Play-to-earn games in India in 2026: what is legal and what pays

What the new law actually says

Disclosure: this article covers blockchain-based games. Gaming Trend Wire does not offer financial advice and does not speculate on token prices.

India passed one of the world's strictest online-gaming laws in 2025. According to Wikipedia's record of the statute, the Promotion and Regulation of Online Gaming Act 2025 cleared the Lok Sabha on 20 August 2025, the Rajya Sabha on 21 August, and received presidential assent on 22 August 2025. The headline effect is a nationwide ban on what the law calls 'online money games'.

The definition is deliberately broad. Legal analyses of the Act describe an online money game as any online game where a player pays a fee, deposits money or provides other stakes in the expectation of winning money or another enrichment, irrespective of whether the game is based on skill, chance or both. That wording collapses the old legal distinction between games of skill, such as fantasy sports, and games of chance, such as online poker, and sweeps both into the ban.

The Act does more than ban the games themselves. Reporting on the law in August 2025 noted it also prohibits advertising these games and bars banks and payment systems from processing related transactions, with authorities empowered to block offending platforms. Penalties reported at the time reached up to three years in prison and a fine of about 10 million rupees for offering a banned game.

Do crypto and play-to-earn games count?

This is the question that matters for anyone reading about crypto games in India, and the answer sits in the fine print. Legal analyses published after the Act, including commentary carried by Lexology and Mondaq, point out that the definition of 'other stakes' expressly includes credits, coins, tokens or objects 'whether real or virtual', where they are recognised as equivalent to or convertible into money and are bought in relation to the game.

That matters because most play-to-earn games are built exactly this way. If a game sells or awards a token or NFT that can be sold on an exchange or marketplace for real money, and players pay to enter that loop, the structure can look a lot like a money game under the Act's language. The law does not name cryptocurrency, but the 'real or virtual' phrasing means a token economy is not automatically outside its reach.

There is still a grey area, and it is genuine. A purely free-to-play blockchain game with no cash entry, or a title whose NFTs are cosmetic rather than convertible, sits closer to the permitted category of 'online social games' with no monetary stakes. The Act also carves out esports as a recognised competitive sport. As of late September 2026, how regulators and courts apply these lines to specific token games in India has not been fully tested, so the safe reading is that any game combining paid entry with a cash-out token is legally exposed.

What Indians actually play

India is not a small crypto market it can afford to ignore. Chainalysis ranked India first in its 2025 Global Crypto Adoption Index, published on 2 September 2025, and said the country led across all four of the index's underlying measures. That scale is why global blockchain games have long courted Indian players.

In practice, Indian interest over the last cycle has flowed into the same titles that drew players everywhere: NFT games such as Axie Infinity and the farming game Pixels on the Ronin network, and the wave of Telegram tap-to-earn games such as Hamster Kombat and Notcoin that peaked in 2024. Many of these are free to start, which is part of their appeal and also part of why their legal status is less clear-cut than a paid real-money game.

What the 2025 law changes is the commercial reality of running or promoting a cash-based game to Indian users. Even where a game itself is not clearly banned, the advertising prohibition and the block on payment processing make it far harder to operate a money-in, money-out model aimed at India. Several real-money gaming companies unrelated to crypto have already restructured or shut Indian operations since the Act.

The risks players face

Beyond the law, the financial risks are real and well documented. Token economies in play-to-earn games have repeatedly collapsed. Axie Infinity's Smooth Love Potion token, the reward Filipino and other players earned, fell from about 36.5 cents in mid-2021 to roughly one cent by January 2022, France24 reported in February 2022. Players who treated the game as income watched most of that value evaporate.

There is also fraud risk. The 2024 tap-to-earn boom ended with many players across emerging markets receiving token payouts far smaller than promised, and some projects asked users to pay before an airdrop, a pattern crypto observers flag as a warning sign. In India specifically, the added layer is legal exposure: a player using a banned money game, or a promoter advertising one, now risks penalties under the 2025 Act.

Taxes complicate things further. India taxes gains on virtual digital assets, so even a player who does earn a convertible token may owe tax on it, separate from any question of whether the underlying game is legal.

The bottom line

India has not banned owning cryptocurrency, and it has not banned every game that touches a blockchain. What it has banned, as of 22 August 2025, is online money games, and the law's own definition of stakes reaches virtual tokens that can be converted to cash. That places the cash-out core of most play-to-earn games in a legally uncertain, and quite possibly prohibited, position.

For an ordinary reader in India in 2026, the honest summary is that free-to-play blockchain games without paid entry are the lower-risk end of the spectrum, while any game that asks you to buy in and cash out a convertible token carries both legal and financial risk. We are reporting the law and the market as they stand and do not offer financial advice or forecast token prices. Anyone unsure of a specific game's status should seek qualified legal guidance rather than rely on a platform's marketing.