Unlisted Gaming Firms Stare At Valuation Bloodbath As Govt Tightens Noose

India's online real money gaming sector is staring at a valuation bloodbath, with unlisted giants like Dream11, Gameskraft, Winzo, and others facing a potential wipeout.

The panic in the industry comes in the wake of the Centre’s online gaming bill, which has already cleared both Houses of Parliament and now awaits presidential assent. Once enacted, the law will effectively outlaw real money gaming in India, forcing operators to either shut shop or radically pivot their business models.

No gaming platform, which deals in real money, is in a wait-and-watch mode. While platforms will try to push New Delhi for more time to pivot their business models, they will end up losing out on a very profitable revenue stream, which will be a high draw-down on the firms' valuation, an industry insider told NDTV Profit on the condition of anonymity.

India's online real money gaming sector is valued at about $25 billion, generating over Rs 31,000 crore in annual revenue and contributing close to Rs 20,000 crore in taxes, news agency PTI reported on Aug. 20, quoting official sources. The industry supports 2 lakh jobs across over 400 companies, while attracting nearly Rs 25,000 crore in foreign direct investment.

If the bill comes into effect immediately, all real-money gaming platforms will be forced to shut shop, a second person working directly with such companies explained to NDTV Profit on the condition of anonymity.

While most of the companies operating in the space are unlisted, Nazara Technologies Ltd. has meaningful exposure in the space via PokerBaazi operator Moonshine Technology. Analysts at ICICI Securities, who in June valued Moonshine at Rs 400 — at a time when Nazara was trading at Rs 1,320 apiece — have now marked this down to zero.

PokerBaazi's valuation has been all but wiped out of Nazara as the stock slumped 20% in two days, an analyst tracking the scrip said. Most RMG companies in India are unlisted.

Now, these unlisted companies have a few options on their hands, the second person added. While declaring bankruptcy will be the last thing anyone would go for, the firms can also look to sell their businesses to overseas companies.

They might consider pivoting business models or end up using their existing tech stacks for other businesses, the person said, but did not detail the name of any company.

NDTV Profit has reached out to the firms mentioned in the story for their views. While Dream11 has refused to comment, replies from Gameskraft and Winzo are still awaited.

Now that the bill has been cleared by both the Houses of the Parliament, it remains a draft law until it receives presidential approval.

"While the direction of policy is clear, the finer outlines of regulation, enforcement, and compliance timelines remain subject to further deliberation and change," analysts at JM Financial wrote in a note on Wednesday.

"In our view, the implementation of the bill would essentially make online real money gaming infeasible in India," researchers, led by Abhisek Banerjee, wrote for ICICI Securities.

Kazim Rizvi, the founding director of New Delhi-based think tank the Dialogue, said that the bill will lead to the stalling of innovation in the industry. "With $2.8 billion startup funding drying up, talent will be pushed abroad and India's global gaming edge will be weakened," he explained.