Analysis of the definition of an Online Money Game
As of August 22,2025, the newly enacted Promotion and Regulation of Online Gaming Act, 2025 effectively overrides the existing legal regime governing online gaming in India with immediate effect.
The preamble to the Promotion and Regulation of Online Gaming Act, 2025
It is important to consider the preamble to the Promotion and Regulation of Online Gaming Act, 2025 for this opinion as it defines the legislative intent of fully prohibiting online money games giving it a very broad definition by including all forms of ‘staking’, monetary or otherwise or participation with the expectation of winning by way of a monetary gain in return or other stakes and establishing supervisory and regulatory control over online social games meant for entertainment and education. The functions and monetization policies of online games will have to be mapped against not only the provisions / sections of the act but also against the legislative intent articulated in the preamble to ensure there is no violation.
The preamble to the Promotion and Regulation of Online Gaming Act, 2025, articulates a balanced vision for the future of India’s online gaming sector. The Act was passed:
- To foster growth and innovation in online gaming: The preamble acknowledges that online gaming, including e-sports, educational, and social games, has become one of the most dynamic and rapidly expanding segments of the digital and creative economy. It highlights India’s large pool of technologically skilled young professionals and a growing domestic market, positioning the country as a future global leader in the online gaming value chain.
- To establish regulatory oversight: Recognizing the absence of a dedicated institutional and legal framework for online gaming, the preamble emphasizes the urgent need for coordinated policy support, strategic planning, capacity building, research, and responsible innovation. The Act seeks to promote structured development of the sector by providing for the appointment of an Authority to oversee and support policy, development, and regulation.
- To prohibit online money games: The preamble draws a sharp distinction between e-sports, educational and social gaming, which it aims to promote and online money games offering monetary returns for user deposits, which it aims to prohibit. It notes that the unchecked growth of online money games, often aggressively marketed and accessible from across borders, has resulted in significant social, economic, psychological, and health harms, especially among young and economically weaker groups. It further recognizes links to, addictive algorithms, compulsive behaviours financial ruin, fraud, money laundering, tax evasion, and, in some cases, financing of terrorism and threats to national security.
- To protect individuals and vulnerable groups from online money games: The Act’s preamble stresses the protection of youth and vulnerable sections of society from the damaging effects of online money games, including manipulation, loss of privacy, and compulsive and risky behaviours that can lead to economic and emotional distress or financial ruin
- To ensure responsible use of technology and public order: It calls for the responsible use of digital technologies within the sector, maintenance of public order and health, and the safeguarding of the integrity of national financial systems and State security.
- To provide a uniform legal framework: The preamble notes the challenges created by inconsistent state-level laws, extra-territorial operations of gaming platforms, and enforcement difficulties. It thus justifies the establishment of a unified, national-level legal framework to ensure public safety, morality, financial sovereignty, and fair market practices.
- To delineate and govern various game types distinctly: The Act reflects the need to clearly categorize different forms of online games such as e-sports, educational, social, and money games and provide tailored regulation for each segment, ensuring appropriate legal treatment and sectoral development.
Categories of online games under the Act
The Promotion and Regulation of Online Gaming Act , 2025 describes and regulates three categories of online games, namely:
- e-sport as defined under Section 2(1)© of the Act
- Online money game as defined under Section 2(1)(g) of the Act
- Online social game as defined under Section 2(1)(i) of the Act
Online money game
The definition of an Online money game under the Act is broad with the inclusion of the word “other stakes”. Section 5 the said act totally prohibits any person from offering, aiding, or engaging in online money games or online money gaming services
Definition of online money game under Section 2(1)(g) of 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;”
As per the definition an online game is an online game if played for money or other stakes, regardless of whether it is a game of skill or chance. This definition includes any online game requiring a deposit, fee, or other stake with the expectation of a monetary or other enrichment. The core feature is the involvement of real money or equivalent stakes. Further, it defines other stakes as anything recognized as equivalent or convertible to money and includes credit, coins, tokens, or other objects (whether real or virtual) that a user may purchase directly or indirectly as part of or in relation to an online game.
