ARTICLE
10 July 2025

Esports vs Online Gaming: Why The Distinction Matters Under Indian Law?

Ka
Khurana and Khurana

Contributor

K&K is among leading IP and Commercial Law Practices in India with rankings and recommendations from Legal500, IAM, Chambers & Partners, AsiaIP, Acquisition-INTL, Corp-INTL, and Managing IP. K&K represents numerous entities through its 9 offices across India and over 160 professionals for varied IP, Corporate, Commercial, and Media/Entertainment Matters.
Esports in India experienced remarkable growth, primarily driven by the rise of professional players, expanding audiences, frequent tournaments, and substantial investments.
India Media, Telecoms, IT, Entertainment

Esports in India experienced remarkable growth, primarily driven by the rise of professional players, expanding audiences, frequent tournaments, and substantial investments. What sets Esports apart from online gaming is its competitive, skill-based nature, bringing it closer in spirit to traditional sports. Despite this, the Indian legal system still does not recognize Esports as distinct from online gaming, leading to regulatory gaps and the absence of an industry-specific framework.

Online gaming regulations in India are largely focus on three inter-connected areas: gambling, addiction concerns, and user safety issues – with little or no consideration for Esports separately. This lack of distinction between Esports and online gaming poses significant regulatory challenges especially regarding tax implications, sponsorship policies, international tournament visa facilitation and support for infrastructure construction. Without a clear legal definition, Esports struggles to gain formal recognition as both a legitimate profession and a competitive sport, limiting its growth within the broader digital economy.

India faces significant challenges because it does not differentiate between Esports and other online gaming activities, even as several countries have introduced legal frameworks to support competitive video gaming. This blog explores the key differences between Esports and online gaming and argues for targeted legal reforms and regulatory measures to address the gap and unlock the full potential of India's growing Esports market.

I. Difference between Esports and Online Gaming

Although often used interchangeably, Esports and online gaming differ significantly in terms of structure, intent, and legal implications. Esports refers to organized, skill-based competitive gaming supported by sponsorships, structured tournaments, and professional rankings, whereas online gaming encompasses a broader category that includes casual games, real-money platforms, and fantasy sports, many of which rely on chance or financial input. The fundamental distinction lies in the skill-centric nature of Esports, which has been internationally recognized as a legitimate sport by institutions such as the International Olympic Committee and the Olympic Council of Asia, notably featuring as a medal event in the 2022 Asian Games. As highlighted by Suji, Director of the Electronic Sports Federation of India, Esports is rooted in individual ability and should not be conflated with gambling or online betting.

Recognising these distinctions is crucial when analysing the manner in which Indian law presently classifies and regulates online gaming – a framework that frequently fails to account for the specific attributes of Esports.

II. Current Indian Legal Regime

India's legal framework governing online gaming remains fragmented and inconsistent, largely due to the absence of a comprehensive central statute addressing the sector. The responsibility for regulating online gaming lies with the State Governments, as gambling and betting fall under Entry 34 of the State List (List II) in the Seventh Schedule of the Constitution. Resultantly, various states have adopted divergent and often conflicting regulatory approaches. For example, Tamil Nadu, Telangana, and Andhra Pradesh have enacted prohibitions on games involving monetary stakes – even those based on skill – while other states have opted for more permissive or conditional frameworks.

At the central level, efforts to introduce uniformity have been limited. The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, along with subsequent amendments proposed by the Ministry of Electronics and Information Technology (MeitY) in 2023, seek to impose certain compliance standards on online gaming intermediaries. These include obligations relating to content moderation, grievance redressal mechanisms, and creation of self-regulatory bodies. However, these guidelines are applied uniformly across all forms of online gaming, without distinguishing between games of chance, real-money gaming, and skill-based competitive Esports..

As a result, the current regulatory regime treats online gaming as a homogenous category, thereby neglecting the unique legal and structural characteristics of Esports.

III. Why Esports Doesn't Fit into India's Online Gaming Regulations

The Government of India recognised Esports as part of multi-sport events in 2023, bringing it under the ambit of the Ministry of Youth Affairs and Sports.

One of the entities spearheading the Esports movement in India is the Electronic Sports Federation of India (ESFI), a non-profit organization. ESFI is a full member of the International Esports Federation (IESF), Global Esports Federation (GEF), and Asian Esports Federation (AESF).

