India’s Skill Gaming Industry: Investment Outlook and Regulatory Landscape

In a recent decision, the federal government appointed the Ministry of Electronics and Information Technology (MeitY) as the nodal body to regulate India's skill gaming industry. This move has given legitimacy to the sector which was eagerly awaiting regulatory reform to attract greater investments and protect the largely young gaming population. 

In this article, we assess India's gaming market and note prominent investment trends, followed by listing the relevant laws based on jurisdiction and associated regulatory bodies.

A uniform regulation at the federal level is seen by many industry watchers as necessary for the gaming industry to reach its next development phase, capitalizing on a combination of growth drivers, such as India's expanding mobile phone user base, growing spending power, broader access to higher internet speed, and pandemic restrictions to outward mobility. 

At the recent 50th GST Council Meeting concluded on July 11, 2023, the Group of Ministers (GoM) has recommended that online gaming should be taxed at a uniform rate of 28 percent. The tax will be applicable on the full-face value of bets placed, which means that the tax will be calculated on the amount of money that is wagered, regardless of whether the bet wins or loses.

Amid ongoing discussions to regulate skill gaming industry in India, the federal government recently announced its decision to bring skill gaming industry under the ambit of Ministry of Electronics and Information Technology (MeitY). This move is a step towards finalizing a uniform and targeted law for online gaming industry in India, which was much needed to stimulate investment and protect player interests. The need for regulation arose after growing incidents of money laundering and addiction due to skill gaming; India is among the world’s four largest gaming markets. The gaming industry welcomed the move as regulatory certainty will bring it legitimacy. It will also boost scope for investments, while safeguarding the interests of skilled game players, whose population has grown from 360 million in 2020 to 510 million in 2022.

What is ‘skill gaming’?

Skill gaming refers to pay-to-play online games, including fantasy sports, like Dream 11 and MPL fantasy cricket, casual games, and card games like rummy or poker, which require some use of skill.

In India, gaming is growing faster than most media sub-sectors, including OTT video, cinema, and home entertainment and audio. While India’s gaming market is currently smaller than the US and China, it is worth about US$1.5 billion and is expected to triple in size to reach US$5 billion by 2025. This jump in market growth will be sustained by the ‘mobile-first’ phenomenon. Popularity of gaming in India is catalyzed by factors like a young consumer base, rising disposable incomes, introduction of new sophisticated gaming genres with easier learning curves, internet affordability, rapidly increasing number of smartphone and tablet users, the growth of the influencer economy, and lifestyle changes due to the COVID-19 pandemic.

Market overview

Online gaming in India is among the country’s fastest growing industries, with a potential to generate revenue worth INR 154 billion by 2023 – in terms of rake fees earned – as per a joint report by EY- All India Gaming Federation (AIGF) titled, ‘Online gaming in India – The GST conundrum.’

According to Statista, the market value of the Indian skill gaming sector was around INR 79 billion in the financial year (FY) 2021-22, and is expected to reach INR 150 billion in FY 2023-24, indicating a compound annual growth rate (CAGR) of around 15 percent.

Another report by Mordor Intelligence suggests that the Indian gaming market was valued at an estimated INR 79 billion in 2020 and expected to reach INR 374 billion by 2026, registering a CAGR of 20.83 percent over the forecast period 2021-2026.

In terms of user base, the number of online gamers in India is rapidly expanding, with the mobile gaming community taking the lead. India has more than 560 million internet users, making it the second-largest internet consumer base in the world. Within this, the mobile phone user base comprise an overwhelming 85 percent of the industry, followed by personal computer users at 11 percent and tablet users at just four percent.

Mordor Intelligence found that in 2021, India had over 220 million gamers spending an average of 42 minutes per day on mobile games while Invest India has pegged this number at 303 million.

