Hike’s demise signals the end of India’s real-money gaming boom as regulatory crackdown claims a $1.4bn startup

THE NEWS: What Happened

India’s regulatory crackdown on real-money gaming has claimed its most high-profile victim: Hike, once valued at $1.4bn and backed by Tiger Global, SoftBank, and Tencent, has shut down operations. The company, founded by Kavin Bharti Mittal (son of telecom magnate Sunil Bharti Mittal), announced its closure following the Indian government’s blanket ban on real-money gaming platforms last month.

Hike’s journey reflects the volatile nature of India’s startup ecosystem. Originally launched in 2012 as a WhatsApp rival targeting youth audiences, the messaging app failed to gain sustainable traction against its American competitor. The company pivoted to real-money gaming in recent years, operating Rush, a platform offering casual games like carrom and ludo for cash prizes. Rush attracted over 10 million users and generated more than $500m in gross revenue over four years before the regulatory hammer fell.

The shutdown follows the Indian government’s introduction of the Promotion and Regulation of Online Gaming Act, 2025, which imposed comprehensive restrictions on the $23bn real-money gaming industry. The federal government justified the decision by citing incidents of harm, including reported suicides linked to gaming losses. The crackdown has triggered mass layoffs across the sector, with approximately 2,000 job losses reported at companies including Games24x7, Head Digital Works, and Mobile Premier League, with some firms planning to cut up to 90% of their workforce.

THE INTELLIGENCE: What It Means

Hike’s collapse represents more than the failure of a single company—it signals a fundamental shift in how emerging markets balance innovation with social protection. The speed and severity of India’s gaming ban demonstrates that regulatory risk remains the paramount threat to startups operating in politically sensitive sectors, regardless of their financial backing or market position.

The timing of the crackdown is particularly significant. India’s real-money gaming industry had attracted substantial venture capital investment, with the sector valued at $23bn before the ban. This represents one of the largest regulatory-driven value destruction events in Indian startup history, potentially wiping out billions in investor value overnight. The fact that even a company with Hike’s pedigree—founded by telecom royalty and backed by premier global investors—could not survive the regulatory shift underscores the binary nature of policy risk.

The investor response reveals deeper concerns about due diligence and risk assessment in emerging markets. Sources indicate that venture capital firms have questioned portfolio companies about whether early regulatory warning signs were ignored. This suggests a systematic underestimation of political risk across the Indian gaming sector, despite the inherent controversy surrounding gambling-adjacent activities.

The broader implications extend beyond gaming. India’s willingness to ban an entire $23bn industry overnight signals to international investors that regulatory risk in large emerging markets may be higher than previously assessed. This could affect valuations and investment appetite for startups operating in sectors where government policy could shift rapidly—including fintech, social media, and data-driven businesses.

The aftermath also highlights the limits of pivot strategies. While some gaming companies are attempting transitions to micro-dramas and financial services, Hike’s leadership explicitly rejected this approach, citing the fundamental reset required as “not the best use of capital or time.” This suggests that successful pivots from banned or declining sectors may be rarer and more difficult than commonly believed.

THE BRIDGE: What To Do About It

For venture capitalists evaluating emerging market opportunities, Hike’s shutdown provides critical lessons about regulatory risk assessment. The gaming industry’s collapse demonstrates that even sectors with strong fundamentals and proven revenue models can face existential threats from policy changes. Investment committees should incorporate scenario analysis for potential regulatory bans when evaluating politically sensitive sectors.

Sectors requiring enhanced regulatory scrutiny:

• Cryptocurrency and digital assets: Regulatory uncertainty remains high across multiple jurisdictions
• Online lending and alternative finance: Government crackdowns increasingly common in emerging markets
• Social media and content platforms: Growing government concern about social impact and data sovereignty
• EdTech with gaming elements: Potential spillover effects from gaming bans in conservative markets

Investment opportunities in the aftermath:

• Gaming infrastructure providers: Companies serving international markets may benefit from Indian talent exodus
• Financial services for displaced gaming workers: Fintech solutions for sudden unemployment and retraining
• International gaming platforms: Non-Indian companies may capture market share from departing local players
• Legal and compliance technology: Startups helping companies navigate complex regulatory environments

Active investors adapting strategies:

• Tiger Global: Likely reassessing India exposure across gaming and gaming-adjacent investments
• SoftBank Vision Fund: May implement enhanced political risk assessment for future emerging market deals
• Tencent: Could redirect Indian gaming investments toward international expansion of existing portfolio companies
• Sequoia India: Reportedly advising portfolio companies on regulatory compliance and international expansion strategies

For startup founders in regulated industries, Hike’s experience offers sobering insights about building sustainable businesses under regulatory uncertainty. The most critical lesson may be the importance of geographic and business model diversification before regulatory risk materializes. Companies that waited until after the ban to explore international expansion found themselves competing for limited investor attention and facing compressed timelines.

Founders should also consider the reputational and career implications of regulatory shutdowns. While Hike’s leadership has positioned the closure as a strategic choice rather than a forced exit, the inability to preserve investor value through the crisis may affect future fundraising prospects. Building relationships with international investors and establishing operational presence in multiple jurisdictions before regulatory risk crystallizes appears increasingly essential for sustainable growth.

The talent displacement from India’s gaming sector creates opportunities for international companies seeking experienced professionals in game development, user acquisition, and monetization. Companies building gaming or entertainment platforms outside India may find exceptional talent available at favorable terms as displaced workers seek new opportunities.

For policy makers and economic development officials, the India gaming ban illustrates the potential unintended consequences of broad regulatory action. While addressing social harms was the stated objective, the complete elimination of a $23bn industry may have destroyed more economic value than selective regulation could have preserved while still protecting vulnerable consumers.