This move was expected to distinguish Esports from casual online gaming and gambling, and to align it with other recognised competitive sports. However, the legal and regulatory frameworks that followed have not fully clarified the practical implications of this classification. Notably, the amendments introduced by the MeitY continue to exhibit vagueness, making it unclear whether Esports, particularly those that do not involve real money, fall within their scope. For instance, the term "deposit" as used in the definition of Online Real Money Games (ORMGs) could be interpreted to include in-game purchases, potentially bringing free-to-play Esports titles under unnecessary regulation intended for wagering-based platforms.

Furthermore, taxation remains a contentious area. A 30% TDS is levied on winnings from online games under the Income Tax Act, 1961. Yet, there remains no clarity on whether Esports tournament winnings, particularly from skill-based, non-wagered competitions, are subject to the same tax regime, as the statutory language refers broadly to "online gaming" without distinguishing Esports. This lack of definitional and fiscal clarity continues to hinder the development of a distinct regulatory identity for Esports in India.1

The Goods and Services Tax (GST) regime adds yet another layer of confusion. While the GST Council's 2023 decision imposed a 28% GST on online games involving real money, a government official clarified that this would not extend to Esports titles such as FIFA, League of Legends, or games on PlayStation, Xbox, and Nintendo consoles. These would continue to attract an 18% GST rate, applicable to entertainment and digital services. However, the absence of a statutory distinction in the GST law itself creates ambiguity. In the absence of codified exemptions, Esports developers and tournament organizers remain exposed to arbitrary interpretation by tax authorities, potentially jeopardizing the growth of the sector.

IV. Learning from Global Models

As India grapples with defining and regulating Esports within its broader online gaming framework, several global jurisdictions offer valuable insights into how Esports can be distinctly recognised, supported, and governed.

Countries like South Korea, the United States, and Germany have already established robust regulatory and infrastructural models that separate Esports from gambling or casual gaming, promoting it as a legitimate sporting discipline.

South Korea, often considered the pioneer of professional Esports, has integrated Esports under the Ministry of Culture, Sports and Tourism. It has established dedicated Esports arenas, associations, and even athlete visas, recognising Esports players as professionals. The Korean e-Sports Association (KeSPA) functions under governmental oversight, ensuring standardisation and support for players, tournaments, and broadcasters.

Germany amended its Immigration Act to issue special Esports visas, thereby simplifying the process for international players to participate in tournaments. Esports is also recognised under the country's legal definition of sport, allowing teams and organisations to benefit from subsidies and tax incentives.

The United States takes a decentralised but economically encouraging approach. Esports athletes can obtain P-1 visas, the same used by traditional sports professionals. Moreover, universities across the country now offer Esports scholarships and degrees, treating it as an academic and career discipline.

India can benefit by adopting similar distinctions: recognising Esports separately from online gaming in its laws, creating structured visa and taxation policies for Esports professionals, and investing in digital infrastructure and grassroots development. These international models demonstrate that clear legal recognition and tailored governance can foster a thriving, internationally competitive Esports environment.

Esports in India has rapidly evolved into a dynamic, skill-based industry, with organisations like S8UL leading the charge by representing India on global platforms and winning the title of the Best Content Group of Esports in the World thrice. Despite its growing influence and India's recognition of Esports as part of multi-sport events under the Ministry of Youth Affairs and Sports, the sector continues to be regulated under the same legal framework as online gaming, which is largely focused on gambling and real-money platforms. This conflation creates regulatory confusion, especially regarding taxation, infrastructure, sponsorships, and international recognition. With global Esports events such as the Asian Games and upcoming Olympic showcases gaining prominence, India's lack of a tailored legal framework holds back its potential. Drawing from successful international models, it is essential to adopt Esports-specific regulations to fully support its athletes, organisations, and ecosystem. Legal clarity will not only legitimise Esports but also fuel its growth as a premier digital sport.

Footnote

1. Niyati Pandey & S. Tarun, Regulatory Progress and Challenges in India's Booming Online Gaming Market, in Online Gaming in India (Lovely Dasgupta & Shameek Sen eds., CRC Press 2023), https://doi.org/10.1201/9781032624204-6.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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