India Proposes to Ban Real-Money Gaming Operations, Potentially Impacting $3.8 Billion Industry and Unicorn Startups
The burgeoning real-money gaming sector in India faces an impending ban under proposed legislation, which could significantly impact industry players and potentially disrupt the sector’s growth trajectory.
According to reports, the Indian government intends to outlaw all forms of real-money games – whether based on skill or chance – under a new online gaming regulation draft. This information was corroborated by three sources, including a consultant from the Indian IT ministry and two individuals closely connected with the government and real-money gaming companies.
The proposed legislation, tentatively named The Promotion and Regulation of Online Gaming Act, 2025, seeks to restrict online games involving real-money stakes and prohibit both their advertisements and financial transactions. If enacted, no financial institution or facilitator would be allowed to engage in, permit, or aid real-money gaming transactions, as stated in the draft legislation.
Real-money gaming has been a significant revenue driver for India’s online gaming industry, generating $3.8 billion in revenue during the fiscal year 2023–24 – a 23% increase year-over-year, according to a recent report by gaming-focused VC firm Lumikai. Real-money gaming alone accounted for $2.4 billion of that total.
The sector has come under increasing scrutiny due to concerns over incidents of harm, including reports of suicides resulting from substantial financial losses in games. Industry stakeholders largely attribute these instances to offshore betting and gambling apps, which continue to operate despite claims of enforcement actions by federal and state authorities, such as website blocks and account freezes.
In 2023, the Indian government imposed a 28% tax on online gaming to curb real-money play, a move that was met with criticism from top investors like Tiger Global and Kotak, who warned of potential write-offs and job losses. Despite these concerns, the tax remains in effect, albeit contested in the Supreme Court due to its retrospective application. Reports suggest that the tax could rise to 40% under new rules.
Under the proposed legislation, real-money gaming companies could face imprisonment for up to three years, a fine of up to ₹10 million (approximately $115,000), or both. Celebrities promoting such games on any media platform could be liable for up to two years of imprisonment or a fine of ₹5 million (around $57,000). The bill also grants the Indian government the power to establish a regulatory authority to oversee its implementation.
“The legislation, if enforced, will likely cause businesses to shut down,” the founder of a leading Indian real-money gaming startup told an unnamed news outlet, requesting anonymity due to the confidential nature of the draft.
Investors are equally apprehensive about the proposed law, which is expected to be tabled in the Indian parliament soon for debate. “All unicorns in this sector will be significantly impacted if the move becomes reality,” an investor in Indian real-money gaming startups said, while declining to be quoted on record due to the proposal’s yet-to-be-released status by the Indian government.
Leading Indian real-money gaming companies like Dream Sports, Games24x7, and WinZO have collectively raised billions of dollars and generate substantial revenue from millions of users. India boasts the highest number of real-money gaming startups globally, followed by the US and the UK, according to Tracxn.
While many of these companies also offer non-monetized games, one founder revealed that real-money gaming accounts for over 85% of their total revenue. They chose to remain anonymous due to the confidential nature of the draft, but expressed their concerns anonymously.
Some startups have attempted to expand their businesses overseas to bypass regulatory challenges in India, but these efforts have yet to yield positive results as they currently generate almost 100% of their revenues from India alone, the founder mentioned above said.
This is not the first time New Delhi has considered regulating real-money gaming. In 2023, the Indian government amended the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to curb “user harm” associated with real-money games. The proposed creation of self-regulatory bodies to approve legitimate games while restricting illegal betting and gambling failed due to conflicts among industry stakeholders over enforcement and standards.
Local reports on Tuesday suggested that India’s Cabinet had cleared the proposed bill for its introduction in the lower house of parliament as early as Wednesday. However, the Indian government has yet to confirm this development.
