SBSI
Equity Research

India Esports & Online Gaming —
Sector Outlook FY26

Regulatory inflection, structural growth, and the rise of competitive gaming as a recognised asset class in India's digital economy.

Published — May 2026 Sector: Technology / Media / Gaming Coverage: FY23–FY28E Sources: EY, EGF, FIFS
Sector Size FY24 ₹232B Online gaming market ↑ Actuals
Projected FY28E ₹316B Total market ~11% CAGR
Esports FY26E ₹5,269Cr Non-RMG & esports ↑ 24% YoY
RMG Share FY28E 75% Down from 83% in FY23 Structural shift
Sector CAGR ~15% Esports segment FY23–FY28 ↑ Accelerating

A Regulatory Inflection Point for India's Gaming Economy

In May 2026, the Government of India enacted the Promotion and Regulation of Online Gaming Rules 2026 — creating a modern regulatory framework that separates esports and social gaming from real money gaming, and giving the sector formal legal legitimacy for the first time.

India's online gaming sector was valued at ₹232 billion in FY24 and is projected to grow at ~11% annually to reach ₹316 billion by FY28E, driven by structured regulation, institutional investment, and growing competitive gaming adoption.

Read the full report here

In May 2026, the Government of India gave esports a major push through the Promotion and Regulation of Online Gaming Rules 2026. In simple terms, the rules create a modern regulatory framework that allows esports to grow without being dragged into the political, social, and economic concerns linked to real money gaming. This was long overdue.

Globally, esports is recognised as a competitive sport, on par with traditional team sports, backed by clear rules, regulation, legal support, and investment from both governments and private players. The new rules bring much-needed clarity and regulatory legitimacy to India's fast-growing esports industry, which is still evolving commercially and is yet to become consistently profitable as a sector. More importantly, they move India closer to the organised esports ecosystems seen internationally.

The rules establish a clear and comprehensive framework for regulating the online gaming sector in India — introducing a transparent classification system that distinguishes prohibited online money games from permissible esports and online social games.

— Press Information Bureau, Government of India, May 2026

These rules build on the Promotion and Regulation of Online Gaming Act 2025, which effectively banned fantasy gaming and most forms of real money gaming. That move had triggered widespread restructuring and layoffs across the gaming industry, which until then had been witnessing explosive growth. At the time, the disruption was seen as necessary to address the growing concerns around gambling and the associated social, economic, and legal issues.

A properly structured esports ecosystem benefits everyone. According to the Government, India's online gaming sector was valued at ₹232 billion in FY24 and is expected to grow at around 11% annually to reach ₹316 billion. Nearly 77% of this value came from transaction-based games — in other words, users spending on access fees, in-game purchases, upgrades, and in some cases, betting-related activities.

The biggest issue until now was the blurred line between games of skill and games of chance. Different states and regulators often interpreted this differently. The new rules attempt to remove that ambiguity by clearly defining esports, online gaming, and real money gaming, whilst also laying down measurable standards through which regulators can assess games.

Regulatory Clarity

For the first time, esports has a designated governing body — the Online Gaming Authority of India — providing a digital-first, unified regulatory structure for the sector.

Light-Touch Compliance

Game classification determinations must be completed within 90 days. Digital registration certificates remain valid for 10 years, with largely digital proceedings and defined dispute timelines.

Investor Confidence

The framework is expected to improve access to banking, ease institutional investment, and align India more closely with leading esports markets such as South Korea, Japan, Singapore, and the United States.

Player Safeguards

Mandatory grievance redressal systems and clearer enforcement mechanisms with defined timelines are introduced for the first time, giving competitive players formal legal protection.

Five-Year Market Volume — Gaming Sector (INR Crore)

Total market size is projected to grow from ₹16,428 Cr in FY23 to ₹33,243 Cr by FY28E, reflecting a doubling of the sector over five years. Esports and non-RMG gaming is the fastest-growing sub-segment, more than doubling from ₹2,832 Cr to ₹8,167 Cr over the same period.

Read the full report here
Year Esports / Non-RMG (₹ Cr) RMG (₹ Cr) Total Market (₹ Cr) YoY Growth
FY23 2,832 13,596 16,428
FY24 3,455 16,520 19,974 ↑ 21.6%
FY25 4,249 18,171 22,421 ↑ 12.2%
FY26 5,269 20,170 25,440 ↑ 13.5%E
FY27E 6,534 22,389 28,923 ↑ 13.7%E
FY28E 8,167 25,076 33,243 ↑ 14.9%E

Source: New Frontiers by EY, E-Gaming Federation (EGF), Federation of Indian Fantasy Sports (FIFS). FY26E onwards are estimates.