According to the World Economic Forum (WEF), mobile is the primary vehicle for the gaming market in India, supported by access to affordable smartphones growing at 15 percent year-on-year for the past five years. Besides, high-speed 4G internet penetration sustained by the world's lowest data tariffs have contributed to cementing this trend. This trend further picked pace during the pandemic, when several lockdowns and restrictions changed the landscape of online gaming industry in India. As per a survey cited by Invest India, nearly 45 percent of India's mobile users started playing games on their smartphones during the pandemic.

Trends in India's mobile gaming market

  • Higher engagement with better features: Increased focus on familiar content, along with visual and voice features are helping onboard new gamers and driving higher engagement.
  • India emerging as global talent hub: A larger talent pool with gaming companies has multiplied tenfold over last decade.
  • Influencers playing major role: Influencer-driven user generated content, livestreaming, and the nascent but growing INR 7.7 billion (electronic sports) e-sports industry, are driving gaming adoption and higher engagement.
  • New developments attracting user and investor interest alike: investors are actively shaping the gaming space in India. It is reported that approximately 33 percent of the total gaming funding so far came in the first quarter of 2021.

Investment outlook 

A facilitative policy framework permitting 100 percent foreign direct investment (FDI) in gaming, coupled with government initiatives like the “Digital India” program, have enabled the growth of the gaming industry in India.

Leading players

As per IBEF, the number of gaming companies with a presence in India rose nearly 10x times since 2010, crossing 275 in 2020. Major players include Electronic Arts (EA) Sports, Mobile Premier League (MPL), Dream11, Nazara Technologies, Halaplay, etc. These companies provide direct and indirect employment to around 3,000 to 4,000 people. A report by The Economic Times suggests that in the foreseeable future, the gaming industry could create several hundred thousand jobs.

Currently, there are 920 gaming start-ups in India, with Mumbai (Maharashtra) serving as the headquarter base for top players in this domain.

Investment trends

During the August 2020-January 2021 period, the gaming sector in India attracted US$544 million in investments. As per a report by Maple Capital Advisors, growth capital funds like Chrys Capital and TPG have participated while numerous others have started to look at the gaming industry. Recently, the Virat Kohli-backed Asian e-sports and mobile gaming platform MPL raised US$95 million in a Series D round led by Composite Capital and Moore Strategic Ventures at a valuation of US$945 million. Other notable investments include US$225 million investment into Dream11 (September 2020) and US$68 million into Nazara Technologies (January 2021). GameEon Studios, working on India’s first triple-A title, Mumbai Gullies, received funding of INR 25 million in September 2021.

Merger and Acquisition Activity in the India Gaming Industry, 2021


Strategic acquirer

Funding amount

Type of deal


Modern Times Group

US$360 million



Stillfront Group

US$100 million




US$22.5 million




US$9 million



Indian Gaming Ecosystem: Key Segments and Market Players


Game Tech

Unity, UNREAL Engine

Other IP owners

Lucasfilms Ltd., FIFA

Content development

Independent developers

Lucid Labs, Xigma Games, Frostwood Interactive, Underdogs Studio LLP

E-sports teams

TSM Team, Team Finatic

Content Development and Marketing

Studios and publishers

Gametion, Games 24, Seven, Ctro, Tencent Games, Dream11, King Ubisoft, Gameskraft, Krafton Game Union, Moonfrog


Advertisement networks

Audience network by Facebook, Inmobi, Google AdMob

Marketing and Distribution

Gaming platforms

MPL: Mobile Premier League, WINZO, Paytm First Games, ROBLOX, STADIA


App stores

EPIC Games, Steam, Google Play Store. IOS App Store, App Bazaar

E-sports leagues

Nodwin Gaming, ESL India









Google Pay, Paytm


Vivi, Samsung, Backbone, MI


YouTube Gaming, Facebook Gaming, Discord

How online skill gaming is regulated in India

At present, there is no uniform federal law regulating the skill gaming industry in India. The archaic Public Gambling Act, 1867 and Prize Competitions Act, 1955 currently govern India’s online gaming industry at the federal level while varying legislation in different Indian states supersede these Acts. This is because state governments in India are empowered by the constitution to legislate on gambling. 

