In a dramatic move that sent shockwaves through the Indian gaming community, Gameskraft has announced the suspension of its poker platform Pocket52. Once seen as a rising star in India’s burgeoning online poker scene, Pocket52 is now the first major casualty of India’s harsh 28% GST regime on online real-money gaming.
But is this a one-off business decision or the start of a dangerous trend that could derail one of the fastest-growing sectors in the country?
This article explores the deeper reasons behind the closure, its implications for the Indian poker and gaming industry, and why both players and investors should be deeply concerned.
What Happened: The Fall of Pocket52
Launched in 2018, Pocket52 was an ambitious attempt by Gameskraft to capture the Indian poker market. With blockchain-based RNG technology, a sleek UI, and high-value tournaments, it was fast gaining traction among recreational and professional players alike.
However, on May 14, 2025, Gameskraft quietly announced a “strategic pause” in Pocket52’s operations. The stated reason: to re-evaluate its position and align with long-term business goals. But the real issue? The 28% GST burden that has crippled the business model of poker platforms in India.
“This pause is a strategic move to strengthen our offerings,” said a Gameskraft spokesperson.
Yet, sources close to the company confirm that the GST crisis was a decisive factor.
The GST Crisis: Death by Taxation?
In July 2023, India implemented a 28% Goods and Services Tax (GST) on online gaming — not just on platform revenue, but on the total face value of player deposits.
This means if a player deposits ₹10,000 to play poker, ₹2,800 goes straight to the government, regardless of whether the player wins or the platform earns.
To make matters worse, the GST has been applied retrospectively from July 2017, prompting tax demands worth ₹1.12 lakh crore (approx. $13.4 billion) across the industry. Gameskraft alone is battling a ₹21,000 crore GST demand.
Players Bear the Burden
To stay afloat, many platforms have increased their rake, meaning players now lose more to fees than ever before. This has had two major consequences:
- Player migration to unregulated apps and offshore sites that offer lower rake and higher returns.
- A sharp decline in recreational users, hurting liquidity and tournament viability.
In effect, players are being priced out, and the domestic online poker ecosystem is shrinking.
Supreme Court: The Industry’s Last Hope
The legal status of the GST rule is currently under scrutiny in the Supreme Court of India.
- Gaming companies have argued that poker, rummy, and fantasy sports are games of skill, not gambling, and should not be taxed the same way.
- Senior advocates claim that taxing 28% on player deposits is unconstitutional, as platforms do not retain this money.
- A final verdict is expected later in 2025 — and it could make or break the Indian online gaming sector.
Until then, uncertainty continues to haunt operators, investors, and players alike.
Related Read
India’s Real-Money Gaming Industry Faces Pivotal Supreme Court Battle Over Retrospective GST Taxation
A Sector Once Booming, Now Bleeding
India’s gaming market was valued at $2.6 billion in 2022 and was expected to hit $4.5 billion by 2025. With 420 million gamers (2023), it had become the second-largest gaming market globally by user base, behind only China.
But post-GST:
- Multiple platforms have shut down (e.g., Hike’s Rush Gaming Universe, CrickPe).
- Venture capital funding has dried up.
- Player traffic is dwindling.
- Affiliates and marketers have been forced to pivot or exit.
The online poker segment, in particular, has been hit hard due to its relatively low margins and intense competition.
International Platforms and Underground Apps: The New Frontier?
As India makes it harder to operate legally, international poker platforms and underground gaming apps are thriving.
- Offshore operators offer better rake, anonymity, and crypto payments.
- Underground Indian apps often bypass GST, rake laws, and KYC norms, attracting thousands of daily users.
- This creates a black market gaming economy, beyond the reach of regulators and tax authorities.
Ironically, the very GST policy meant to regulate and tax the industry is driving it underground.
Investor Sentiment: From Gold Rush to Cold Feet
From 2018 to 2022, the Indian gaming sector attracted over $2.7 billion in foreign direct investment (FDI). Big names like Tiger Global, Sequoia Capital, and Tencent were bullish.
Now?
- MPL shut down its Indonesia operations and laid off 50% of its Indian workforce.
- Nazara, Delta, and Head Digital Works are consolidating or exiting verticals.
- New investment deals are on pause pending the Supreme Court verdict.
Until regulatory clarity returns, India is no longer seen as a safe bet in the global gaming investment landscape.
The Legal Gray Area: Skill vs. Chance
At the heart of the battle is one critical question:
Numerous High Court judgments — including from Karnataka, Madras, and Delhi — have ruled that poker and rummy are games of skill.
But the GST Council and tax authorities continue to lump all real-money games under “gambling.”
This contradiction has led to a policy vacuum, making compliance difficult and enforcement arbitrary.
Could This Be Just the Beginning?
Pocket52 is not the last platform to fold — it’s just the first visible crack in a crumbling dam.
Unless drastic reforms are undertaken:
- More Indian platforms will shut shop.
- Indian poker pros will be forced to play on foreign platforms, hurting local industry.
- Affiliates and content creators will lose a major revenue stream.
- The government will lose taxable revenue as the industry moves underground.
This isn’t just about one company or one tax rate — it’s about whether India wants to nurture or destroy its digital economy.
What Needs to Change?
To prevent a full-scale collapse, here’s what stakeholders are demanding:
1. Skill-Based Distinction in Taxation
Tax skill-based games like poker, rummy, and fantasy sports on gross revenue, not deposit value.
2. Clarity on Compliance
Uniform rules, clear communication, and no retrospective tax scares.
3. Encouragement of Local Innovation
Support homegrown platforms instead of penalizing them.
4. Protection for Players
Ensure safety, data protection, and fairness via licensed platforms.
Final Thoughts: The Alarm Bells Are Ringing
Pocket52’s shutdown is not just a business closure — it’s a symbol of what happens when regulatory overreach meets economic short-sightedness.
India’s online gaming industry has the talent, the user base, and the innovation to lead globally. But without rational taxation and clear regulation, that future may never arrive.
It’s time to listen to the alarm bells before they become a death knell.
FAQ: Pocket52 and Indian Gaming Industry
Q: Is Pocket52 permanently shut down?
No. Gameskraft has called it a “pause,” but there’s no clear timeline for return.
Q: Why did Pocket52 shut down?
Primarily due to the 28% GST burden and the legal uncertainty surrounding poker in India.
Q: How does GST affect players?
Platforms increase rake to compensate, which reduces player winnings. It also pushes players toward unregulated platforms.
Q: Is poker legal in India?
Poker is considered a game of skill in many High Court rulings, but it is taxed as gambling under current GST rules.
Q: What’s next for the industry?
Everyone is waiting for the Supreme Court’s ruling on GST and classification of online games — this will define the industry’s future.
Sources
Business Standard report on Pocket52
Moneycontrol article on Pocket52 closure
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