Startup Deep Dive : Zupee — profitable for the first time, then banned by law

In the financial year ending March 2024, Zupee turned its first annual profit — ₹146 crore, on revenue of ₹1,123 crore (about $117 million). Eighteen months later, a law passed by Parliament made the product that built that profit illegal to sell, and the company laid off roughly a third of its staff to survive.

That is the whole arc of Zupee in one sentence: a Ludo app that turned a board game every Indian household already owned into a ₹1,000-crore-plus business, absorbed a tax increase that its own industry body called unconstitutional, and then watched Parliament ban the entire category it was built on. What is left is a smaller company betting that the users it spent seven years acquiring will still show up when there is nothing to win but points.

Quick facts

What they do

Zupee built its business on a game almost every Indian family already knew how to play: Ludo. Rather than invent a new pastime, it took the board game and layered skill mechanics onto it — timed turns, no dice in some formats, and rules that reward strategy over luck — then let users stake small amounts of real money against each other in short matches, typically eight to ten minutes long, with entries starting as low as ₹1. Alongside Ludo it ran Snakes & Ladders, Trump Cards and quiz-style formats, all aimed at the same audience: mobile-first users, heavily concentrated in India’s smaller towns, who wanted a familiar game with a small stake attached rather than the complexity of fantasy cricket or poker. That single insight — familiarity over novelty — carried the company from a 2018 startup to more than 100 million registered users by the end of FY24, and past 150 million by the time the business model itself was outlawed in August 2025, as reported by HRKatha and YourStory.

The origin

Dilsher Singh Malhi and Siddhant Saurabh met at IIT Kanpur — Malhi graduating in chemical engineering in 2017, Saurabh in computer science a year earlier. Malhi spent time as a research associate at EPFL in Switzerland before returning to India; Saurabh brought the engineering background that would later build Zupee’s game architecture, as per StartupTalky’s profile of the founders. The company they started in 2018 was not a Ludo app at all — it launched as a real-money quiz platform. It picked up users and engagement, but the founders ran into a problem that a lot of quiz apps hit: quiz formats are hard to monetise consistently, because the games are short, repetitive to produce, and don’t hold attention the way a strategy game does. Recognising that gap, the team made what StartupTalky’s account of the company calls “a bold decision to pivot” toward casual, culturally familiar board games — landing on Ludo by 2019. That pivot, more than the original idea, is what the business was actually built on.

The struggle years

Zupee’s near-decade has two distinct crises, not one. The first was structural and self-inflicted in the sense that most startups face it: the original quiz product’s monetisation problem in 2018–19, which forced the pivot to Ludo described above. The second was regulatory, and it hit twice. On 1 October 2023, the government’s 28% GST on the full face value of every deposit — not on the platform’s revenue or margin — came into force, an amendment the industry’s own trade body, the All India Gaming Federation (representing Zupee alongside Nazara, Gameskraft and WinZO, among others), called “unconstitutional, irrational, and egregious,” as reported by TechCrunch and Business Today at the time. The change was reported to raise GST liabilities across the sector by roughly 1,000%. Zupee absorbed it: CEO Malhi told Storyboard18 the company would take “a responsible and compliant approach” and would be “sharing some of the burden” with users rather than passing the full cost on. It worked, in the narrow sense that FY24 revenue still grew — but the bigger blow was still to come.

The turning point

The defining event in Zupee’s history is not a funding round. It is the Promotion and Regulation of Online Gaming Act, 2025 — passed by the Lok Sabha on 20 August 2025, the Rajya Sabha the next day, and given presidential assent on 22 August 2025. The law bans “online money games” outright, regardless of whether they involve skill or chance, bars banks and payment processors from handling related transactions, and prohibits advertising for such games, with penalties running up to three years’ imprisonment or a fine for operators and up to two years for celebrities who endorse them. On one side of that date sits a company that had just posted its first-ever annual profit, ₹146 crore on ₹1,123 crore of revenue, with over 100 million registered users. On the other side, within weeks, sits a company that shut down its entire real-money product line and cut 170 employees — about 30% of its workforce — in September 2025, according to HRKatha and Indian Startup News. CEO Malhi’s statement at the time was blunt: “This has been a tough call for us, but was necessary to adapt to the new regulatory framework.”

