Esports: Legal Validation Amid Regulation of Money Games

Legislative Shift & Recognition

• The Promotion and Regulation of Online Gaming Act, 2025, passed by Parliament and receiving the President’s assent on August 22, formally recognizes esports as a competitive, skill-based sport and delineates it from real-money gaming platforms, which are now outlawed.WikipediaThe Economic TimesThe Times of India
• The Act clarifies that esports tournaments can involve entry fees and prize money, provided there is no wagering or betting involved.The Indian Express
• A centralized regulatory authority will be set up to register esports events, define classification criteria, and oversee conduct.The Indian ExpressThe Economic Times
• Government support includes plans for training academies, research centers, and promotional initiatives.The Indian ExpressIndia TodayThe Times of India
• MeitY (Ministry of Electronics & IT) Secretary emphasized that the core aim of the Act is to combat real-money gaming, not to target esports or legitimate game developers.The Economic Times

Challenges Ahead for Esports in India

Despite the Act’s promising measures, several concerns remain:

1. Regulatory Ambiguities and State-Level Discrepancies

• Although esports enjoys official recognition, getting tournament licenses and navigating compliance with variable state policies remains complex.FinlawMondaqETLegalWorld.com
• Confusion persists over the treatment of in-game purchases and whether certain esports fall under stricter regulations.Mondaq

2. Taxation and Prize Distribution Uncertainty

• The 28% GST on entry or deposit-based gaming and a flat TDS of 30% on winnings have triggered concern around the viability of esports tournaments. The fine lines separating esports from taxed gambling remain vague.MondaqFinlawReddit+1

3. Absence of Legal Sporting Infrastructure

• While the Esports Federation of India (ESFI) exists and is formally affiliated with global bodies, it still lacks official recognition from the Ministry of Youth Affairs and Sports.Wikipedia
• No unified governing structure affects player contracts, dispute resolution, and safeguarding athlete welfare.SigmaPlay

4. Operational Hurdles: IP, Privacy, Infrastructure

• Ownership and protection of intellectual property—such as team branding and streaming rights—remains legally unclear.Advocate TanwarLegal Service India
• Compliance with content moderation and streaming rules across platforms complicates live event organization.Finlaw
• Infrastructure gaps—like limited esports venues, poor connectivity in remote areas, and lack of affordable servers—hinder both professional events and grassroots growth.FinlawSigmaPlay