Market Volume vs Esports Share — FY23 to FY28E

Total gaming market volume is expected to more than double from ₹16,428 Cr in FY23 to ₹33,243 Cr by FY28E. Simultaneously, the esports and non-RMG share is steadily rising — from 17% in FY23 to a projected 25% by FY28E — as regulatory clarity drives structural reallocation within the sector.

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Total Market Volume (₹ Cr) & Esports/Non-RMG Share (%)

Esports / Non-RMG
RMG
Esports Share %

RMG vs Esports/Non-RMG — Before & After

The composition of India's online gaming market is shifting structurally. RMG's share is declining from 83% in FY23 to a projected 75% by FY28E, while esports and non-RMG gaming grows from 17% to 25% over the same period — reflecting both regulatory tailwinds and a maturing competitive gaming audience.

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Baseline Year
FY23
83% RMG
17% Esports / Non-RMG
Forecast Year
FY28E
75% RMG
25% Esports / Non-RMG
Year RMG Share Esports Share Esports (₹ Cr)
FY23 83% 17% 2,832
FY24 83% 17% 3,455
FY25 81% 19% 4,249
FY26E 79% 21% 5,269
FY27E 77% 23% 6,534
FY28E 75% 25% 8,167
Segment Split — FY23 (Baseline)
83%
RMG
17%
Esports / Non-RMG
Segment Split — FY28E (Forecast)
75%
RMG
25%
Esports / Non-RMG

Key Forces Shaping India's Esports Growth

India's esports sector is being shaped by three structural forces: regulatory recognition through the 2026 Rules, institutional investment enabled by a clearer legal framework, and the organic growth of a competitive gaming audience aligned with India's young, digitally native population.

Read the full report here
⚖️

Regulatory Recognition

The Promotion and Regulation of Online Gaming Rules 2026 give esports formal legal status, separating it cleanly from gambling and real money gaming. The Online Gaming Authority of India provides a unified, digital-first regulatory body for the sector.

🏦

Institutional Investment Access

Regulatory clarity is expected to ease access to banking, institutional capital, and corporate sponsorships. Esports is increasingly being treated on par with mainstream sports for investment and infrastructure purposes, closely mirroring the evolution seen in South Korea and Japan.

🎮

Audience & Demographics

India's young, mobile-first, digitally native population represents one of the world's largest potential esports audiences. As internet penetration deepens in Tier 2 and Tier 3 cities, the addressable gaming audience continues to expand rapidly.

🛡️

Player & User Safeguards

For the first time, competitive esports players benefit from formal grievance redressal mechanisms and clearer enforcement timelines. These safeguards reduce operational risk for tournament operators and attract serious, long-term participants to the ecosystem.

🌏

Global Alignment

The new framework brings India's regulatory posture closer to established esports markets including South Korea, Singapore, Japan, and the United States — facilitating cross-border tournaments, international franchising, and global brand partnerships.

📋

Light-Touch & Time-Bound Rules

Classification determinations are mandated within 90 days. Registration once completed carries a 10-year validity. Proceedings are largely digital. For operators functioning within the permissible framework, the risk of arbitrary regulatory action has been significantly curtailed.

Regulatory Framework — Key Provisions at a Glance

The 2026 Rules introduce six key provisions — including a transparent classification mechanism for permissible games, the establishment of the Online Gaming Authority of India, mandatory user safety measures, a statutory registration framework, civil penalty procedures, and an appellate mechanism for accountability and natural justice.

Read the full report here

Classification Mechanism

Provides a clear, transparent, and time-bound mechanism to determine whether a game qualifies as a prohibited online money game or a permissible esports or online social game.

Regulatory

Online Gaming Authority of India

Establishes a unified, digital-first regulator for the sector — the Online Gaming Authority of India — providing the industry its first dedicated governing body.

Governance

Statutory Registration

Creates a statutory registration framework for esports and notified categories of online social games, with digital certificates valid for 10 years post-registration.

Compliance

User Safety Obligations

Introduces mandatory user safety measures, grievance redressal systems, and transparency obligations for all online gaming service providers operating within India.

User Protection

Civil Penalties Framework

Lays down clear procedures for inquiry and civil penalties under Section 12 of the Act, giving regulators defined enforcement tools with structured timelines.

Enforcement

Appellate Mechanism

Provides a formal appellate mechanism to ensure accountability, fairness, and adherence to principles of natural justice — a first for India's online gaming sector.

Accountability