Examining how non-transferable online gaming licences function as core digital assets yet lose economic value due to rigid regulatory constraints, Srija Singh highlights a critical gap in the current framework. In her submission for the SpicyIP- jhana blogpost writing competition, she argues that these approvals should be treated as IP-like intangible assets to preserve enterprise value and foster innovation in India’s digital economy. Srija is a final-year law student at Amity Law School, Noida, with a research interest in intellectual property, technology regulation, and digital-market governance.
Dead Assets in a Digital Economy: Why Online Gaming Licences Should Be Treated Like IP
By Srija Singh
In an economy increasingly driven by intangible value, the boundary between regulatory approvals and intellectual property is blurring. Yet India’s regulatory architecture continues to treat high-value online-gaming licences as static permissions rather than economic assets.
Imagine a startup pours millions into securing a prized gaming licence, only for it to become unusable during a sale or insolvency simply because the law forbids its transfer. Non-transferability transforms these approvals from strategic assets into dead weight, eroding enterprise value when it matters most.
Why Regulatory Licences Matter as Intangible Assets
In India’s online gaming market, regulatory approvals determine whether a platform can legally operate. Under the Promotion and Regulation of Online Gaming Act, 2025 (PROG Act 2025), real-money online gaming is prohibited, and the law establishes a national regulator to oversee any permitted categories.
The Nagaland Online Games of Skill Act, 2015, grants licences to online “games of skill” only to entities incorporated in India, requiring Indian ownership, control, and Indian-based hosting/operations. Because these permissions are strictly tied to the licensed entity’s identity and structure, regulatory approval functions effectively as an exclusive right without a clear mechanism for transfer or assignment.
In effect, these approvals resemble intellectual property that is stuck, raising questions about their true value as corporate assets, particularly in mergers, acquisitions, or insolvency scenarios.
Licensing as a Legal Precondition for IP Exploitation
Online gaming enterprises are inherently IP-intensive businesses. Their core assets consist of copyrighted game software, audiovisual elements, source code, databases, and user interfaces protected under the Copyright Act, 1957, along with trademarks in platform names, logos, and game titles under the Trade Marks Act, 1999. Indian courts have repeatedly recognised software and digital content as protectable literary works, and platform goodwill as a legally enforceable commercial interest.
Unlike most IP-driven industries, however, the commercial exploitation of these rights in the online gaming sector is legally contingent upon regulatory permission. A gaming platform may hold valid copyright and trademark protection yet remain barred from deploying these rights in the market without a licence issued under sector-specific gaming legislation. The licence thus functions as a statutory precondition to the exercise of IP rights, rather than as a substitute for them.
This regulatory structure creates a distinctive legal interdependence: while intellectual property rights confer exclusivity over creation and branding, regulatory licences determine market access and monetisation. Where the absence of a licence renders legally protected IP commercially inert, the licence assumes an economic role closely aligned with intangible property, even while remaining doctrinally rooted in public law.
Non-Transferability and Its Economic Implications
Regulators justify non-transferable gaming licences on public-interest grounds, keeping approvals tied to a license-holder’s identity and financial stability to prevent fraud, money laundering, and user harm. The draft Promotion and Regulation of Online Gaming Act, 2025, emphasises strict licensing to curb addiction, financial exploitation, and illicit flows. Courts have endorsed this approach: the Madras High Court upheld Tamil Nadu’s online-gaming framework as a “reasonable restriction” under Article 19(6), citing the risks of real-money gaming.
Yet the economic costs are substantial. In India’s digital-services sector, regulatory permissions often represent a startup’s most valuable intangible asset, central to investment and acquisitions. Non-transferability can render viable firms unsaleable, disproportionately harming SMEs, depressing valuations, deterring investors, and slowing innovation. In effect, such restrictions reshape market behaviour, limiting competition and constraining India’s digital economy.
Lessons from IP Law
Regulatory licences cannot be equated with intellectual property in the strict legal sense. Indian constitutional and administrative jurisprudence has consistently treated licences as statutory permissions rather than proprietary entitlements, granted subject to continuing regulatory control and capable of modification or revocation in the public interest. The Supreme Court has repeatedly held that licences do not constitute property unless the governing statute expressly provides otherwise.
Nevertheless, intellectual property law remains analytically relevant in assessing the economic consequences of regulatory design. IP jurisprudence demonstrates that the defining characteristic of valuable intangible assets is not exclusivity alone, but controlled alienability-the ability to license, assign, or transfer rights subject to legal conditions. Where regulatory licences determine whether IP can be exercised at all within a market, a rigid refusal to recognise their economic character produces doctrinal inconsistency between IP law and regulatory law.
Conventional intellectual property rights such as patents, trademarks, and copyrights are recognized under Indian law as transferable, securitized, and monetizable assets. Indian jurisprudence has long recognised that the core strength of intellectual property lies not merely in exclusivity, but in the transferability of IP rights.
