Gameskraft, a prominent player in the online gaming industry, has announced a significant restructuring, including the layoff of 120 employees, following the recent passage of the Online Gaming Bill. The company's decision comes in the wake of regulatory changes that have forced it to halt its business operations entirely.

Regulatory Impact

The Promotion and Regulation of Online Gaming Act, passed by Parliament on August 21, has dealt a severe blow to the online gaming industry in India. The new legislation prohibits all forms of online money games while promoting e-sports and other online games. Additionally, it bars advertisements related to online money games and prevents banks from transferring funds for such games.

Layoffs and Severance Benefits

As part of its restructuring efforts, Gameskraft is laying off 120 employees. The company has committed to providing severance benefits to affected staff, including:

• Leave encashment based on total salary
• Extended group health insurance until March 2026
• Conversion options for health coverage

Financial Performance

Despite the current challenges, Gameskraft reported strong financial results for the recent fiscal year:

The company saw a significant increase in revenue, growing from ₹3,475.00 crore in the previous fiscal year to ₹4,009.00 crore in FY 2024-25. However, net profit decreased from ₹947.00 crore to ₹706.00 crore during the same period.

Alleged Fraud by Former CFO

In a separate development, Gameskraft has filed a police complaint against its former Chief Financial Officer (CFO). The company alleges that the ex-CFO siphoned off over ₹231.00 crore, which has impacted the company's net profit through a one-time accounting adjustment.

The gaming industry in India is undergoing significant changes due to new regulations, and Gameskraft's situation highlights the challenges faced by companies in adapting to this evolving landscape. As the sector continues to navigate these regulatory shifts, it remains to be seen how other players in the industry will respond and what the long-term impact will be on the online gaming ecosystem in India.

Bengaluru-based gaming company Gameskraft has announced it will not pursue legal action against the Promotion and Regulation of Online Gaming Bill, which bans all online money games in India. The company has taken immediate steps to comply with the new legislation, including pausing all its pay-to-play rummy offerings.

Respecting the Legislative Process

In a statement, Gameskraft expressed its respect for the legislative process and reaffirmed its commitment to operating within legal frameworks. This decision aligns with a similar stance taken by Dream11, another major player in the online gaming industry, which also opted not to challenge the Bill legally.

Internal Restructuring and Business Continuity

Gameskraft has initiated internal discussions to chart its future course in light of the new regulations. The company is actively coordinating with various stakeholders to ensure business continuity during this transition period:

• Engaging with auditors for financial assessments
• Consulting with banking partners to manage financial implications
• Seeking guidance from legal advisors on compliance matters

Industry-wide Impact and Adaptations

The online gaming industry in India is witnessing significant shifts in response to the new legislation:

• Dream11 has piloted a wealth management app, diversifying its business model
• Gaming platform Winzo has launched a micro-entertainment platform

These moves indicate a trend of online gaming companies exploring alternative revenue streams and business models in the wake of the regulatory changes.

Ongoing Regulatory Challenges

Apart from adapting to the new gaming bill, Gameskraft is also grappling with other regulatory issues. The company is currently addressing a Rs 21,000-crore show-cause notice from the Directorate General of GST Intelligence, highlighting the complex regulatory environment facing the online gaming industry in India.

The company's decision to comply with the new regulations without legal challenge, while simultaneously dealing with existing regulatory issues, underscores the challenging landscape for online gaming companies in India. As the industry continues to evolve, companies like Gameskraft will need to navigate these regulatory hurdles while exploring new avenues for growth and sustainability.