India’s Online Gaming Bill 2025: Why this could actually be a good news for the industry?
I’ll be honest, when I first heard about the Promotion and Regulation of Online Gaming Act, 2025, my immediate reaction was concern. Like many others in the investment community, I worried about the potential impact on gaming stocks, particularly companies like Nazara Technologies that I’ve been tracking closely.
But after digging deeper into the legislation and analyzing the market dynamics, I’ve come to a different conclusion. This bill might just be the wake-up call India’s gaming industry needed.
The real story behind the legislation
Let’s cut through the noise here. Yes, the new law bans real money gaming (RMG). But here’s what’s interesting, the legislation actually makes a clear distinction between exploitative gambling practices and legitimate gaming activities like e-sports, social gaming, and educational content.
What really caught my attention is how the government has officially recognized e-sports as a competitive sport. This isn’t just symbolic; it comes with concrete plans for training centers and research facilities. For a country with India’s young demographic, this could be transformational.
Nazara’s numbers tell a compelling story
I’ve been following Nazara Technologies for a while now, and their Q1 FY26 results really validate the non-RMG approach. Revenue jumped 99% year-on-year to INR 498.8 crore, with EBITDA up 90% to INR 47.4 crore. More importantly, they confirmed zero revenue from RMG activities this quarter.
Here’s how their revenue breaks down:
– Gaming platforms: 36% (INR 240.92 crore)
– E-sports: 55% (INR 154.14 crore)
– Ad-tech solutions: 9% (INR 106.06 crore)
But let me address the elephant in the room, that PokerBaazi acquisition. In September 2024, Nazara bought a 47.7% stake in Moonshine Technology (PokerBaazi’s parent) for INR 831.5 crore. CEO Nitish Mittersain even called it a “moonshot” investment.
When the new law came into effect, Nazara quickly pulled out of buying additional shares, citing the “material adverse effect” clause. Some might see this as a setback, but I actually view it as smart risk management. The company protected its shareholders by having proper legal safeguards in place.
Mittersain’s response to the regulatory changes also impressed me. Instead of complaining, he outlined Nazara’s “3P Mantra” on LinkedIn – Passion, Perseverance, and Positivity. He reminded everyone how the company survived the dot-com crash, the 2008 financial crisis, and even a failed IPO attempt in 2018. Each crisis became an opportunity to reinvent.
That’s the kind of leadership mindset that makes me bullish on the company’s long-term prospects.
The Economics make sense
The numbers around India’s gaming industry are pretty compelling. The overall market was worth INR 33,000 crore in 2023 and is expected to double to INR 66,000 crore by 2028. Within this, the non-RMG segment is projected to grow even faster at 28% CAGR from 2024-29, expanding from $0.5 billion to $1.8 billion.
But what really excites me is the employment potential. The broader AVGC-XR sector (Animation, Visual Effects, Gaming, Comics, and Extended Reality) is expected to create 160,000+ jobs annually, growing at 25-30%. These aren’t just any jobs, they’re high-skill positions in game design, programming, and digital content creation.
The sector’s GDP contribution has already doubled from 0.033% in 2019 to 0.067% in 2022. That might sound small, but it shows real economic momentum.
Foreign Investment continues to flow
Here’s something that surprises many people: despite regulatory uncertainty, foreign investment in Indian gaming has remained strong. The non-RMG sector has attracted nearly INR 25,896 crore ($3 billion) in FDI over the past five years.
Krafton’s commitment to invest at least $50 million annually in India’s gaming market is particularly noteworthy. They’re betting on the regulatory clarity that this new law provides, focusing on e-sports and entertainment-focused gaming that complies with Indian regulations.
This foreign investment is crucial because it’s bringing:
– Technology transfer and skill development
– Support for creating Indian gaming intellectual properties
– Opportunities to export Indian-made content globally
– Positioning India as a global game development hub
A Personal perspective on the cultural impact
One aspect that doesn’t get enough attention is how gaming can preserve and promote Indian culture. Games like “Tanhaji: The Maratha Warrior” and “Unsung Empires: The Cholas” are bringing Indian history to life through interactive experiences. As someone who values our cultural heritage, I find this particularly exciting.
The e-sports segment alone is projected to contribute ₹1,100+ crore to the economy by 2026, with over 1.5 million professional athletes participating. Imagine the cultural soft power India could wield through gaming, it’s happened with Bollywood, and it could happen with interactive entertainment too.
My Investment Thesis
Look, I’m not going to sugarcoat this, the legislation has created short-term uncertainty. Some gaming professionals and companies, especially those focused on RMG, are facing genuine challenges.
But from an investment perspective, I see this as a market correction that will ultimately benefit companies with sustainable business models. The demand for skilled gaming talent remains strong as companies pivot toward compliant and sustainable approaches.
Companies like Nazara that have already proven they can succeed in the non-RMG space are well-positioned to capitalize on this regulatory clarity. Their diverse revenue streams, strong growth trajectory, and experienced management team make them attractive even in this transitional period.
Why I’m actually optimistic
After analyzing this legislation from multiple angles, I’ve concluded that it represents a strategic reset rather than an industry killer. By eliminating exploitative RMG practices while encouraging legitimate gaming formats, the law creates a foundation for sustainable, innovation-driven growth.
The success stories we’re already seeing, Nazara’s impressive financial performance, continued foreign investment, expanding job creation demonstrate that profitable gaming businesses can thrive without relying on gambling mechanics.
Rather than viewing this law as a barrier, I believe stakeholders should see it as an opportunity to build a globally competitive and ethically sound gaming ecosystem. The regulatory clarity encourages focused investment in safe, sustainable gaming models while reducing risks associated with gambling-driven formats.
With this shift, India’s gaming industry is positioned to become stronger, more innovative, and more globally competitive delivering skill-based gaming experiences that entertain, educate, and inspire, rather than exploit.
The fundamentals are there. The regulatory framework is clearer. The global opportunity is massive. Sometimes the best investment opportunities emerge from periods of uncertainty, and I believe that’s exactly what we’re seeing in India’s gaming sector today.
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