The money behind it

Zupee raised roughly $121 million across five rounds between 2019 and 2022, per Entrackr’s reporting on the company’s filings. It started small — a $1 million seed round from Smile Group in April 2019 — then scaled through a $8 million Series A in March 2020 and a further $10 million Series A extension in January 2021 led by WestCap and Matrix Partners India (now Z47). The two rounds that mattered most came next. In August 2021, WestCap Group and Tomales Bay Capital co-led a $31 million Series B at a reported pre-money valuation of around $500 million. Then, in January 2022, an extension brought in $72 million more from Nepean Capital, AJ Capital Partners and existing backers, taking the company’s valuation to $600 million (₹4,900 crore, reported) — confirmed independently by YourStory’s coverage of the round and by TheCapitalQuest’s reporting at the time. Nepean Capital emerged as the largest outside shareholder, with a stake reported between 16% and 20% depending on the filing year, alongside the founders’ roughly 12% combined holding. It is worth stating plainly: Zupee has never confirmed unicorn status. Some industry round-ups have grouped it loosely with India’s gaming unicorns, but its own disclosed numbers say otherwise — $600 million is 40% short of the $1 billion bar, and no fresh valuation has been reported since January 2022, more than four years ago.

How it makes money

Before August 2025, Zupee’s revenue came almost entirely from a platform fee — a cut, commonly called a rake, taken out of the entry fees pooled into each cash match or tournament. Users staked money against each other; Zupee took its cut regardless of who won. That model scales cleanly with usage, which is why revenue nearly tripled between FY22 and FY24, but it also means costs scale with it: user acquisition and cashback are the two biggest line items by far. In FY23, advertising and sales promotion alone accounted for ₹468 crore of the company’s ₹901 crore in total expenses — 52% of everything it spent — with cashback to users adding a further ₹235 crore, according to Entrackr’s breakdown of the company’s financials. The part people tend to get wrong about apps like Zupee is assuming the money comes from big-ticket bettors; the design — ₹1 entry fees, eight-to-ten-minute matches — points the other way, toward high-frequency, low-stake play from a very large user base, which is also exactly the model the 2025 Act was written to eliminate, since the law makes no distinction between a ₹1 stake and a large one. Since the ban, the company has rebuilt its revenue model around advertising within free-to-play games, a Zupee Plus subscription priced at ₹499 for three months, and short-form video through Zupee Studio — none of which replaces the rake economics that built the FY24 profit.

The numbers

Three years of filings tell the story of a company that fixed its unit economics just before the ground shifted under it. Losses shrank from ₹130 crore in FY22 to ₹36 crore in FY23 — a 73% reduction — even as revenue more than doubled. By FY24, growth and cost discipline finally met: revenue rose another 35% and the company recorded its first annual profit.

Figures as reported by Entrackr from Zupee’s regulatory filings (December 2023 and April 2025 reports). No FY25 revenue or profit figure had been disclosed publicly as of September 2026 — the year in which the company would have absorbed a full twelve months of the 28% GST regime followed by the outright ban from late August 2025, so it is likely to be the most consequential year in the company’s financial history and, at the time of writing, the least documented.

Where the money comes from

Zupee’s business was never diversified by geography — it was, and remains, an India-only product, with its stated user concentration in tier-2 and tier-3 towns rather than metro markets, a deliberate targeting choice the company has described in interviews as central to its growth strategy. The surprise is less about geography and more about product concentration: for a company with several games in its catalogue, the overwhelming majority of revenue before the ban rode on Ludo formats specifically, with Snakes & Ladders, Trump Cards and quiz games contributing user engagement and cross-sell rather than comparable revenue. That concentration — one game, one country, one regulatory regime — is precisely what made the 2025 Act an existential shock rather than a manageable setback: there was no other market or product line to fall back on while the core business was switched off.

The risks

The first risk is now realised rather than hypothetical: the company’s core revenue-generating product is illegal to operate in its only market, and every monetisation path it has announced since — advertising, subscriptions, short-form video — is unproven at anything like the scale of the rake business it replaces. The second is legal uncertainty cutting both ways. Petitioners including Head Digital Works and Clubboom11 have taken the constitutionality of the 2025 Act to the Supreme Court, arguing it violates the right to trade (Article 19), equal treatment of skill-based games (Article 14) and states’ authority over gambling (Entry 34 of the State List); the case was pending before a three-judge bench led by Chief Justice Surya Kant as of the Supreme Court Observer’s case tracker in mid-2026, with no ruling yet. A favourable verdict could reopen the business Zupee just shut down; an unfavourable one closes the door permanently, and either way the company cannot plan around an outcome it does not control. The third risk is execution and headcount: Zupee cut 170 employees in September 2025 and a further roughly 200 in a second round announced in late January 2026 — cumulative job losses of around 370 across two rounds, concentrated in technology and customer support, according to Outlook Business — a pace of contraction that makes rebuilding a new product line with a smaller, differently skilled team materially harder.

