From Unicorns to ED Raids: How Real-Money Gaming Unravelled in 2025

India's real-money gaming industry entered 2025 as a fast-growing, $3 billion sector employing over a lakh professionals and serving crores of users. During the course of the year, the industry was effectively banned, its platforms shuttered, its workers displaced and some of its executives raided and arrested in one of the most sweeping crackdowns India’s start-up sector had ever seen.

The industry’s fate was sealed on August 21, 2025, when the Indian Parliament passed a bill that effectively banned online games played for money, along with related advertising and transactions. The Centre described the Promotion and Regulation of Online Gaming Bill (or the Online Gaming Act) as a landmark measure aimed at protecting citizens from the risks of online money gaming, while promoting and regulating other forms of online games.

A Pillar of Growth

Before the move, the real money gaming (RMG) segment formed the backbone of the Indian gaming industry, which itself was estimated at ₹31,938 crore (around $3.7-3.8 billion) in 2024 by a March 2025 report by WinZO Games and the Interactive Entertainment and Innovation Council (IEIC). The report estimated that the RMG segment accounted for 85.7% of this revenue, or ₹27,438 crore ($3.2 billion).

It noted that the gaming sector had attracted ₹25,896 crore ($3 billion) in foreign direct investment, with roughly 85% of FDI flowing into the pay-to-play segment.

The numbers are in line with estimates by other associations and firms. In FY24, India’s gaming industry was valued at about $3.8 billion, according to Lumikai’s The State of India Interactive Media & Gaming report. Gaming made up roughly 30% of the $12.5 billion new-media revenue market, which also includes video content, animation and VFX, audio streaming and social media.

The report says India had 591 million active gamers in FY24, with 23 million new users added during the year. About 66% of gamers were from non-metro cities, and 43% of players in the 18–30 age group were first-time earners, underscoring the sector’s reach beyond major urban centres.

Spending inside games continued to rise: around 148 million users made in-game purchases, including 8 million new paying players in FY24. In-app purchases, driven largely by mid-core games, grew 41% year on year and remained the fastest-growing slice of the $3.8 billion revenue pool.

According to the WinZO-IEIC report, India accounts for nearly 20% of the global gaming population, with 591 million gamers and about 11.2 billion mobile game downloads annually. The country is home to around 1,900 gaming companies that collectively employ about 1.3 lakh skilled professionals.

The Aftermath of the Ban

The ban had an immediate and far-reaching impact on employment trends across the sector. Real-money gaming companies accounted for a significant chunk of the 37% of Indian start-ups that carried out layoffs in 2025, according to an Inc42 report.

In total, more than two lakh direct and indirect jobs linked to the real-money gaming ecosystem were reportedly affected by the decision. Several prominent gaming firms, including GamesKraft, Head Digital Works, PokerBaazi, Games24×7, Mobile Premier League, Zupee and Hike, were among those that resorted to layoffs as their business models became unviable following the ban.

Beyond layoffs, the disruption also forced widespread restructuring. Nearly 46% of start-ups were compelled to overhaul their operations, as existing cost structures and business models proved unsustainable amid slowing demand, tighter funding conditions and rising operational expenses.

Following the ban, major platforms such as First Games (Paytm), Dream11 (Dream Sports), Mobile Premier League (MPL), RummyCircle and My11Circle (Games24x7), Junglee (Flutter), PokerBaazi (Moonshine and Nazara), WinZO, Zupee, GamesKraft and Probo either suspended or wound down their real-money operations. These companies stopped accepting new deposits, enabled user withdrawals and shifted many offerings to free-to-play or practice formats.

Paytm’s First Games formally exited real-money gaming while continuing to operate social and free titles. Flutter said it had suspended Junglee’s real-money operations and warned that the abrupt regulatory shift could push consumers towards unregulated platforms. The company had earlier indicated that its India business was expected to contribute around $200 million in revenue and $50 million in adjusted EBITDA in 2025. Dream11, meanwhile, suspended paid contests, assured users of withdrawals and transitioned its product to a free-to-play model.

Several other firms, including MPL, Games24x7, PokerBaazi, GamesKraft, Zupee and Probo, paused add-cash and paid gameplay, allowed withdrawals and initiated workforce reductions as they reassessed their business strategies. Hike, which had previously pivoted into gaming, announced that it would shut down entirely in September 2025.

Follow-On Crackdowns

The troubles faced by the companies and promoters did not end with the restructurings and business disruptions. Instead, some of them faced investigation and prosecution for allegedly trying to cheat the customers as their firms were being restructured or shuttered.

Between November 18 and 22, 2025, the Enforcement Directorate (ED) carried out searches at multiple locations as part of a crackdown linked to the Promotion and Regulation of Online Gaming Act, 2025. The companies under investigation included WinZO Games, Gameskraft Technologies and Nirdesa Networks, which operates the Pocket52 platform.

The ED alleged that these firms failed to refund large sums of player deposits despite the ban. According to the agency, WinZO withheld around ₹43 crore, while Gameskraft and Pocket52 together retained more than ₹30 crore in escrow accounts that were meant to be returned to users.

