Gaming Glory, Legal Limbo: Why India’s Esports Boom Is Stuck In Pause Mode
By Ananay Jain
India is on the brink of becoming a global digital superpower. From fintech to edtech, every corner of the digital economy is expanding, and esports is no exception. India’s digital economy is thriving, with online gaming at the forefront of this boom. With millions of young gamers, booming live-streaming platforms, and a rapidly growing audience, India’s esports scene has evolved from niche communities to full-blown stadium events.
But while the industry is ready to scale, the legal ecosystem isn’t. In a bid to regulate online gaming and curb betting, India’s policy landscape has lumped esports into the same category as real-money gaming. The result? A growing skill-based, competitive sport is being stifled by outdated, ambiguous, and fragmented laws.
The Framework: A Law Meant for Gambling, Not Gaming
In April 2023, the Ministry of Electronics and Information Technology (MeitY) introduced amendments to the IT Rules, bringing online gaming platforms under stricter scrutiny. The intention was valid — to regulate real-money games like rummy, poker, and fantasy sports, which often involve betting and financial risk.
But the rules failed to clearly distinguish esports games based purely on skill, strategy, and teamwork, where no wagering is involved.
To complicate matters, gaming in India is a state subject, and several states — including Tamil Nadu, Telangana, and Andhra Pradesh — have passed laws banning online games involving money, regardless of whether they are games of skill or chance.
This patchwork of state bans and a vague central framework has created a dangerous grey area where esports tournaments get caught up in regulations meant for gambling platforms. The outcome? Esports tournaments, which involve no wagering, no betting, and are entirely skill-driven, are being swept into regulations never meant for them.
The Challenges: Collateral Damage to an Emerging Industry
Legal Ambiguity- With no official differentiation in many legal texts, esports tournaments — especially those with prize money or entry fees — risk being treated as gambling. Organisers often operate in fear of legal backlash or police scrutiny, despite esports involving no element of betting.
Payment Blockades-Banks and payment gateways, wary of regulatory action, sometimes flag transactions involving esports platforms. This leads to delays in prize payouts, blocked accounts, and loss of trust among players and sponsors.
Loss of Sponsorships- Brands — both Indian and global — are hesitant to fund or associate with esports events due to the legal fog. The monetisation potential of esports is being choked, forcing organisers to scale down or cancel promising tournaments.
Missed Global Opportunities- While countries like South Korea, the US, and China are institutionalising esports through policies, India is sending mixed signals. Global organisers often skip India, fearing regulatory confusion, costing Indian players international exposure and career-building moments.
Why It Matters: India Risks Falling Behind
This regulatory blind spot has broader implications. India is home to one of the world’s largest youth populations and fastest-growing gaming audiences. Yet the lack of legal clarity is pushing talent, capital, and opportunities abroad.
Aspiring esports athletes find their career paths uncertain. Domestic organisers are throttling scale due to legal risks. Investors and sponsors are shifting focus to more stable international markets. And while the world moves towards recognising esports as a mainstream discipline — even a potential Olympic category — India risks being a spectator, not a leader.
The fallout of legal uncertainty doesn’t just impact tournament organisers — it creates a ripple effect across the entire esports ecosystem.
- Players & Athletes: India’s young esports talent faces shrinking opportunities. With reduced tournament frequency, uncertain prize payouts, and a lack of career safeguards, many players are forced to either drop out or move abroad in search of structure and support.
- Organisers & Platforms: Mid-tier esports startups, often bootstrapped or running on tight sponsorships, are the first to feel the heat. Instead of focusing on scale and innovation, they’re spending time navigating legal minefields and firefighting payment issues.
- Sponsors & Brands: Sponsorship is the financial engine of esports. But when a tournament could be seen — even mistakenly — as falling into a regulatory grey area, big brands hesitate. This directly impacts tournament quality, reach, and sustainability.
Recommendations: What the Government Needs to Do
India doesn’t need more regulation — it needs smarter regulation. The Government must act quickly and decisively to distinguish esports from real-money online gaming through:
The future of esports in India depends on how fast the law can differentiate between skill-based digital sports and betting-linked gaming platforms. Here’s what the Government must urgently prioritise:
- Recognise Esports as a Sport, not a Gaming Offshoot: Esports deserves its own category and regulatory home. It should be governed under the Ministry of Youth Affairs and Sports, not clubbed under online gaming policies aimed at gambling or wagering.
- Establish a Central Esports Policy: India needs a national esports framework, similar to what countries like South Korea and Singapore have done. This should define eligibility, tournament standards, prize pool regulations, and player rights.
- Guide States Through a Model Law: Given the state-level variations, the Centre should issue model guidelines encouraging states to exclude esports from blanket bans on online games. A uniform national approach will give investors and organisers much-needed confidence.
- Support the Ecosystem: Beyond regulation, the Government should incentivise infrastructure like esports arenas, training academies, and collegiate leagues. Scholarships, skill certifications, and inclusion in school/college sports programs can formalise the path from hobby to profession.
Legal Clarity is the Real Game-Changer
India has the players. India has the platforms. India even has an audience — tens of millions who tune in to livestreams, tournaments, and local events. What India lacks is legal clarity.
Esports is not a legal loophole. It’s a digital sport, a youth movement, and a new economy waiting to be unlocked. But unless laws evolve to reflect this reality, we’ll keep losing our best talent to global markets — and watch the potential of an entire generation fade behind regulatory fog.
(The author is a Partner, Grant Thornton Bharat)
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