Hike, which was once one of India’s most valuable consumer internet startups, is no longer going to develop new social networking or messaging apps as it struggles to gain traction with consumers. Running a recently launched U.S. business that was starting to gain traction but making informed decisions based on poor risk–reward math under the new regime and founder Kavin Bharti Mittal told shareholders it wasn’t interested in undertaking a capital-intensive reset.
From unicorn in messaging to pivot in cash gaming
Funded by the likes of Tiger Global, SoftBank and Tencent, Hike achieved unicorn status in its prime when there was a rush towards socialising with one’s neighbours. The company shut down its messaging app a few years later and pivoted to real-money games with Rush, a hyper-casual platform that features games like carrom and ludo with entry fees and cash prizes.
According to the company’s own figures, Rush attracted more than 10 million users and raised over $500 million in gross revenue during its life. But the business model was inherently vulnerable to policy whiplash, as it depended on real-money play. A promising test expansion to the U.S., begun less than a year ago, would have required substantial recapitalization in order to scale globally — something the leadership deemed no longer wise.
A wide ban and growing tax pressure
But the proximate cause of Hike’s closure is a federal law in India, the Promotion and Regulation of Online Gaming Act; it enforces a blanket ban on real-money gaming. Policymakers cast the move as a matter of public health and consumer protection, citing cases of financial harm and devastating outcomes associated with gambling-like behavior.
The ban is the culmination of years of tightening oversight. Effectively, a 28 per cent goods and services tax on online gaming was implemented earlier, making the cost structure for operators significantly higher. It was compounded by state-level restrictions on formats. The policy arc stretching from a tax shock to outright prohibition has upended the economics of an industry that had seen India emerging as one of the fastest-growing gaming markets in the world.
The country’s Supreme Court has folded legally challenged to the new law from around India together, although the rules have yet to be fully notified. Industry lobby groups such as the Internet and Mobile Association of India and the All India Gaming Federation have called for explicit, skill-based carve-outs and a predictable compliance route, cautioning about blanket bans driving users to gray markets.
Industry fallout: shutdowns, pivots and the numbers
The larger industry, which at its peak was estimated to be worth $23 billion in total stakes and platform volume, is retrenching. Pioneers including Dream Sports and Mobile Premier League have scaled back or stopped pushing real-money offerings domestically while experimenting with adjacent bets — from short-form content to financial services — or focusing on friendlier overseas jurisdictions.
The economic effects ripple outward. Many companies reported layoffs, reduced prize pools and smaller guaranteed events after the 28% tax; an outright ban would wipe out earnings altogether for RMG first entities. The investor climate has also cooled; growth-stage capital isn’t easy to come by for gaming startups that don’t have a monetization play other than RMG, or at least international exposure, per deal trackers and venture firms focused on the category.
For Hike, which had already made one high-profile pivot, the road to existence would have required creating a distributed compliance-heavy operator across several geographies — taking on user acquisition costs in a home market at risk of regulatory roller-coastering. That’s a tall order even for well-financed companies, much less one staring at a reset.
Why Hike took the off-ramp
Mittal’s logic is simple: capital has an opportunity cost. Global growth for real-money gaming means state-by-state licensing in the U.S., stringent KYC and payments stacks and deep marketing spend to compete with entrenched incumbents. After India, Hike’s home market, became unavailable for RMG that meant the upside case is shrank while the execution risk swelled.
There is also the matter of brand and team focus. “Being a social company building out and going from social to gaming as we did, it was time for us step back and throw the gauntlet in the non-RMG entertainment space or fintech,” Hike founder-CEO Kavin Bharti Mittal had told ET when they announced shuttering of Sticker Chat. Instead of pursuing a third act in an already crowded field, the company chose to return capital and conserve talent — something that investors often prefer over long-shot, low-probability turnarounds.
What to watch next
Two factors will determine the terrain from here. First, how the Court decides to handle the consolidated petitions will have much to say about whether a skills-based approach can emerge—or if the categorical bar will continue to prevail. Second, the government’s final rules and any clarifications from the Ministry of Electronics and Information Technology will indicate whether compliant formats — such as free-to-play, esports or rewards without staking — can scale.
Meanwhile, founders are hedging. Studios and developers are reorienting their gaze towards ad-supported casual games and IP licensing; esports platforms are pushing for sponsorships; and a small number of real money gaming (RMG) operators are targeting regulated markets overseas. For venture investors, the headline lesson is a familiar one: in India’s digital economy, policy risk is product risk. The exit of Hike underscores how fast that risk can blare across the roadmap — even for a one-time unicorn backed by marquee investors.