The takeaway

The lesson in Zupee’s numbers is not that real-money gaming was a bad business — the FY24 filing shows it was, by the time the company had scaled and disciplined its costs, a genuinely profitable one. The lesson is that a business built entirely on a single regulatory permission, in a single country, with no other product or market to absorb the shock, is only ever as durable as the next Parliament session. Companies in India’s gaming, fintech and lending sectors that depend on a specific tax treatment or licensing regime, rather than a broader consumer need, carry the same structural exposure Zupee did — profitable right up until the rules underneath them change, at which point profitability offers no protection at all.

Frequently asked questions

What does Zupee do now that real-money gaming is banned in India?

Since the Promotion and Regulation of Online Gaming Act, 2025 came into force in August 2025, Zupee has stopped offering cash-stake games and shifted toward free-to-play social and casual games, a Zupee Plus subscription service, and short-form video content produced under Zupee Studio, according to reporting by HRKatha and Indian Startup News.

Was Zupee ever officially a unicorn?

No. Zupee’s last disclosed valuation was $600 million (₹4,900 crore, reported), set in a Series B extension round in January 2022 and confirmed by YourStory and TheCapitalQuest at the time. That is below the $1 billion threshold the term requires, and no higher valuation has been publicly reported since.

How much funding has Zupee raised, and from whom?

Zupee raised about $121 million across five rounds between 2019 and 2022, per Entrackr’s reporting, from backers including Smile Group, WestCap Group, Tomales Bay Capital, Matrix Partners India (now Z47), Nepean Capital and AJ Capital Partners. Nepean Capital is reported as the largest outside shareholder.

How did the 28% GST affect Zupee before the outright ban?

From 1 October 2023, India levied 28% GST on the full face value of gaming deposits rather than on platform revenue or margin, a change the industry’s trade body called unconstitutional, as reported by TechCrunch and Business Today. Zupee’s CEO said the company would absorb part of that cost rather than pass all of it to users; the business still grew revenue through FY24 despite the higher tax burden.

Can the 2025 real-money gaming ban still be overturned?

It is being contested. Petitions from companies including Head Digital Works and Clubboom11 challenging the Act’s constitutionality were consolidated before the Supreme Court and remained pending, under a three-judge bench led by Chief Justice Surya Kant, as of the Supreme Court Observer’s mid-2026 case tracker update, with no ruling issued as of September 2026.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• Entrackr, “Zupee’s revenue zooms to Rs 832 Cr in FY23; cuts losses by 73%,” December 2023
• Entrackr, “Zupee posts Rs 146 Cr profit after tax in FY24,” April 2025
• Business Standard, “Online gaming firm Zupee turns profitable in FY24, revenue up 35%,” April 2025
• YourStory, “[Funding alert] Zupee raises $72M; announces partnership with Reliance Jio,” January 2022
• WestCap, press release on Zupee’s Series B funding and $600 million valuation, January 2022
• TheCapitalQuest, “Gaming startup Zupee gets $600 mn valuation in Series B round,” January 2022
• StartupTalky, “Zupee: Where Classic Games Meet Skill and Innovation,” accessed September 2026
• Storyboard18, interview with Zupee CEO Dilsher Singh Malhi on responsible gaming and GST, accessed September 2026
• TechCrunch, “India deals a 28% tax blow to online gaming industry,” 11 July 2023
• Business Today, “Online gaming companies, associations write to Centre to reassess 28% GST,” 15 July 2023
• HRKatha, “Zupee lays off 170 employees after online gaming ban,” September 2025
• Indian Startup News, “Zupee lays off 170 employees after ban on real-money gaming; CEO says, ‘This has been a tough call for us,'” September 2025
• Outlook Business, “Zupee Lays Off 200 Employees to Cut Costs After Money Gaming Ban Disruption,” January 2026
• Wikipedia, “Promotion and Regulation of Online Gaming Act, 2025,” dates of parliamentary passage and assent, accessed September 2026
• Supreme Court Observer, “Challenge to the Promotion and Regulation of Online Gaming Act, 2025,” case tracker, accessed September 2026

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