However, the recent government decision to appoint Ministry of Electronics and Information Technology (MeitY) as the nodal ministry for online gaming in India has finally provided legitimacy to the sector, which was earlier facing the threat of an impending ban following outcry by distressed parents. The industry had earlier come under scanner after the proliferation of games like cards, casinos, and fantasy sports among young people led to addiction and financial losses, with some reported cases of suicide.

With this decision, it is expected that the government will soon introduce a law specifically targeting online gaming in India. The government has also informed that it will shortly draft regulations for intermediaries in the online gambling industry and initiate a public consultation process.

Existing Gaming Regulations in India





Federal law

Public Gambling Act, 1867

  1. It’s an archaic law which has been adopted by several states and union territories, including Uttar Pradesh, Madhya Pradesh, and Delhi.
  2. Many other states have enacted their own legislation to regulate gaming activities within their territory, since gambling is a state law.

The Public Gambling Act and Supreme Court decisions have excluded games of skill from the ambit of gambling.




Bombay Prevention of Gambling Act, (Gujarat Amendment), 1964.

In 2006, the Gujarat High Court laid down the test for what would not constitute gambling. They include:

  1. Wagering upon a horse-race/dog-race in certain circumstances
  2. Games of “mere skill”
  3. Lotteries


Karnataka Police Act, 1963


Public Gambling Act, 1867

  1. The Karnataka Police Act states that all “games of chance” except betting on horse racing are punishable, without specifying what constitutes game of chance.




Kerala Gaming Act, 1960

  1. This Act empowers the state government to exempt a game from all or any of its provisions if they are satisfied that in any game, the element of skill is more predominant than the element of chance.
  2. In 2019, the Kerala High Court stated that playing rummy for stakes would amount to the offence of gambling under the Act. However, it later stated that the issue is needed to be decided on a case-to-case basis.
  3. In February 2021, the Kerala state government issued a notification making online rummy illegal when played for stakes.


Bombay Prevention of Gambling Act, 1887

  1. This Act governs the conduct of gaming in the state of Maharashtra and also contains provisions for offline gambling houses and online casinos, websites, and sportsbooks.
  2. In 2019, the High Court at Bombay had stated that fantasy sports may be classified as a game of skill and permitted the same.


The Meghalaya Prevention of Gambling Act, 1970.



Meghalaya Regulating of Gaming Ordinance 2021.

  1. The Meghalaya Prevention of Gambling Act not only permits “games of mere skill wherever played”, but also those games and sports that it may by notification exempt from the operation of this Act provided it is not likely to encourage gambling or otherwise defeat the objects thereof.
  2. The 2021 ordinance seeks to regulate games of skill and games of chance within the state by envisaging a licensing regime for all forms of gaming. In a move that is a first of its kind, the law also creates a progressive independent regulatory body called the Meghalaya Gaming Commission to monitor all gaming activities in the state.



Nagaland Prohibition of Gambling and promotion of Online Games of Skill Act & Rules, 2016.

  1. The Act exclusively prohibits gambling, which include games involving wagering or betting based on chance and not skill. The law states that games of skill can be played for real money and a profit or gain can be derived from it if a license is obtained from the state government.

Tamil Nadu

Madras Gambling Act, 1930


Tamil Nadu Gaming and Police Laws (Amendment) Ordinance, 2020

  1. The 1930 Act excludes skill gaming from its ambit.
  2. The 2020 ordinance expands on the 1930 law and recognizes online gaming platforms as a mode of gambling. However, it provides exception to skill gaming.

It is being reported that the government believes regulation of the gaming industry should not be entrusted to a financial sector regulator as it might be beyond the ambit of their core competence. However, it is being speculated that the federal government is likely to bring online games within the purview of the Prevention of Money Laundering Act (PMLA), requiring companies to comply with KYC (know your customer) norms.

