. Real money gaming accounted for 86% of total online gaming revenue in India. Of the $2 billion raised by gaming start-ups between 2019 and 2024, 90% went into RMG. Dream11, MPL, Gameskraft, Zupee — their business models are directly affected. Nazara's stock fell 13% on news of the Bill's passage, reflecting market expectations of revenue loss.

The Advertising and Financial Processing Prohibition

The ban extends beyond operators. The Act prohibits promotion and advertising of online money games — catching the celebrity and influencer endorsements that drove user acquisition for RMG platforms. It also bars financial processing: banks, fintechs, and digital wallets are prohibited from processing transactions related to online money games. This is designed to close the workaround of offshore platforms that previously bypassed Indian regulation by processing transactions through foreign payment rails.

Why the Government Acted

The regulatory rationale is documented and, to a significant degree, difficult to dispute. The WHO's ICD-11 recognises both Gaming Disorder and Gambling Disorder as medical conditions. Multiple suicides and family bankruptcies linked to online money gaming losses were reported across Indian states — 47 in Tamil Nadu between 2019 and 2024 alone. Offshore platforms were identified as conduits for tax evasion and money laundering. Aggressive advertising using celebrity endorsements was found to be misleading consumers, particularly minors. The regulatory case had been building for years.

The Employment and Investment Impact

The industry employed 50,000 direct workers and over 200,000 in total including game developers, marketing professionals, and support services. Those jobs are now at risk. The $2 billion in investment raised by RMG companies faces significant writedown risk. Several of the sector's largest companies — Dream11, MPL — will need to fundamentally restructure their business models toward esports, social gaming, or international markets.

What Comes Next

The PROG Act is a historic step — the first central law on online gaming in India, bringing long-needed uniformity in regulation. But the transition will be painful, and there are genuine risks that the regulatory overcorrection will damage India's ability to build a globally competitive gaming industry. Esports and social gaming should not be treated on par with gambling. Indian game developers — who were not the architects of the RMG problem — deserve policy support, not regulatory collateral damage.

We expect legal challenges. The constitutional protection for games of skill has not been extinguished. Whether the Act's blanket ban survives scrutiny at the Supreme Court will depend on the evidence of harm and the proportionality of the response. AM Sports Law will continue to monitor and advise on these developments.