India’s gaming reset: With RMG dismantled, can the country lead in e-sports and casual gaming?

On July 7, Kavin Bharti Mittal, founder and CEO of tech startup Hike, shared a vision on LinkedIn of a “gaming nation” where players, not just platforms, own the value they create. “This is our moonshot: creating an online nation where every participant owns a piece of what they help build. Where attention transforms into tangible value. Where the network effects benefit everyone, not just the platform owners,” he wrote.

Two months later, that dream collapsed. Or so it seems. On September 13, in another LinkedIn post, Mittal announced Hike’s shutdown after the layoffs of over 100 employees from its real-money gaming (RMG) platform, Rush. It was the Promotion and Regulation of Online Gaming Act, 2025 (Proga), which decimated the country’s real-money gaming sector, that sealed Hike’s fate. “The gaming nation vision is real, but we may be too early,” Mittal admitted, adding that RMG was never the endgame—only a test bed for unit economics and traction. “In hindsight, starting in India locked us into the model and regulatory headwinds, turning a temporary path into a more permanent one,” the son of Bharti Airtel chairman Sunil Mittal wrote.

Many firms vanished overnight after the unprecedented shutdown of the new-age industry, comprising 2,000 RMG-linked startups and around 250,000 employees. Others swiftly pivoted from their high-margin models to newer, uncharted avenues, such as e-sports, free titles, exportable game IP, the content space, and even finance.

The introduction of the legislation couldn’t have come at a worse time. At a time when general fear over the threat of AI on employment looms large, around 7,000 jobs were lost in just 30 days. Smaller players have laid off employees en masse—around 5,000 so far; gaming associations are still assessing the actual figures. Several firms and employees stare at an uncertain future.

Barring a few, most companies have resorted to layoffs. My11Circle parent, Games24x7, laid off 400 employees. MPL, India’s second-largest RMG player after Dream11, let go of around 600-700 employees. Other major players, such as WinZO and Zupee, shed around 30% of their workforce. “My company has been affected badly; people became jobless overnight. This kind of law enforcement doesn’t make sense. I am struggling to find a new job,” says a techie, who was among the 500 employees fired from Hyderabad-based HeadDigital Works, on the condition of anonymity.

Bitkraft, a U.S.-based early-stage investor focussed on gaming and interactive media, recently announced it is laying off 120 people. Other companies made swift pivots. For instance, Dream11’s parent Dream Sports came up with a financial services platform, Dream Money, while WinZO forayed into the content market in the U.S. Zupee entered the e-sports sector with Zupee Studio.

Money-based gaming is a lucrative business. With more than 100 million yearly users, it accounted for 80% of the online gaming space’s $3.5 billion revenue in 2024. The market hit a CAGR of 28% between 2020 and 2024. It was pegged to grow at 12-15% over the next five years.

No wonder the impact is reverberating beyond the ecosystem. Anecdotal estimates say people’s deposits worth ₹3,800 crore have already been wiped out. So is the government’s tax revenue, worth nearly ₹1,100 crore; online gaming contributed ₹25,000 crore in direct and indirect tax revenue to the Centre in FY25.

Adding to these woes, online money gaming has found itself in the company of tobacco and cigarettes in the ‘sin category’ under GST 2.0, attracting a 40% tax. The pending case in the Supreme Court over a ₹2.5 lakh crore GST dispute has the potential to be the final nail in the coffin for the crisis-laden space.

Nevertheless, the sun seems to have set on the once-thriving RMG space.

The broader impact

The online gaming space also saw around $3 billion in foreign direct investment in FY25. The tax outgo had surged more than 400% by 2024, after it was placed in the 28% GST bracket about a year earlier. The government’s best intentions notwithstanding, some experts see Proga as a hastily drafted bill that has threatened the feasibility of other entertainment formats as well as complementary and dependent sectors. For example, online gaming companies contributed significantly to marketing (sponsorships and endorsements), ads (traditional and digital), and tech infra (cloud services, payment gateway, and servers) businesses. “The ban will fuel the illicit gaming sector, boosting the growth of offshore betting platforms. The government is already struggling to restrict such platforms from being accessed by Indian users. The ban will create an additional burden,” says Probir Roy Chowdhury, partner, JSA Advocates & Solicitors.

