How Fantasy Sports Are Reshaping India’s Sports-Tech Economy

India’s sports technology sector is growing fast, and fantasy sports (FS) is at the heart of this growth. What started as a form of online entertainment has now become a major part of the country’s digital economy. In the financial year 2023-24, the FS industry earned ₹9,100 crore in revenue. This made it the single largest contributor to India’s sports-tech ecosystem.

But the journey of fantasy sports has not been without challenges. Recent changes in tax laws, especially the introduction of a higher Goods and Services Tax (GST), have slowed down growth and created uncertainty among investors. Yet, the long-term potential of the industry remains strong.

A Fast-Growing Industry Faces a Hurdle

Until recently, fantasy sports were growing rapidly. Between financial years 2022 and 2027, it was projected to grow at a compound annual growth rate (CAGR) of 30%. Platforms like Dream11, MPL, and My11Circle became household names, with millions of users across the country. The popularity of cricket and other sports, combined with increased smartphone use, helped fantasy sports grow faster than most digital platforms.

However, things began to change with the implementation of a new GST policy. Starting from October 2023, the government introduced a 28% GST on the full value of contest entry fees, rather than just the platform fee or commission. This had a major impact on the business model of FS platforms.

As a result, analysts now expect the industry to grow at only 7% CAGR from financial year 2024 to 2029. Revenues are projected to fall by 10% to ₹8,190 crore in FY25. The sector, once seen as a money-maker, is now navigating difficult terrain.

Investors Are Holding Back

One of the biggest impacts of the new GST policy has been on investor confidence. Startups and mid-sized platforms, which rely on regular funding to expand, are now facing a funding freeze. In 2023, investments in FS startups fell by 90% compared to the previous year. In 2024 so far, there has been no new investment in space.

Higher tax rates have also reduced profit margins for companies. This has made investors cautious, as they wait for clearer signals from the government regarding long-term taxation and regulation.

To make matters more complicated, some FS operators have received retrospective tax notices from authorities. These demand tax payments for past years based on the new tax rules. Industry leaders have called for relief on this issue, warning that such policies may push startups out of business and reduce innovation in the sector.

A Big Win for the Government’s Revenue

Despite these challenges, one clear benefit of the GST policy has been an increase in government revenue. GST collections from fantasy sports platforms are expected to double in FY24 to ₹3,520 crore. Over the next five years, this figure is likely to reach ₹30,380 crore.

This shows how large the FS sector has become and why it cannot be ignored in discussions about India’s digital economy. However, industry experts argue that a balance must be struck. They want the government to create a stable and predictable regulatory environment that allows the sector to grow while also contributing to the public treasury.

Technology Is Changing Indian Sports

Beyond fantasy sports, the use of technology in Indian sports is growing in many ways. Analytics tools are being used to improve athlete performance. Apps are helping fans stay connected with teams and matches. Training programs are being digitised to reach rural areas.

Smt. Raksha Khadse, Minister of State for Youth Affairs and Sports, recently spoke about the positive role of technology in sports. She said that partnerships, such as the one between the government and Deloitte, are “very promising” for the future of sports in India. Technology, she added, can help analyse athlete performance and identify new talent.

Joy Bhattacharjya, Director General of the Federation of Indian Fantasy Sports (FIFS), shared similar views. He said that India’s sports tech sector is growing and can lead to better athletic performance, stronger fan engagement, and new business opportunities.

A ₹49,500 Crore Industry by FY29

According to a report by the country’s sports-tech industry is expected to grow at a 13% CAGR and reach ₹49,500 crore by the financial year 2029. Fantasy sports will remain a key part of this growth.

The sector is also creating jobs. By FY27, the FS industry is expected to create more than 17,500 direct and indirect employment opportunities. This will include tech professionals, data analysts, content creators, and customer service staff.

A Vision for the Future

The Indian government is also focusing on the future of sports. The Draft National Sports Policy 2024 aims to improve the sports ecosystem from the grassroots to the elite level. It highlights the importance of technology in talent identification, athlete training, and fan engagement.

Even with current challenges, the overall outlook for India’s sports-tech sector remains positive. Fantasy sports, in particular, can play a key role in expanding digital sports engagement, creating jobs, and contributing to the economy.

With the right mix of policy support, investment, and innovation, India’s sports-tech industry has the potential to make a global mark. As the digital and sporting worlds come together, the next few years could define a new era for Indian sports.