Industry stakeholders, policy consultants and lawyers told Mint that next year's expected Supreme Court rulings on state-level regulation for the online gaming industry and the taxation liability of the sector will be key to renewing discussions around how the nascent online gaming sector should be regulated going forward.

This could also help save the sector from regulatory limbo and attract investments again.

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A senior official directly involved with the Union ministry of electronics and information technology (Meity) said on condition of anonymity that there are "no ongoing conversations on the SRB model for online gaming within the IT ministry, at the moment." An email sent to Meity on the matter did not receive a response.

Industry consultants said this is a key hurdle that the nascent sector is looking to overcome. Kazim Rizvi, founding director of policy think tank The Dialogue, said the Centre's role will be key in establishing checks and balances in an industry where consumer offerings have controversially fallen between the definitions of gaming and gambling.

"The Centre's role in enforcing a scientific evaluation process would be important. While there are limited or no ongoing conversations right now, there's hope that talks to enforce regulations on online gaming firms will pick up next year. Various research institutions have proposed ways to segregate games of skill versus chance, all of which can help bring back investments into this industry—which are drying up due to the regulatory uncertainty of the sector," Rizvi said.

On 16 October, Rizvi, with Bimal Roy, former chairperson of the Centre's National Statistical Commission, proposed a mechanism to create an empirical evaluation formula to define whether a game can qualify as one of skill or chance. The latter, industry experts said, could also be vital in defining future outcomes in courts of law—as well as urging the Centre to look at a regulatory model with greater importance.

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Such formulas, however, would require a qualified body of authority to enforce in order for it to have any legal ramifications on games in India. In 2023, Meity's proposed SRB approach did not see on-ground implementation. In December last year, a senior government official told Mint that the IT ministry was looking for "ways to implement a regulatory model without letting any single private company or entity have lopsided powers to influence how the industry progresses."

However, the National Democratic Alliance in its third term at the Centre has so far not taken up online gaming as a policy agenda, two officials with direct knowledge of the matter said.

Jay Sayta, a senior technology and gaming lawyer, said this delay is in turn hurting the scope of progress and growth in the overall industry.

"There is an absence of any unified legal definition that states what is permitted in online gaming, and what isn't. In due course, companies have innovated in various ways to present a range of games that have no skill involved as a game of skill. The variety of offerings in the industry has ballooned as a result. But, realistically, it is unlikely that there will be any progress on regulating the industry, which has hit a phase of limbo, until the Supreme Court decides on the issue of retrospective GST (goods and services tax) notices, as well as all the pending appeals by the Tamil Nadu and Karnataka governments against orders of high courts that struck down legislations imposing complete bans on real money skill-based games," he said.

Investors are projecting a slowdown in the online gaming sector, as a result. On 12 November, an annual report by Lumikai, India's largest dedicated venture capital investor for gaming firms, in partnership with Google, projected the online gaming industry to become the slowest-growing vertical in the overall field of gaming in the next five fiscals—with an estimated growth pace of 8% annually. In comparison, in-game advertising was projected to grow 15% annually, while in-app purchases from competitive and casual gaming titles was projected to grow 44% annually until FY29.

Still, the online gaming industry continued to show its value, Lumikai said, claiming that the industry added $400 million in incremental revenue to generate $2.4 billion in net revenue in FY24. As a result, it accounted for 63% of India's overall gaming industry's net revenue, which was $3.8 billion in FY24.

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