The law leaves grey areas around skill-based contests, virtual goods trading, and creator tipping, says Ananay Jain, partner, media, AVGC, e-gaming at Grant Thornton Bharat. “These appear harmless, but history suggests otherwise. Globally, regulators have grappled with loot boxes, tokenised in-game assets, and pay-to-play skill challenges that effectively recreate betting mechanics. In India, where over 420 million gamers form the world’s second-largest player base, even a small fraction exploiting these loopholes could spawn a parallel RMG economy.”

Then there are risks associated with the migration of habitual gamblers to offshore betting platforms. According to a 2024 BCG-Sequoia report, more than 30% of India’s RMG users had already experimented with offshore apps when GST crackdowns led to increased costs. In the absence of a domestic playground, this percentage could rise sharply, fuelling an underground economy with zero consumer safeguards. “This exposes users to fraud, data misuse, and gambling addiction while draining tax revenues and pushing financial flows into opaque channels—an AML (anti-money laundering) nightmare,” Jain warns.

Proga 2025 is a lifesaving step: Govt

The government's stance on implementing the Proga 2025 framework is clear: money-based online games have caused widespread financial and psychological harm. Top ministers say the new regulatory authority and stricter rules will protect families, youth, and the broader public, curbing rising addiction and debt and potentially saving countless lives. 

The Centre says the pause button on money gaming was pressed when it became clear that the negatives outweighed the positives. “It is a major decision because countless online games are negatively influencing our students. Many people were falling into debt, some even taking their own lives,” Prime Minister Narendra Modi said in August.

Union Electronics and IT Minister Ashwini Vaishnav, during a consultation process with gaming companies, said the Centre is still willing to make amendments, if required, but assured that it engaged extensively with a majority of stakeholders, both before and after bringing the bill. "We engaged with practically every stakeholder possible in this, and we have finalised the rules. And in case we need more time, we will definitely consider a more consultative approach, which is our standard approach.”

Union Finance Minister Nirmala Sitharaman also reasoned the government’s move, citing huge financial losses to families, especially the poor and middle class, and children who were at risk of being addicted to online games. “Many people approached us, including PMO and said that money games were ruining our country and youth, and that is the reason the law was brought to the fore,” she said during a TV interview. 

Meanwhile, after having incorporated public feedback and comments, the Ministry of Electronics and Information Tech (MeitY) will now finalise and notify the PROGA, 2025, in November, essentially catering to challenges posed by both domestic and offshore money-based gaming companies. As mentioned in it, an Online Gaming Authority of India (OGAI) will also be formed, with representatives from the home and foreign ministries. It will manage both e-sports and social gaming companies, while also functioning as a quasi-judicial body with powers similar to a civil court.

The shock absorbers?

The exit of money-driven games will inevitably leave a vacuum, but stakeholders of e-sports—a $1.65-billion global industry with an audience of over 500 million—are excited. The popularity of e-sports among India’s youth surged during the pandemic as Covid-19 forced people to stay indoors. A recognised sport in several countries, it even featured as a medal event at the 2022 Asian Games. The first edition of the Olympic Esports Games is scheduled to be held in Riyadh in 2027.

But can the segment absorb the shock of the RMG ban? Industry observers say India’s gaming space mirrors what China saw in 2008-09, when regulation forced companies to pivot away from grey areas and double down on e-sports and video gaming. It gave birth to Tencent, a global giant in the online gaming business.

PM Modi believes India has the potential to dominate the global e-sports segment. “Gaming is not bad, but gambling is. India can dominate the global online gaming market if done in the right manner. There are huge job opportunities, too,” he had said. For e-sports specifically, Proga is believed to be a landmark legislation as it is the first time it has been formally recognised, distinct from money-driven formats. Yet, there are some limitations, says Aahna Mehrotra, founder, AM Sports Law & Management Co. “Only e-sports that are a part of multi-sport events have been given legitimacy, which is not typically the way such tournaments are organised. Some of the biggest events are single-title and standalone. A lot will depend on how the definition of multi-sport is clarified and the expansion of its scope.”