The All-India Gaming Federation (AIGF), a self-regulatory apex Industry body for online skill gaming in India, founded in May 2016, states that all affiliates providing online skill games, mainly online fantasy sports games, online rummy, casual games, and poker games, must be duly incorporated/registered in India or must have a business presence in India. It also lays down certain restrictions on participation stating, “participation in pay-to-play game formats in India will be restricted to users in only those Indian states where the pay-to-play formats of the games are legal. Pay-to-play members’ game formats will not be offered to or directed to anyone under the age of 18”.

Trade Associations and Self-Regulating Bodies for Online Gaming in India



All India Gaming Federation (AIGF)

  • It was set up with the objective of regulating skill-based games in India. It covers, under its umbrella, card games as well as Online Fantasy Sports. The federation’s objectives are formulation and implementation of the “Skill Games Charter”, which includes all skill-based games and is harmonious with the prevailing legal and regulatory landscape in India around online gaming.
  • The Charter ensures that minors are not targeted for any real money games through advertisements and also require government identification and valid bank accounts in order to participate in games.

Federation of Indian Fantasy Sports (FIFS)

  • FIFS is the leading body Fantasy Sports companies.
  • Recognizing the role of the industry in protecting players, they have formulated guidelines to protect consumers associated with online fantasy sports.

·         FIFS has released the “Charter for Online Fantasy Sports”.

The Online Rummy Federation

  • It acts as the unified voice of the online rummy industry that works with all its stakeholders for creating the right environment for the growth of the online rummy business.
  • Its members must abide by a code of conduct, where all operators must enable several best practice, SOPs and technology that results to provide a secure online environment, by prevention of underage players, and ensuring data protection.

High court verdicts overturn state bans

Several states in India, including Kerala, Tamil Nadu, Madhya Pradesh, and Karnataka have attempted to impose bans on online gaming with monetary stakes, following outcry from distressed parents of children addicted to playing these games.

Additionally, several cases of people going into debt due to their addiction to fantasy sports and online skill-based games has further caused alarm. However, the respective local bans were struck off by the state high courts as unconstitutional.

The gaming industry in India is currently looking at uncertainty and insecurity, and keenly awaiting regulatory reform, which in turn shall facilitate an influx of large scale of investments.

GST on skill gaming in India

The current GST regime differentiates between online games based on skills and chance.

A game of skill is one where the outcome is based on the expertise, practice and experience of the player and not merely on chance. These games attract a comparatively lower tax rate. A GST charge of 18 percent is made applicable under HSN 998439 only on the platform commission or on gross gaming revenue.

Games of chance are treated similar to betting, gambling and horse racing and hence, are subject to Rule 31A of the Central Goods and Services Tax Rules, 2018 thereby attracting higher GST rate. A 28 percent GST is chargeable under the HSN 999692 on the total bet value.

The line between the games of skill and chance is thin making it difficult to differentiate between the two. One such example is the case of Gameskraft Technologies. However, the tax authorities have decided to club the two categories of games in to one, that is, games of chance, thereby inviting higher GST rate of 28 percent.

Second report of Group of Ministers (GoM) on casinos, race courses, and online gaming

At the recent 50th GST Council Meeting concluded on July 11, 2023, the Group of Ministers (GoM) has recommended that online gaming should be taxed at a uniform rate of 28 percent. The tax will be applicable on the full-face value of bets placed. This means that the tax will be calculated on the amount of money that is wagered, regardless of whether the bet wins or loses.

The GoM has also recommended that online gaming should be included in Schedule III of the Central Goods and Services Tax (GST) Act, 2017. This would make them taxable actionable claims, which are subject to GST.

The proposed changes to the GST law would ensure that online gaming is taxed in a uniform manner across the country. This would help to level the playing field for businesses in these sectors and would also generate additional revenue for the government.

(This article was first published on April 28, 2022. It was last update on July 12, 2023.)


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