India RMG Sector Suffers Major Losses Amid PROGA Delay

The Indian real-money gaming (RMG) industry is grappling with one of its most critical periods in recent memory. Cumulative losses have surpassed Rs70 billion (around $840 million) and over 7,000 jobs have been cut as the market struggles with the regulatory uncertainty surrounding the Promotion and Regulation of Online Gaming Act (PROGA), which remains unnotified nearly three months after passing.

Financial Fallout and Market Disruption
Industry analysts report total revenue losses exceeding Rs100 billion ($1.2 billion), with the government seeing a shortfall of Rs56 billion ($670 million) in GST, TDS and income tax collections. Experts attribute the disruption largely to market anticipation of the Act’s enforcement, rather than its actual application.

The 40 percent GST applied to online gaming from September 22 exacerbated the impact, contributing to revenue declines, reduced tax contributions and operational strain. Platforms struggled to sustain operations amid rising costs and uncertainty.

Legal Concerns Over Delayed Notification
Gaming lawyer Jay Sayta noted that the government’s delay in formally notifying PROGA is problematic. Without notification, penalties cannot be enforced and banking operations for gaming companies continue. Once the notification is issued, all current cash-based gaming activities could be required to halt immediately, potentially intensifying the sector’s challenges.

Corporate Write-Downs and Workforce Reductions
Major players have reported substantial financial write-downs. Flutter Entertainment recorded a $556 million impairment linked to the suspension of rummy in India, contributing to a $789 million net loss for the September quarter. Nazara Technologies wrote off Rs9.15 billion ($110 million) on its Moonshine Technologies investment, while Clairvest reported a Rs7.6 billion ($92 million) unrealized loss in Head Digital Works. Delta Corp also recorded Rs3.8 billion ($46 million) in write-downs across multiple holdings.

Impact on Payments and Fintech
The downturn has extended to fintech platforms. Paytm reported a 98 percent decline in net profit due to Rs1.9 billion ($23 million) in impairments, while Mobikwik’s losses surged eight-fold. UPI transaction volumes linked to gaming fell from 351 million in July to 270 million in August, reflecting reduced user activity.

Industry Response and Operational Freeze
In response to PROGA, leading RMG platforms such as Dream11, MPL, Zupee, WinZO and Gameskraft suspended cash-based games. Hike also permanently shut down its Rush platform.

The Indian RMG sector now faces a precarious period as operators navigate regulatory ambiguity, high taxation, revenue losses and workforce reductions. Industry stakeholders continue to urge the government for clarity on the Act’s implementation to stabilize the market and plan for future growth.