The probe also unearthed allegations of fraud and money laundering. The ED claimed that certain platforms used a hidden algorithm, referred to by WinZO as “PPP”, to match real players against automated bots without their knowledge, increasing the likelihood of user losses. Investigators further alleged that WinZO diverted nearly ₹490 crore (about $55 million) to a shell company in the United States, routing Indian funds overseas under the guise of foreign investment while continuing to operate globally using Indian infrastructure.

As part of the action, the ED froze assets worth more than ₹523 crore, including about ₹505 crore linked to WinZO. In late November 2025, WinZO founders Saumya Singh Rathore and Paavan Nanda were arrested on money-laundering charges and remanded to judicial custody.

A Fair Decision?

In the end, the question remains: Was it a fair and balanced decision to ban a sector that was a key part of the Indian start-up ecosystem?

The government, in a press note, justified its ban by pointing to addiction, financial ruin and social distress caused by predatory gaming platforms that thrive on misleading promises of quick wealth.

Even those who may disagree with the way the government dealt with the problem acknowledge that there was a problem. Many point out that the sector’s rapid expansion, marked by limited transparency and addictive design elements, made government intervention inevitable.

Aarathi Ganesan, manager at public policy consulting firm The Quantum Hub (TQH), said the real-money gaming sector had scaled quickly, driven by products that allowed users to stake small amounts for the prospect of outsized returns. She noted that this model created clear and visible consumer harms. The lure of quick gains pushed some users toward increasingly risky behaviour, while concerns around addiction and financial distress became more pronounced.

“Compounded by the absence of transparent, coordinated industry efforts to address these issues, the situation appears to have prompted the government to impose a ban on the sector,” Ganesan said.

At the same time, most industry observers believe that an outright ban was disproportionate and that a more balanced approach was needed. Ranjana Adhikari, equity partner in the Technology, Media and Telecom practice at SAM & Co, is among those who favour more nuanced and targeted regulation over what she describes as a sledgehammer approach.

“This [ban] is a classic case of throwing the baby out with the bathwater. Instead of creating a legal framework that protects legitimate, tax-paying and job-creating skill-gaming operators while targeting unscrupulous and illegal ones, the government has unfortunately adopted a blanket ban on all online money gaming,” Adhikari said.

She says digital economies tend to flourish under balanced, evidence-based regulatory frameworks shaped through stakeholder consultation and risk-based assessments. Such frameworks, she adds, can protect users while still encouraging innovation, attracting investment, generating employment and supporting long-term economic growth.

Investor Confidence Dented?

The ban has, to an extent, also weakened investor confidence in India’s broader gaming sector. Real-money gaming not only accounted for a large share of the industry’s revenues in recent years but also attracted a steady flow of foreign direct investment.

Ganesan believes the abrupt ban is likely to dent investor sentiment in the medium term, at least until a new law is implemented and demonstrates regulatory stability. This uncertainty, she says, will weigh on hiring, expansion plans and the growth of adjacent segments such as e-sports and online social gaming, both of which remain permitted under the law.

Echoing this view, Adhikari says such knee-jerk policies signal unpredictability in the regulatory environment to the wider investor community. In a global digital economy where capital and talent are highly mobile, regulatory shocks can push both offshore.

“Regulators should realise that entrepreneurs and investors prefer jurisdictions which have (a) unambiguous and clear legal frameworks, (b) no disproportionate prohibitions, (c) contemporary, nuanced and nimble regulations, and (d) consistent, risk-based and focused enforcement,” she said.

Can Esports & Casual Gaming Step In?

With the ban on the most lucrative segment within gaming, everybody’s attention has shifted to the search for other promising areas within the gaming industry, such as social or casual gaming, and esports.

For example, a spokesperson for Revenant Esports called 2025 a defining year for Indian esports, with all-round improvements in performance, partnerships and creators. “Indian teams proved we can compete globally, publishers invested deeper, and brands shifted from experiments to long-term commitments. At the same time, creator-led content and merch-driven fandom showed the true commercial potential of gaming culture in India. We’re no longer growing teams in isolation; we’re building a sustainable, culturally relevant esports ecosystem from India to the world,” he noted.

However, those impacted by the ban on real money gaming will need time to rework their offerings and find permissible monetisation routes. Adhikari of SAM & Co says greater clarity should arrive once the rules under the Act are finalised and the proposed Online Gaming Authority of India (OGA) becomes operational.

“In this landscape, online social games are likely to be more sustainable as the Act expressly recognises and promotes them and permits monetisation through subscriptions, access fees, advertisements and other revenue models provided they do not amount to staking or wagering,” Adhikari said.

Adhikari also says India’s engineering talent positions the country well to serve as global capability centres for foreign operators and as a hub for exporting gaming infrastructure, tools and related services. If the OGA issues clear guidelines on permissible offerings, investors could underwrite social gaming and esports projects with more confidence, accelerating a shift away from real-money gaming.

Aarathi Ganesan warns the immediate test is on the consumer side. For many users, monetary payouts were the main attraction. “Whether these users transition to gaming purely for entertainment or competitive play will become clearer over the coming months. That shift, or the lack of it, will ultimately determine how the Indian gaming market evolves and whether it can build a more sustainable growth trajectory going forward,” she said.