Still, the legislation is expected to boost confidence among players, investors, and organisers, giving them a much stronger foundation to plan for the long term. “The government deserves credit for the steps already taken. India has a genuine opportunity to prepare athletes to represent the country at the e-sports Olympics,” says Rajan Navani, founder & CEO, JetSynthesys, one of India’s largest e-sports and entertainment firms.

With regulatory predictability, brands and publishers can now commit to multi-year partnerships, translating into more opportunities for players and creators, more predictable revenue streams, and stronger global visibility for Indian e-sports.

But will a potential influx of former real-money gamers dilute the competitive culture of e-sports? Animesh Agarwal, co-founder and CEO of Mumbai-based S8UL Esports, a major e-sports club, doesn’t think so. Both are distinct formats, he reasons. “Online money games are about instant outcomes and short-term gratification, whereas e-sports demand consistency, practice, discipline, and an athlete’s mindset. The prize pools may seem attractive, but reaching that level takes years of structured grind, just like cricket or football.” He believes the migration from RMG to e-sports may create a wider funnel of awareness, from which genuinely motivated players can emerge through grassroots tournaments, training academies, and structured programmes.

Akshat Rathee, co-founder & MD of NODWIN Gaming, a major e-sports organiser and gaming solutions firm, agrees. An influx won’t dilute e-sports but expand the casual gaming pool. “Not all of them will become e-sports athletes, but they’ll deepen the fan base, and fandom is what sustains sponsorship, media rights, and merchandise.” The clarity provided by Proga turbocharges the e-sports and broader gaming sector in a way never seen before, as, for the first time, brands, policymakers, and parents can now understand e-sports like cricket or football, without confusing it with RMG, he says.

What will it take to build India a global gaming powerhouse?

E-sports is touted to be India’s next big youth media growth story. The twin formats of e-sports and free-to-play (F2P) appear well-positioned, at least on paper, to achieve RMG-like success. The country’s e-sports space, valued at ₹1,100 crore in 2024, is expected to hit a 35% CAGR annually over the next five years on the back of streaming, sponsorships, and tournament rights. F2P mobile games also dominate the world of downloads. A rising mid-core/core gamer base (200 million+) and adequate policy support can bring more brands and publishers together, helping e-sports unlock its full potential. “On the flip side, blanket bans on popular games like BGMI (2022) can serve as impediments. There is a strong need for stakeholder consultation. The spread of awareness on the adoption of global best practices to combat integrity challenges, which, like physical sport, can have an impact on the commercialisation, will also be key,” says Mehrotra. There is much to be done. A recent RedSeer report called for closing the “gaps in game quality, consumer activation, and ecosystem development.”

Developing the right infrastructure that can propel India to the Top 5 e-sports markets in the next five to seven years is challenging. But it opens immense opportunities, too. “We already have a generation of players who’ve proven themselves internationally. What’s missing is scalable infrastructure: e-sports-ready venues in Tier II and III cities, better internet and device access, and more formalised training academies. That’s where brand money and public-private partnerships need to focus,” says Rathee.

Monetisation is another challenge. “While RMG offered high-frequency, cash-driven revenues, e-sports earnings are concentrated in a handful of titles. F2P monetisation relies on ads and in-app purchases, generating an average revenue per user of under $3, compared to $35+ for RMG players,” says Jain of Grant Thornton Bharat. Additionally, e-sports will also need a major Make-in-India push for sustainable national fandom and innovative monetisation models. Experts feel popularising Indian-origin games is a way local companies can differentiate themselves on the global stage.

S8UL Esports’ Agarwal says the real challenge is whether the ecosystem can provide the right pathways. “India can now create an environment where anyone interested in e-sports has the opportunity to pursue it responsibly, step by step.”

Navani of JetSynthesys sums up what India’s focus should be. First, developing dedicated e-sports zones and hubs across major cities for players to train and compete, on the lines of cricket and football. Second, incentivising local studios to encourage original IP creation, rooted in Indian stories and culture. Third, closer collaboration between industry and academia. “This will ensure a steady pipeline of talent across design, coaching, production, and event management… like the work that institutions such as IICT (Indian Institute of Creative Technology) are doing,” he says.

With the doors shut on RMG, is an e-sports revolution on the cards? The constituents are here. The challenge is in directing the scale and innovation that defined RMG towards e-sports and local game development.