I am a director at a technology summer camp, where the students often spend their free time playing video games and have talked to several parents about how to determine if a game is appropriate or not. I have a few suggestions.
Know the Facts
You can't set appropriate boundaries if you don't know the subject matter. Do some research on the game. Ask him to show you how to play and try a few levels. Talk to him about the game and his opinions on it (it sounds like you're already doing this). Use the internet to look up reviews of the game.
Make Logic Based Decisions
In this and future video games (because there will almost certainly be others), I would advise thinking about what your reasoning for possibly banning the game is. What are the risks to him or others if he continues to play the game? Are you concerned that he will be frightened or have nightmares? Are you worried that he doesn't really want to play the game but feels pressured into it? Or that he might be pressured into playing levels that are too frightening? Are you worried that he is too young to separate fantasy from reality when it comes to violence and might view violence as appropriate when it is not?
If you can't come up with any actual reasons, then you shouldn't ban it. If you can form a short list, think about their risks and the best way to mitigate them. If you're worried about him being afraid, talking about how to handle fear might be better than outright banning the game, for example.
Involve Your Child in the Process
It sounds like you're already doing this, but make sure that he feels like he is being heard, even if he doesn't like the final decision. The best rule I've ever heard is "I am always happy to hear why you disagree with me as long as you are giving new reasons." Basically, the child in question was not allowed to whine or repeat the same argument over and over. But the parent would always seriously consider new information.
Tell your son about your concerns with the game. Ask him if he thinks those concerns are justified, and why or why not. Be clear about what you would need to feel more comfortable with him playing the game. That could be anything from "he needs to be 16 before you feel like he will be ready for the game" to "you need to talk to some other parents or do more research" to "he can play the game, but only when you are present" to even "you will never be comfortable with him playing this game because it is too violent/offensive/etc., and as long as he is a minor he will have to respect that."
It sounds like your son's classmates are playing this game at school. If you were to outright ban it, it seems likely that he would continue to be exposed to it anyway, even if he wasn't the one pressing the buttons. You also never want to set up a situation that encourages your son to lie to you, so before banning something make sure to think about whether it would be easy for him to continue playing it anyway and just not tell you.