Fantasy sports in India may be in for a rough season. The industry may see a 10% year-on-year decline in revenue for FY25 amid the changes in tax policy, according to Deloitte India and the Federation of Indian Fantasy Sports.
However, the industry, which boasts an estimated 225 million users, is expected to bounce back in FY26, the report added.
The fantasy sports industry reported revenue of ₹9,100 crore in FY24. It has experienced rapid expansion in recent years, with a compound annual growth rate (CAGR) of 30% between FY22 and FY24.
However, tax policy changes, implemented in October 2023, have slowed this growth momentum, and the full impact of these regulatory shifts will likely be felt in FY25, the report said.
The uncertainty is compounded by the looming possibility of a retrospective tax order, which could pose an existential threat to major industry players like Dream11, MPL, My11Circle, and BalleBaazi.
These platforms allow users to create virtual teams of real athletes and compete based on actual game performance. But the industry’s biggest challenge now may not be on the field, but off it.
India’s fantasy sports market accounted for 4% of the global industry in FY24. The global market, valued at ₹2.1 trillion, is projected to grow at a 7% CAGR.
“Before 2023’s regulatory regime change, the number of players who engaged with this gaming ecosystem was continuing to grow. And 2024 saw some mega cricketing events like the ICC Men’s Cricket World Cup and also the IPL which ensured that a lot of activity was happening on these platforms,” the partner and leader of customer strategy and design at Deloitte South Asia told Mint.
“But this year, in 2025, that is a little reduced due to lack of these mega events. To ease into the tax regime, some companies have tried to incentivise players but that has increased their expenses,” he added.
Existential threat
The growth of the sector will not be in the 30% CAGR region as it was earlier projected unless there are policy changes, he added. “This is because about 70 online gaming companies in this domain have been issued a retrospective tax demand totalling ₹1.12 trillion against total cumulative revenue of ₹16,000 crore for the same period.”
“The figure could cross ₹2.5 trillion if interest and penalty are added to it. As the tax demand is significantly higher than the companies’ total revenues, the ruling poses an existential threat to the industry,” the report added. The pendency of notices and lack of funding are also leading to the closure of some startups in this sector.
High taxation threatens to slow the growth of real money gaming (RMG), prompting investors to redirect capital toward non-RMG ventures. “This situation also poses a risk of write-off of over $2.5 billion in Foreign Direct Investment (FDI) and other investments in the RMG sector,” the report said. It added that the industry’s long-term sustainability remains uncertain as it navigates mounting regulatory challenges.
Over the five-year period between FY18 and FY23, the fantasy sports industry generated approximately ₹23,860 crore in cumulative revenue and contributed ₹4,290 crore in goods and services tax. GST contributions are projected to rise 137% in FY24 to ₹3,520 crore, up from ₹1,480 crore in FY23.
The recent GST hike on online real-money gaming has upended the industry. Previously taxed at 18% on gross gaming revenue (GGR), the rate has now jumped to 28% on deposits, significantly increasing the financial burden on gaming companies.
Besides GST, fantasy sports platforms also levy TDS or tax deducted at source on player winnings. Between FY18 and FY23, the cumulative TDS contribution totalled ₹1,525 crore. By FY29, TDS and GST together are expected to contribute ₹5,815 crore to the exchequer, the report said.