Indian courts have consistently affirmed that the economic value of intangible assets stems from the transferability of IP rights. In ICICI Bank Ltd. v. APS Star Industries Ltd.(2010), the Supreme Court held that even intangible actionable claims qualify as movable property capable of assignment unless specifically barred by statute. This functional overlap also invites an important counter-argument grounded in competition law.
Regulatory Moats and Competition Law Concerns
A common objection to treating gaming licences as IP-like assets is that they operate as regulatory moats rather than proprietary rights. Competition law treats such entry barriers with caution, recognising their potential to entrench incumbents and distort market neutrality. The Competition Commission of India has accordingly stressed that regulatory frameworks should not unnecessarily foreclose markets. The core problem is not whether gaming licences should be regulated, but whether regulation should render IP-driven businesses economically immobile.
Yet the difficulty in the gaming sector is not exclusivity per se. IP law itself constitutionally legitimises exclusivity to incentivise innovation and investment. The real asymmetry is that gaming licences generate exclusivity inseparable from IP exploitation, yet remain wholly non-transferable even when the underlying IP is freely alienable. This freezes IP-backed enterprise value in a manner neither IP law nor competition law is designed to tolerate.
Indian courts have long recognised IP as transferable economic property capable of valuation and commercial exploitation. Where regulatory approvals determine market entry, confer competitive advantage, and anchor enterprise value, they functionally resemble intangible assets. Yet online gaming licences, despite performing similar economic functions, remain statutorily tied to the original holder, often rendering otherwise compliant and profitable platforms commercially unsaleable upon a change in control, reflecting doctrinal categorisation rather than economic logic.
This rigidity is reinforced by statute and precedent. Gaming licences under the Nagaland Online Games of Skill Act, 2015, and the draft Promotion and Regulation of Online Gaming Act, 2025, prohibit transfer or assignment, even during mergers or acquisitions. Courts have upheld this position: Bangalore Medical Trust v. B.S. Muddappa(1991) and LIC v. Escorts Ltd. (1986) confirm that statutory licences are inseparable from the identity and suitability of the holder unless legislation provides otherwise.
The result is a constitutional tension. While Article 19(1)(g) guarantees the freedom to trade, non-transferability strips regulatory approvals of economic liquidity. As IP law enables flexibility and capital mobility, regulatory licensing continues to constrain enterprise value and investment in India’s digital economy.
Why Regulators Resist Licence Transferability
Regulators are right to worry that permitting transfers of gaming licences could weaken supervision. FINTRAC’s 2024 bulletin on online gambling shows that even licensed platforms remain vulnerable to money laundering when ownership changes escape scrutiny, enabling misuse of prepaid instruments, virtual currencies, or layered accounts. FATF raises similar concerns for online payment systems. However, recognising the economic interdependence between regulatory licences and intellectual property does not require treating licences as absolute property. Indian regulatory practice already balances control with flexibility through prior approvals and fit-and-proper assessments. Extending this calibrated model to gaming licences would safeguard public interests while preserving IP-backed enterprise value and investor confidence in India’s digital economy.
Policy Recommendations for India
To unlock the economic value trapped in regulatory approvals, India does not compromise caution; it only needs to recalibrate it. The solution lies in recognizing regulatory licences as intangible business assets that can be conditionally transferred, following global best practices.
The Malta Gaming Authority (MGA) provides a strong model. Under MGA rules, a license can be transferred or restructured if the new owner successfully passes a robust fit-and-proper assessment, including verification of beneficial owners, financial adequacy, compliance history, and governance standards. The European Union adopts similar oversight-based approaches. Countries such as Denmark, Spain, and Italy allow licences to survive mergers or changes in control, provided regulators pre-approve the acquiring entity. Japan follows the same principle: license transfers are allowed only after regulators evaluate the acquirer’s financial integrity, governance structure, and operational capability.
These examples demonstrate that public interest does not require absolute prohibitions; it can be preserved through regulatory visibility, enforceability, and vetted ownership transitions. India could adopt comparable safeguards, such as pre-approval mechanisms for transfers, fit-and-proper checks, codified rules for license continuity during insolvency, and valuation guidelines recognizing approvals as intangible assets. Such measures would protect consumers while preserving enterprise value and supporting innovation in India’s digital economy.
Conclusion
“The value of an intangible asset is realized not merely in its existence but in its ability to be traded, pledged, or leveraged; restrictions on transferability constrain economic efficiency and innovation.” – Hall & Lerner, 2010
Non-transferable online gaming licences highlight a fundamental challenge in regulating India’s digital economy. Legal permissions function economically like intellectual property, yet without transferability, they lose commercial flexibility. Excessive rigidity, though motivated by public interest, undermines entrepreneurship, capital formation, and innovation. The real question, therefore, is whether Indian law should continue treating high-value digital licences as static regulatory permissions when they increasingly function as the backbone of IP-driven digital businesses.
