With Survival At Stake, Online Gaming Startups To Knock On Every Government Door

The online real money gaming industry in India is once again at a flash point. And this time its very survival is at stake.

While the imposition of 28% GST in 2023 shook the industry, it managed to survive the storm with minor damages. However, it is facing an existential crisis now, as the Centre has proposed to ban real money gaming in the country.

More than $3 Bn has been invested in the Indian real money gaming space, which houses unicorns like Dream11, MPL, and Games24x7, to date. Besides the loss of investment, an estimated 2 Lakh employees are now staring at an uncertain future.

After the Union cabinet cleared the “The Promotion And Regulation Of Online Gaming Bill, 2025” yesterday, the Bill was tabled in the Lok Sabha today and passed by the Lower House.

The Bill proposes to prohibit all forms of real money gaming, whether based on skill, chance or a hybrid of both. It also proposes to ban advertising and promotion of such games across all media platforms and block banks from processing financial transactions related to real money gaming platforms.

It proposes imprisonment of up to three years and fines of up to INR 3 Cr for operators who facilitate these gaming platforms.

Interestingly, the Bill aims to promote esports, with provisions to establish or designate a national-level regulatory authority for oversight. With this, the Centre has drawn a line between esports and real money platforms, and statements indicate lawmakers view the latter as socially and financially harmful.

If passed as an Act, the Bill would result in the dismantling of one of India’s fastest-growing digital segments, which was once termed a sunrise sector.

The online real money gaming market in India is currently valued at $4.3 Bn and was projected to expand nearly fourfold to become a $15.3 Bn opportunity by 2033. However, the Bill has put a question mark on the existence of the industry.

Despair & Disappointment

Startups, investors and industry bodies are scrambling to make sense of the move, which came out of nowhere. The proposal has thrown the country’s real money gaming ecosystem in a state of turmoil.

“This was a complete shocker, nobody saw this coming. Overnight, it all came to a standstill,” an industry source told Inc42 on the condition of anonymity.

Typically, when the government intends to introduce new legislation, it invites suggestions from industry stakeholders. However, industry sources said that consultations were completely missing this time, and they didn’t even receive a hint from the electronics and IT ministry (MeitY) that something of this sort was in the works.

Gaming startups learnt about the proposed rules from news reports, the sources said. Besides the sweeping provisions of the Bill, they highlighted the lack of transitional guidelines. As a result, sources said they are not sure if the operations of their companies will even exist tomorrow.

An industry source questioned the rationale of the Bill, saying it will only increase the presence of offshore betting platforms, such as Bet365, Parimatch, Stake, among others, in the country.

“If the Bill turns into law and we have to shut shop, it will help international betting and gambling platforms increase their presence. They neither pay taxes nor are legal. The government should go after them,” the source said, adding that a majority of reported illegal acts pertaining to the segment are linked to these offshore platforms.

Industry insiders also highlighted potential job losses as the online real money gaming sector directly and indirectly employs close to 2 Lakh people – from engineers, product managers and designers to customer staff, marketing teams, and third-party service providers.

“Everyone is panicking about their job security right now. We don’t know what will happen in the coming days,” an executive working at a gaming startup said.

Karti P Chidambaram, a Member of Parliament from the Sivaganga constituency, called the Bill a “knee-jerk reaction” and said it will not only have an impact on the country’s economy but also national security.

“It risks creating significant national security concerns by driving financial transactions offshore and pushing users toward the dark web. The bill threatens to eliminate 400,000 jobs, erase INR 20,000 Cr in GST and TDS revenue (2024 data), and wipe out $6 Bn in investments, while stifling future funding opportunities for game developers and related sectors,” Chidambaram said in a post on X.

He urged the Centre to refer the Bill to a select committee and hold a public hearing to ensure a “balanced and informed approach”.

Startups Clutch At Straws

Amid the shock, the real money gaming industry is trying to engage with the policymakers. Multiple gaming associations and startups are urgently seeking talks with the government to soften the Bill’s provisions.

The All India Gaming Federation (AIGF) has already written to Home Minister Amit Shah, requesting intervention. In its communication, the AIGF stressed the need for “progressive regulation” rather than a blanket ban, warning that the proposed regulation could be a “death knell” for a legitimate, tax-paying, job-creating sector.

Industry sources said that gaming startups are in close touch with each other to monitor developments and coordinate responses.

“We intend to reach out to all the concerned ministries, be it finance, MeitY, or home. The industry would like to put its case forward. Right now, we don’t have any other option,” one of the sources said.

While it seems highly unlikely that the government would be willing to make changes to the Bill, which was brought in without any prior intimation or consultations, industry players are hopeful and willing to take their chances, as their survival is at stake.

If these consultations don’t result in any changes, startups are also considering taking the legal route and moving to courts, but many are hoping that they don’t have to reach this last resort.

Edited By Vinaykumar Rai

The post With Survival At Stake, Online Gaming Startups To Knock On Every Government Door appeared first on Inc42 Media.