Section 2(1)(j) of the Act defines “Other stakes” as “anything recognized as equivalent or convertible to money and includes credits, coins, tokens, or objects or any other similar things, by whatever name called and whether it is real of virtual, which is purchased by paying money directly or by indirect means or as part of, or in relation to, an online game “
The definition is broad and covers all online games is when the user wagers or uses money or anything equivalent to money or having value. The words equivalent to money” means anything else that behaves likes money or have a value attached to it, is the key ingredient. This includes virtual currency such as credits, coins or tokens. It covers, the use of money or its equivalent with an expectation of a return or a benefit which may be in the form of money or in the form of any other benefit that gives the user an advantage in the game, irrespective of the skill or chance or both.
The key test is the involvement of money or other stakes in the game and the expectation of winning either in the form of money or other enrichment.
The word enrichment can also be interpreted as benefits that helps the user advance or progress in the game or gives it an advantage over other users creating an imbalance as these benefits or enrichment have a value in the game which may be purchased by real money.
The fact that virtual credits/tokens cannot be converted back to money does not, by itself, exempt the activity. What matters is whether the use of credits create value in the game as winning or giving the user an advantage over the others as per the definition of “other stakes” in the Act.
Examples (indicative):
- credits can be used to win monetary prizes or other benefits convertible to money (e.g., gift vouchers, merchandise)
- tradable tokens
- in-app rewards
- pay-to-win
- Stake-based progressions like pay-to-participate in competitions, wagering tokens, credits tradable for in-game advantages or monetary equivalents, or any mechanism allowing financial enrichment can be construed as stakes under the law.
So even if online games may not offer direct monetary benefits or winnings or coins / tokens convertible to money, monetization models of online games like in-app rewards or tradable tokens or stake based /money based progression, any mechanism creating an advantage or imbalance etc, might be construed as value-stake equivalents bringing the online game under the ambit of the definition of online money game. This also aligns with the legislative intent of prohibiting online money games that have addictive algorithms and those who promote risky and compulsive behaviours, leading to economic distress or financial ruin.
If the tokens, coins or credits in the game only allow the user to only play the game or gives cosmetic benefits (no real-world enrichment), this activity is not prohibited and the game will not be classified as an online money game. A cosmetic benefit or purchase in online games refers to acquiring virtual items or modifications that only change the visual appearance of a character, avatar, equipment, or environment, without affecting gameplay, player abilities, or competitive chances.
Online social game
Online social game as defined under Section 2(1)(i) of 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;”
This means that online social games are fundamentally safe, recreational, age-appropriate, and non-addictive experiences designed for entertainment, education, or skills, differentiating them from gambling or betting platforms. Social games do not let users risk money or equivalents for the chance to win more money, cash-convertible points, or things of monetary value.A subscription or one-time fee for game access is allowed, but this is not considered a stake or an incentive under the law, so long as paying doesn't expose the user to monetary risk or reward.
This segment includes puzzle, strategy, role-playing, action-adventure, and shooter games that are monetised primarily via in-app ads, cosmetic purchases (skins, avatars,battle passes), or freemium upgrades rather than through contest fees or winnings.
As per Section 4 of the said Act, the Central Government is empowered to recognize, categorize, and register online social games with the designated Authority and facilitate development and safe availability of these games for recreational/educational purposes.
In view of the above definition, monetization schemes such as Seasonal content, Battle passes, Microtransactions , Optional in-game purchases for progression, Time-savers/ boosters may have to be relooked to ensure that the models do not create a game imbalance or that the benefits are only cosmetic in nature and do not give any functional advantage to the user.
Conclusion
The Act introduces an expansive definition of “other stakes” to include anything “recognized as equivalent or convertible to money,” such as credits, coins, token or objects (real or virtual), purchased directly or indirectly in relation to an online game. This is intentionally broad, potentially capturing not only direct cash stakes but also virtual currencies, in-game items, NFTs, and loyalty points. Casual games with “pay-to-win” models blur the line between social play and monetized advantage. The Act doesn’t distinctly address popular modern variants such as games with in-app purchases, battle passes, lootboxes, tradeable skins, account-selling or microtransactions.A better clarity regarding this may emerge in subsequent advisories, notifications or Rules.