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  4. Online gaming: Revenues slowed even before threat of govt ban

Online gaming: Revenues slowed even before threat of govt ban

GST and TDS on earning snipped 6 percent real money gaming revenues, which total nearly 80 percent of income for the sector

By Samreen Wani
Published: Aug 21, 2025 04:05:23 PM IST
Updated: Aug 21, 2025 04:19:41 PM IST

Online gaming, as a whole, saw a slowdown in earnings. Image: Shutterstock Online gaming, as a whole, saw a slowdown in earnings. Image: Shutterstock

Even before the government passed the draft Promotion and Regulation of Online Gaming Bill to ban real money games in the country, high GST rates had already slowed down online gaming revenues. Gaming startups were also seeing a decline in their funding after the pandemic bump.

Real money gaming revenues, which make up almost 80 percent of the online gaming space, jumped 19.5 percent from Rs16,000 crore in 2022 to Rs19,000 crore in 2023. The following year, higher GST rates and TDS on earning played spoilsport as a 28 percent GST on online gaming came into effect in October 2023.

Subsequently, revenues dipped by 6 percent to Rs17,900 crore, according to data from a FICCI-EY report on media and entertainment titled “Shape the Future”. The report points out that revenues slowed down “due to the impact of the GST make-good that transaction-based gaming companies absorbed into their margins”.

Consequently, online gaming, as a whole, saw a slowdown in earnings. Though the sector’s revenues increased by 20 percent to about Rs24,000 crore in 2023, they remained almost flat in 2024.

But esports has seen a marginal increase in revenue from Rs 4000 crore in 2022 to over Rs 5000 crore in 2024.

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Fantasy sport and card games (rummy and poker), where revenues exceeded Rs 8000 crore in 2023, dipped by more than 7 percent the following year. In contrast, games that charge players a participation fee raked in about Rs 2000 crore.

The pandemic led to a significant proliferation of online games and a massive bump in its revenues. In 2019, the segment accounted for just about 3 percent of all the revenue generated by the media and entertainment sector. In 2022, however, online gaming was bringing in about a tenth of the earnings.

Also read: Online gaming survived the GST blow; new Bill seeks to shut industry

Gaming startups saw an opportunity to grow as well during this period. About 800 online gaming startups were founded until 2018, while another 204 came up in 2019. Since 2020, however, over 1,000 startups have been launched in this sector.

But the sector has struggled with fundraising since 2021, the year it raised over $1 billion. For instance, while online gaming startups raised over $217 million in 2023, they struggled to even cross the $200-million-mark in 2024. So far, in 2025, they have raised about $105 million.

Though the sector has over 2,000 startups, just eight account for most of the funding. The top eight online gaming startups have raised over $ 2.4 billion in funding so far. Dream Sports, the largest among them, has raised over $1.2 billion, followed by MPL and Hike.

The Union Cabinet approved a draft legislation this week, which criminalises transaction-based gaming with an intent to check the economic and psychological effects of unregulated growth in the sector.

The legislation, which has now been passed in the Lok Sabha, may have devastating consequences for the online gaming sector and for millions of gamers. India’s online gamer base that added 33 million and reached 488 million in 2024 was expected to touch 517 million in 2025.

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