**New Delhi: Challenges Ahead for India’s Fantasy Sports Industry**
The fantasy sports sector in India is poised for a challenging period, with projections indicating a 10% year-on-year revenue decline for FY25 due to recent tax policy changes, as reported by Deloitte India and the Federation of Indian Fantasy Sports. Despite this setback, the industry, which currently has around 225 million users, is anticipated to recover in FY26.
In FY24, the fantasy sports industry generated revenue of ₹9,100 crore, experiencing rapid growth with a compound annual growth rate (CAGR) of 30% from FY22 to FY24. However, the introduction of new tax regulations in October 2023 has hindered this growth trajectory, and the full effects of these changes are expected to manifest in FY25.
Adding to the uncertainty is the potential for a retrospective tax order, which could threaten major players in the market, including Dream11, MPL, My11Circle, and BalleBaazi. These platforms enable users to form virtual teams of real athletes and compete based on actual game performances. However, the industry’s most significant challenges may now stem from regulatory issues rather than on-field competition.
In FY24, India’s fantasy sports market represented 4% of the global industry, which is valued at ₹2.1 trillion and projected to grow at a 7% CAGR. Prashanth Rao, partner and leader of customer strategy and design at Deloitte South Asia, noted that prior to the regulatory changes in 2023, the number of participants in this gaming ecosystem was steadily increasing. The year 2024 featured major cricket events like the ICC Men’s Cricket World Cup and the IPL, which drove significant activity on these platforms.
However, in 2025, the absence of such large-scale events is expected to reduce engagement. Some companies have attempted to incentivize players to adapt to the new tax regime, but this has led to increased operational costs. Rao emphasized that unless there are policy adjustments, growth in the sector is unlikely to return to the previously projected 30% CAGR.
The report highlights that around 70 online gaming companies in this sector are facing a retrospective tax demand totaling ₹1.12 trillion, against a cumulative revenue of ₹16,000 crore for the same period. This figure could exceed ₹2.5 trillion when interest and penalties are included, posing a significant threat to the industry’s viability.
Additionally, the backlog of tax notices and a lack of funding are contributing to the closure of several startups in the sector. High taxation is likely to impede the growth of real money gaming (RMG), leading investors to shift their focus to non-RMG ventures. This situation could result in a potential write-off of over $2.5 billion in Foreign Direct Investment (FDI) and other investments in the RMG sector.
