Real-money gaming dealt a losing hand as crackdown follows ₹20,000 cr blow

Business Standard

2 hours ago

Mounting social concerns and an estimated ₹20,000 crore loss by nearly 450 million people due to frauds in real-money gaming (RMG) have pushed the Centre to impose a blanket ban on the sector. The decision comes amid alarm over opaque algorithms, user addiction, and widespread financial distress linked to games such as rummy, poker, and fantasy sports.
The ban not only ends the long-standing debate over whether skill-based or chance-based games can operate in India but also overrides the patchwork of state-level rules on regulating or prohibiting the sector.
Experts and industry players warn that the move could backfire by driving users towards unregulated offshore betting platforms.
'Government needs to reconsider and take a more calibrated stance, as prohibition has never worked. This Bill will bring back the satta market with a vengeance. Blanket bans drive users to unregulated platforms rather than protecting them. Instead of reducing harm, prohibitions create black markets that are harder to regulate and far riskier for users,' said Abhay Raj Mishra, president and national convenor of Public Response Against Helplessness & Action for Addressal (PRAHAR).
PRAHAR's July 2024 survey of 2,500 gamers in Telangana, where RMG has been banned for eight years, found more than 94 per cent of players still accessing offshore or illicit apps through virtual private networks, Telegram groups, or sideloaded platforms.
Industry executives also flagged the dominance of offshore operators, who already control nearly 80 per cent of the RMG market and run operations from tax havens such as Malta, Curaçao, and the British Virgin Islands. 'We continued to absorb high tax costs to keep users engaged. But if costs are passed on, users will simply migrate to untaxed offshore platforms,' said one senior executive.
The ban comes even as the sector was reeling under a 28 per cent goods and services tax (GST) imposed in October 2023. More than 400 companies employ 200,000 people in the sector, estimates show. Major players include Dream11, Games24x7, Junglee Games, MPL, Zupee, Gameskraft, Head Digital Works, and Nazara Technologies.
The decision has jolted the industry, which until recently was preparing for the impact of a steeper tax rate on margins.
'What has surprised the industry is that the Bill has been tabled without any consultation. We were not aware of this Bill until Tuesday,' said another senior executive.
Founders and executives told Business Standard they were questioning the Centre's intent behind a blanket prohibition, especially after years of contributing through taxes, compliances, and outreach.
They pointed out that the 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.
'Why was there revised GST chatter when the sector was supposed to be killed?' asked the founder of an RMG company.
A joint report by the US-India Strategic Partnership Forum, the Interactive Entertainment & Innovation Council, and WinZO said the Indian exchequer loses $2.5 billion annually in tax revenues due to user migration to offshore companies.
'From an economic perspective, the prohibition is likely to hurt an industry that contributes heavily to GST collections and employment, while simultaneously driving users to offshore, unregulated platforms,' said Navod Prasannan, partner, King Stubb & Kasiva, Advocates & Attorneys.
Between 2022 and 2024, the Ministry of Electronics and Information Technology issued blocking directions to 692 gambling and betting websites and apps.
'We acknowledge the government's decision to ban RMG and 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 (CEO), Startup Policy Forum.
Casual games level up?
The Bill proposes recognition for e-sports where games do not involve wagering and rely on factors such as mental agility or strategic thinking.
Currently, categories such as casual, midcore, or AAA-rated games depend on advertising or in-app purchases for revenue. A void in the RMG space may steer users towards e-sports, with the sector welcoming the Centre's decision.
'I welcome the Centre's decision to prohibit RMG and establish a strong regulatory framework. Too many young lives were being lost to addiction and debt. This decisive step safeguards our youth while unlocking the future of Indian gaming, driven by original intellectual property (IP), creativity, and Make in India games,' said Vishal Gondal, cofounder of nCore Games.
Ecosystem participants added that the move is expected to drive stronger IP development in the country.
'We applaud this decision, as it allows us to focus on the real 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 cofounder of Ginger Games.