Fantasy Sports Industry Faces Revenue Decline in FY25 Amid Tax Policy Changes

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India’s fantasy sports industry is set to experience a 10% revenue decline in FY25 due to recent tax policy changes, according to a report by Deloitte India and the Federation of Indian Fantasy Sports (FIFS).

The report, published by Mint, highlights the challenges faced by major platforms like Dream11, MPL, My11Circle, and BalleBaazi, including a potential retrospective tax order that could threaten their existence.

The fantasy sports sector, which had a revenue of ₹9,100 crore in FY24, grew at a compound annual growth rate (CAGR) of 30% from FY22 to FY24. However, tax changes implemented in October 2023 have impacted this growth, with the full effect expected in FY25.

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.

Prashanth Rao, partner and leader of customer strategy and design at Deloitte South Asia, noted, “Before 2023’s regulatory regime change, the number of players engaging with this gaming ecosystem was growing.” He added, “In 2024, mega events like the ICC Men’s Cricket World Cup and IPL boosted activity on these platforms.”

However, Rao pointed out that 2025 may see reduced activity due to fewer major events and increased expenses from player incentives offered by companies adapting to the new tax regime.

Rising Tax Burden and Its Impact on Fantasy Sports Platforms

The industry faces further challenges due to a retrospective tax demand of ₹1.12 trillion on about 70 online gaming companies, surpassing their total cumulative revenue of ₹16,000 crore for the same period. The report warned that, “The figure could cross ₹2.5 trillion with interest and penalties added.”

High taxation could slow real money gaming (RMG) growth, redirecting investor capital to non-RMG ventures. The report highlighted that, “This situation poses a risk of write-off of over $2.5 billion in Foreign Direct Investment (FDI) and other investments in the RMG sector.”

Between FY18 and FY23, the fantasy sports industry generated ₹23,860 crore in cumulative revenue and contributed ₹4,290 crore in goods and services tax (GST). GST contributions surged 137% in FY24, reaching ₹3,520 crore from ₹1,480 crore in FY23.

The recent GST hike from 18% on gross gaming revenue to 28% on deposits has significantly increased the financial burden on gaming companies. Fantasy sports platforms also deduct tax at source (TDS) on player winnings. The cumulative TDS contribution from FY18 to FY23 was ₹1,525 crore, and by FY29, combined GST and TDS contributions are expected to reach ₹5,815 crore, the report stated.

Despite the current challenges, the industry, with an estimated 225 million users, is expected to recover by FY26 as it navigates regulatory hurdles and explores sustainable growth strategies.

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