Money gaming industry may be forced to fold as Centre goes all in on ban

Days after it was figuring out how to deal with a steep GST burden, the real money gaming industry has been hit with a legislative tsunami that could effectively eliminate it entirely

Only days after the industry was bracing for a steep tax burden, India’s real money gaming (RMG) sector is now in intensive care as the Centre moves to impose a blanket ban via legislation.

 

The Promotion and Regulation of Online Gaming Bill, 2025 - which was tabled in the Lok Sabha on Wednesday - has raised the stakes for the sector dramatically. The legislation has gone all in to erase the sector altogether, citing its role in driving players into financial distress and enabling unlawful practices such as fraud, money laundering, and tax evasion.

 

“Why was there a revised GST chatter when the sector was supposed to be killed?” a founder of an RMG company questioned, requesting anonymity.

 

The bill not only ends the long-standing debate over which games can operate in the country — skill-based or chance-based — but also overrides the patchwork of state-level regulations on whether to ban or regulate the sector.

 

Major companies in the sector include Dream11, Games24x7, Junglee Games, Mobile Premier League (MPL), Head Digital Works, Zupee, Gameskraft, Nazara Technologies, among others. Incidentally, Dream11 is also the official lead sponsor of the Indian cricket team across all three formats of the game.

 

Founders and company executives told Business Standard they were questioning the Centre’s intent behind a complete prohibition, especially after years of contributing through taxes, compliances, and outreach.

 

They noted that this move came just days after rumours of a higher 40 per cent goods and services tax (GST) slab, categorising gaming as a ‘sin’ commodity, something they had already deemed unsustainable.

 

The sector was already reeling under a 28 per cent GST imposed in October 2023. More than 400 companies employ 200,000 persons across the sector, as per estimates.

 

“When the last time GST was increased (in 2023), many players in the industry got retrospective tax notices simultaneously. There’s always been a larger battle to fight even as we continued to pay taxes,” the person added.

 

Executives said they had been absorbing the tax burden to keep users engaged on their platforms, with nearly 40 per cent of their revenues going towards taxes.

 

“We continued to absorb those costs to ensure our users are engaged. The problem with the sector has been that, if we passed on such costs, users would move to offshore platforms with no tax,” a second company executive said.

 

The person added that nearly 80 per cent of the RMG market is cornered by offshore companies, which have little regard for user safeguards, taxation, and compliance with code of conduct set by industry bodies.

 

“From an economic perspective, the prohibition is likely to adversely impact an industry that contributes significantly to GST collections and employment, while simultaneously driving users towards offshore, unregulated platforms,” said Navod Prasannan, partner, King Stubb & Kasiva, Advocates and Attorneys.

 

Industry bodies — the All India Gaming Federation (AIGF), E-Gaming Federation (EGF), and Federation of Indian Fantasy Sports (FIFS) — estimate that the homegrown sector contributes around Rs 20,000 crore annually in direct and indirect taxes.

 

“We acknowledge the government’s decision to ban real money gaming and fully respect that this step has been taken after careful consideration of the social and regulatory concerns associated with the sector. As responsible stakeholders, we recognise the government’s priority to safeguard consumer interests, prevent harm, and ensure that innovation aligns with national well-being,” said Shweta Rajpal Kohli, president and chief executive officer, Startup Policy Forum.

 

Offshore risks

 

In a joint letter addressed to Home Minister Amit Shah, industry bodies added that offshore entities are set to benefit from the bill.

 

“Instead of protecting people, this Bill risks exposing them to fraud, exploitation, and unsafe practices may end up helping illegal offshore operators which is one of the biggest national security threats to the country today,” they added.

 

A joint report by US-India Strategic Partnership Forum, the Interactive Entertainment and Innovation Council (IEIC), and WinZO added that the Indian exchequer has lost tax revenues due to user migration to offshore companies, estimating a GST loss of $2.5 billion annually to such platforms.

 

Offshore entities operate from international tax havens like Malta, the British Virgin Islands, and Curaçao.

 

Between 2022 and 2024, the Ministry of Electronics and Information Technology (Meity) issued blocking directions to 692 gambling and betting websites and apps.

 

Fillip to casual games

 

The Bill, however, proposes recognition to e-sports where such games do not involve staking money or wagering and are dependent on factors such as mental agility or strategic thinking, among other things.

 

At present, categories of games such as casual, mid-core or AAA-rated games depend on advertising or in-app purchases to generate revenue. A void in the RMG space may lead users to digital e-sports, with the sector welcoming the centre’s decision.

 

“I welcome the Govt’s decision to prohibit Real Money Gaming & establish a strong regulatory framework. Too many young lives were being lost to addiction & debt. This decisive step safeguards our youth while unlocking the future of Indian gaming — driven by original IP, creativity & Make in India games,” said Vishal Gondal, co-founder of Ncore Games.

 

Ecosystem participants added that the move is expected to drive better intellectual property (IP) development in the country.

 

“We applaud this decision as it allows us to focus on the ongoing concerns as a business — monetisation, retention, and most importantly, building great IP for India and the world, rather than having to explain to our audiences what we are to begin with,” said Sumit Batheja, CEO and co-founder, Ginger Games.