THE COMPLETE BAN on the real money gaming (RMG) sector is a direct result of the negligence of the entities within the sector to ignore the basic tenets governing their business and social sensitivities, and instead focusing on converting themselves into money-making machines with complete disregard for the fact that they were always doing a tightrope walk on a thin strand that gave them legal sanctity. The warning signs have been there for some time, and the companies (mainly the fantasy gaming, rummy, poker entities) can’t complain that the decision to ban RMG completely has been a surprise.
The first warning came with the skilled gaming versus gambling debate. The fantasy gaming and cardgame companies were always dependent on the courts for legal sanctity in a country where betting and gambling is banned. What protected them were court judgements that upheld online gaming such as fantasy sports, poker, and rummy are “games of skill” based on the “predominance of skill” test where landmark cases upheld that a game is considered a game of skill and therefore not gambling if skill predominates over chance. The Supreme Court defined skills as those where success depends mainly on a player’s superior knowledge, training, experience, and judgement. Even if chance is present, as long as skill is the dominant factor, the game remains within the ambit of skill.
This worked fine and business grew as the companies attracted new users and revenues and valuations skyrocketed. However, it was not skilled gaming which bought the moolah in; it came through the introduction of many product variants which definitely fell within the ambit of “gambling”. Need to note here that since ‘Betting and Gambling’ is a State subject, and states have exclusive power to make laws on betting and gambling within their territories, few states such as Telengana, Assam, Andhra Pradesh, Odisha have always imposed state-level bans on real-money gaming despite the judicial recognition given to it as skill-based games.
Even while the RMG entities were pushing their luck on the skill factor, came the GST juggernaut from the government in October 2023. The imposition of 28% GST was a huge body blow to the industry, making acquisition and retention of users difficult. Most companies absorbed the hike, insulating the users from the pain. While the industry was internally managing these blows, they ignored the clear warning signs that they were under fierce attack.
With a war chest at their disposal, instead of steadying ship and streamlining products to ensure they have a voice to fight, the RMG brands doubled down and converted themselves into betting entities, where traditional fantasy gaming, poker, rummy games which got them legitimacy as skill-based games were outnumbered by variations of these games which had negligible, and in many cases, no element of skill and could easily be categorised as gambling.
The companies had to do this for two reasons: the skilled players for all these games play conservatively and provide limited growth potential; new users with limited skill could only be attracted with the thrill of gambling and promises of making huge gains from low investments. With the use of advanced technology, these users were mapped and rewarded sufficiently to stay on the treadmill. The companies needed this influx of gamblers to cover up the funds they were putting up to make up the GST shortfall they couldn’t charge users, and keep the valuation game going. This edition of the Indian Premier League (IPL) showcased how the fantasy gaming brands’ emphasis was only on advertising the huge prize money that fantasy players could win if they entered their teams. The ‘predominance of skill’ factor which kept the companies on the right side of the thin strand was completely ignored.
While the RMG companies were self-immolating, esports was presenting itself as the industry where the current generation could continue with their passion of playing online, but also compete professionally and gain rewards through their skills and performance, not gambling. The Esports World Cup 2025 in Riyadh consisted of competitions in 25 games and a huge prize pool over $70 million. The International Olympic Committee (IOC) has confirmed that the first-ever Olympic Esports Games will be held in 2027 in Saudi Arabia. While a robust ecosystem has been growing in India around esports, the entry of India’s largest conglomerate, Reliance, into this space through JioBlast, its joint venture with Denmark-based Blast Esports, will now provide additional impetus to this industry.
The RMG brands created a successful business model on shaky firmament, but their short-sightedness in not reinforcing the foundation with the immense monetary gains they made to secure its future has brought its house of cards down. It is going to take a phenomenal effort on all fronts for this sector to rebuild; this fleeting episode seems to be one consigned to remain in history books as the ‘grand rise and fall of the RMG empire’.
