Online gaming: 1 lakh jobs in limbo after Supreme Court ruling

The Supreme Court’s decision to uphold 28 per cent retrospective GST on online gaming firms has put at least one lakh jobs at risk. Industry experts say the ruling will force companies to restructure and could push some to liquidation, leading to large-scale layoffs in the gaming sector. According to them, the sector employs at least 2 lakh people, and already thousands have been laid off, following the new regulatory framework for online gaming that came into effect on May 1, 2026.

The online real-money gaming (RMG) industry was effectively shuttered when Parliament passed the PROG (Promotion and Regulation of Online Gaming) Act in August 2025.

While the apex court has upheld the constitutionality of the tax, the industry it was meant to apply to no longer exists in any meaningful form. For most operators, the practical impact is devastating — not because they are still running businesses, but precisely because they are not, Aahna Mehrotra, Founder, AM Sports Law & Management Co, said.

Tax demands worth approximately Rs 1.12 lakh crore were raised against 71 online gaming companies, and with interest and penalties, total liabilities could climb to nearly double that amount.

Experts said these companies had already absorbed massive losses within the first 90 days after the PROG Act was passed. It is reported that RMG platforms recorded asset write-downs of more than $800 million. "Many used whatever capital remained to pivot to other businesses. The retrospective tax now reaches into those residual resources," Mehrotra said.

Industry experts warned that layoffs across segments of the online gaming industry now appear difficult to rule out, although the sector had already witnessed significant exits and workforce rationalisation following the implementation of the PROG Act framework.

After the PROG Act, firms such as WinZo and Nazara Technologies' PokerBaazi halted RMG operations.

For several companies, the consequence is stark: potential tax outflows that may well exceed the topline revenues they have ever generated, Adarsh Somani, Partner, Economic Laws Practice, said.

"Even for those capable of surviving the financial shock, they will be forced to rediscover actual gaming instead of financialised dopamine loops built around deposits and churn — but the question is, will the gamer still be interested? The companies that survive may not necessarily be the ones with the biggest user base today, but the ones that can psychologically detach gaming from gambling economics and rebuild around community, skill, IP, entertainment and retention rather than merely cash circulation," Somani said.

Aditya Narayana Mishra, MD and CEO of CIEL HR, also highlighted that gaming firms should rediscover engaging gameplay and come up with new games to stay relevant in the industry. "With new business models, firms can re-engage the workforce over time," he said.

What does this mean for online gamers? The immediate fear of direct cash loss may be relatively limited, particularly since several established and reputable platforms had already ring-fenced or refunded user deposits in anticipation of regulatory turbulence, said experts.

However, the larger concern is behavioural and systemic: excessive regulatory and tax pressure on compliant domestic operators could gradually push users toward offshore, unregulated or illegal betting platforms. That would be a far more worrisome outcome from a policy perspective, as it risks migration of Indian users and capital flows into opaque ecosystems operating beyond meaningful Indian regulatory oversight, Somani opined.

Industry executives said that firms can consider filing review petitions.

Shareen Gupta, Partner, JSA Advocates and Solicitors, said the surprising outcome of the ruling for the gaming industry is the retrospective application of valuation provisions, affirming the levy of GST since its inception, on the value of the monies staked by the players. The ruling will have an impact on the entire online gaming industry.

Experts also anticipate innovation in the business models, which may include subscription, season‑pass, and non‑monetary gameplay, including e‑sports and community leagues, where consumer protections and taxation are more straightforward.