High risk, shrinking reward: Is India still a market worth investing in?

India has always looked irresistible on a spreadsheet: 1.4 billion people, obsessive cricket fandom, cheap data and frictionless payments. For gambling executives, however, the spreadsheet needs a second tab labelled “things that can become illegal before lunch.”

A market built on exceptions

For more than a century, India’s gambling regime was less a market than a mosaic. The Public Gambling Act of 1867 supplied the colonial template, while the Constitution left “betting and gambling” to the states. Courts then carved out an economically important distinction between games of chance and games in which skill predominates. That opened room for rummy, poker and fantasy-sports businesses, even as most conventional betting remained prohibited.

There are still legal islands. State-run lotteries operate under national legislation; horse racing has long enjoyed judicial recognition as a game of skill; and casinos are licensed in Goa and Sikkim. But these are narrow, locally governed channels, not a national gambling market. Operators thus have had to read India like a railway timetable printed by 28 different companies.

Digital play briefly appeared to offer a faster route. According to the Indian Government, online gaming generated INR232bn ($2.4bn) in 2024, with transaction-based games producing 77% of revenue. Cricket, smartphones and UPI payments made customer acquisition alluring. The old skill-versus-chance distinction also gave well-funded domestic platforms – and international investors – a plausible legal thesis. Then the thesis was marked down, taxed and banned.

The door slams on real-money gaming

A 28% GST on the full amount deposited, introduced in 2023, attacked the economics of real-money gaming before the Promotion and Regulation of Online Gaming Act 2025 attacked its legality. In force with its rules since 1 May 2026, the Act prohibits online money games irrespective of whether skill or chance determines the result. It also bans their advertising and payment facilitation. Social games and esports are permitted, but esports must be registered with the new Online Gaming Authority of India, which can also determine or register other products.

The commercial shock was immediate. Dream11, MPL and others withdrew money games. Flutter shut Junglee’s real-money operation, which had been expected to contribute about $200m of 2025 revenue and $50m of adjusted EBITDA. Its later $556m impairment is a useful reminder that in India, “regulatory risk” is not decorative language buried on page 147 of an annual report. Nor has the courtroom offered operators an easy hedge. In May 2026, the Supreme Court upheld full-stake GST treatment and the ability of Tamil Nadu and Karnataka to prohibit online staking even on skill games.

A separate constitutional challenge to the national Act is heading for a final hearing. The case could reopen part of the market, but assuming that outcome would make for a risky entry strategy; staking capital on a favourable judgment is a gamble few compliance committees would take.

Prohibition’s offshore problem

Meanwhile, prohibition has not made demand disappear – it has just changed who serves it. Before the national ban, the Government said it had blocked 1,524 betting and gambling sites and apps between 2022 and June 2025. Tax investigators separately reported roughly 700 offshore operators under scrutiny, 357 URLs blocked, nearly 2,400 bank accounts targeted and INR1.26bn frozen. In 2026, petitioners told the Supreme Court that around 2,000 apps were still facilitating betting under gaming labels.

This is the market’s central paradox. The compliant domestic sector is easier to switch off than offshore operators using mirror sites, mule accounts, cryptocurrency and surrogate marketing. Enforcement can raise friction, but digital whack-a-mole is still whack-a-mole. Consumers are left with fewer safeguards, while licensed businesses lose the very visibility regulators could supervise.

The direction of travel is nevertheless tougher, not looser. Bihar’s 2026 law replaced the 1867 framework with a broad prohibition covering websites, apps and virtual currency, alongside warrantless enforcement powers and corporate liability. Other states may modernise their statutes too, while the centre is combining website blocking with payment disruption and money-laundering investigations. Taken together, this looks less like a grey market inching towards regulation than a perimeter being steadily fortified.

Bet or fold: Is India worth the wager?

So, is India a good market for gambling companies? For offshore betting brands courting Indian players, no: the audience may be enormous, but so are criminal, payment, tax and reputational risks. For casino groups, lotteries and racing interests, opportunity remains local and licence-specific. For suppliers able to serve esports, free-to-play social gaming, safety technology or compliant entertainment without stakes, India can still be compelling.

The long-term prize is a regulated market that channels existing demand into taxed, monitored products. India’s own Law Commission argued in 2018 that prohibition was difficult to enforce and regulation was the pragmatic alternative. Yet policy has since travelled the other way. The reward remains alluringly visible; the legal road to it has, for now, been barricaded.