India’s massive gaming ecosystem, home to nearly 500 million players—the second-largest base globally—is undergoing a profound and rapid transformation, according to the new Lightbox Gaming Report. Driven by decisive government regulation, the industry is pivoting its focus, capital, and talent away from Real-Money Gaming (RMG) toward Non-Real Money Gaming (Non-RMG) at an unprecedented scale.

This forced evolution aims to transform the Indian market from a "volume story to becoming a value story."

New Law Rewrites Industry Economics

The catalyst for this shift is the enactment of the Promotion and Regulation of Online Gaming Act, 2025. The legislation effectively bans RMG—games of skill or chance played for real cash—and outlaws their advertising and financial infrastructure, introducing strict penalties for non-compliance.

Historically, the RMG segment had been the financial powerhouse of Indian gaming, accounting for an estimated 83–86% of total industry revenues. Investment flows reflected this dominance, with RMG companies cornering $3.3 billion of the $3.7 billion raised by gaming startups between 2005 and 2024.

With the regulatory risk around RMG now crystallized, the industry signal is clear: redeploy resources. Leading RMG platforms have already suspended cash games and begun pivoting their offerings to social, free-to-play, and other Non-RMG models, including competitive esports, mid-core titles, and casual games.

The Paradox of Scale: Monetization Gap

Despite its staggering scale, the Indian market has long struggled with monetization. The report highlights that the average revenue per user (ARPU) in India stands at a mere $3.03. This is a stark contrast to mature markets like the U.S. at $215 and China at $68, underscoring the significant headroom for growth in player spending.

However, a survey conducted for the Lightbox report by game streaming platform Rooter reveals an "encouraging willingness to spend" among Indian players. The data debunks the assumption that only high-time players are high spenders: a sizable share of gamers who play less than thirty minutes daily are spending over ₹1,000 (approximately $11) per month. This indicates that Indian gamers are ready to pay when provided with the right value, content, and community experience.

The Non-RMG Opportunity: Micro-Transactions and Live Services

The future of Indian gaming rests on Non-RMG, a segment that generates nearly 80% of its revenue from mobile platforms. Monetization for this new era will rely heavily on:

• In-App Purchases (IAPs): The cornerstone of revenue generation, with IAPs projected to grow at a robust CAGR of 20%. This spending is primarily driven by cosmetic items like character outfits and weapon skins in shooting games such as Battlegrounds Mobile India (BGMI) and Free Fire.
• In-Game Advertising: Casual and hyper-casual games monetize their immense download volumes through ads, especially rewarded video ads where players willingly watch a short advertisement in exchange for an in-game reward.

The combination of policy clarity and India's half-a-billion-strong gamer base is expected to accelerate the development of durable, culturally resonant, and monetizable gaming experiences, positioning the nation to become a Non-RMG powerhouse.