Online gaming ban triggers 400 layoffs at Gameskraft

Online gaming company Gameskraft Technologies has laid off more than 400 employees, over half its workforce, in one of the most severe downsizing exercises to hit India’s real money gaming sector. The move follows regulatory disruption triggered by the Promotion and Regulation of Online Gaming Act, 2025, and internal turmoil after an alleged multi-crore fraud by the firm’s former chief financial officer, Storyboard18 reported.

The Bengaluru-based company confirmed the cuts in a statement to Storyboard18, saying the decision came after “careful deliberation” as part of a broad organisational restructuring. “Approximately 400+ employees across teams and functions were impacted after careful deliberation,” a company spokesperson said. “The decision was driven by business continuity considerations, following the implementation of the Promotion and Regulation of Online Gaming Act, 2025, which triggered a fundamental shift in the operating environment for real money gaming companies.”

Initially, around 120 layoffs were expected earlier this year, but the number rose sharply as the company reassessed its operations and cost structure. The regulatory crackdown on cash-based gaming has severely disrupted revenue streams for industry players, many of which built their business models around real money gaming.

Once among India’s fastest-growing gaming startups, Gameskraft had built a strong portfolio of skill-based gaming platforms. However, the company said the new law — which bans or restricts cash-based games citing concerns about addiction and financial risk — rendered several of its verticals unviable, forcing a rethink on ongoing projects, expenses, and team configurations.

Despite the scale of the layoffs, Gameskraft said it sought to ensure an “empathy-led” transition. All impacted employees — including probationers, interns, and contractual staff — were offered three months’ salary in advance, one month’s pay per completed year of service (up to three months), and notice pay along with leave encashment for up to 45 days. The company also extended group medical insurance until March 2026 and term life coverage of up to twice an employee’s CTC or ₹5 crore until June 2026.

Further, Gameskraft said it would continue to offer mental health support until May 2026, while women employees on maternity leave have been given an additional six months of paid leave. Impacted staff will also receive career transition assistance, placement support, and priority rehiring for future openings. The firm has waived all recoveries linked to joining bonuses, relocation costs, and notice period buyouts.

CFO scandal adds to internal crisis

The layoffs come against the backdrop of a major financial scandal involving the company’s former CFO, Prabhu, who allegedly diverted ₹231 crore from company accounts into his personal bank accounts between FY20 and FY25.

A police complaint filed in September led to an FIR by the Marathahalli Police under provisions of the Bharatiya Nyaya Sanhita, including theft, criminal breach of trust, forgery, and falsification of accounts. An internal audit revealed a total loss exceeding ₹250 crore after Prabhu’s speculative trading losses compounded the fraud.

Prabhu, a chartered accountant who joined Gameskraft in 2018, allegedly manipulated investment documents and accounting records to disguise the diversions. He reportedly confessed in an email before disappearing from the firm’s Bengaluru office in March 2025. He remains untraceable.

Despite the turbulence, Gameskraft’s FY25 filings show revenue rising 12% year-on-year to ₹3,896 crore, up from ₹3,475 crore in FY24. However, net profit dropped 25% to ₹706 crore, weighed down by an exceptional loss of ₹270 crore tied to the fraud.

Gameskraft’s restructuring underscores the mounting pressure on India’s online gaming firms as they grapple with regulatory uncertainty and funding headwinds. With the government signalling a tougher stance on cash-based gaming, analysts expect more consolidation and layoffs in the sector over the coming months.