In a significant move that reshapes India’s online gaming landscape, Head Digital Works (HDW) has announced its acquisition of Deltatech Gaming Ltd (DGL), the operator of popular poker platform Adda52, in a deal valued at ₹491 crore. The strategic acquisition combines two of India’s leading skill-gaming platforms, marking a major consolidation in the country’s rapidly evolving digital gaming sector.
Strategic Acquisition Structure
The acquisition will proceed in two phases, with HDW initially acquiring a 51% stake in Deltatech Gaming. Following this, Deltatech Gaming will be fully merged into HDW’s operations. As part of the agreement, Delta Corp, Deltatech’s parent company, will secure a 2.8% equity stake in HDW by April 6, 2025, eventually expanding to a 5.7% stake upon completion of the merger.
Creating a Gaming Powerhouse
The merger brings together HDW’s established presence in online rummy through A23 Rummy, which boasts over 75 million users, with Adda52’s strong position in the online poker market. “This acquisition combines two of India’s biggest skill-gaming platforms, aiming to deliver an unparalleled gaming experience and foster innovation in the online poker space,” HDW announced.
Deepak Gullapalli, founder and CEO of Head Digital Works, emphasized the strategic importance of the merger: “By combining our strengths, we aim to expand our poker business, accelerate growth through new avenues, and create India’s most comprehensive and diversified skill-gaming platform for our customers.”
Industry Impact and Growth Potential
The deal represents the second-largest merger in India’s online poker and rummy gaming segment, following Nazara Technologies’ ₹982 crore acquisition of a stake in PokerBaazi’s parent company in September 2024. HDW’s acquisition of Deltatech Gaming significantly strengthens its market position, combining its expertise in rummy with Adda52’s established poker operations.
For perspective, HDW reported revenue of ₹8.41 billion in the 2023-24 fiscal year, while Adda52 generated ₹899 million during the same period. The merger is expected to create substantial synergies and accelerate growth in India’s expanding skill-gaming market.
Regulatory Landscape and Future Outlook
The merger comes at a time of increased regulatory attention on India’s online gambling sector. As the government evaluates potential reforms to oversight of real-money gaming, HDW’s enhanced scale and compliance infrastructure position it well to navigate future regulatory changes.
The transaction, which remains subject to various approvals including a Delta Corp shareholder vote scheduled for March 21, 2025, represents a significant milestone in the consolidation of India’s online gaming industry. Industry experts anticipate that the integration will drive innovation and create a more comprehensive gaming experience for Indian players.
Ashish Kapadia, Delta Corp’s managing director, expressed optimism about the merger’s potential: “We’re excited for this journey with Deepak and team, whose leadership has been instrumental in shaping the online rummy market in India. We believe that this transaction will help strengthen Adda52’s leading position in the online poker market.”
In a landmark decision on 10 January 2025, the Supreme Court of India temporarily stayed ₹1.12 lakh crore in Goods and Services Tax (GST) show-cause notices issued to online gaming companies. This decision, which halts proceedings until a conclusive resolution is reached, provides much-needed relief to an industry already grappling with regulatory uncertainties. The Court has consolidated all related cases for a final hearing scheduled on 18 March 2025.
Core Issue: Taxing Games of Skill vs Gambling
The crux of the debate revolves around the interpretation of GST’s applicability to online gaming. While the government argues for a 28% GST on the full contest entry fees—including prize pools—gaming companies maintain that the tax should be applied only to platform commissions, particularly for skill-based games. The industry contends that equating games of skill with gambling or betting is unjustified and stifles innovation.
Impact of 28% GST: A Sector at Risk
The GST Council’s reclassification of all online games under the 28% tax slab in October 2023 has drawn sharp criticism from industry stakeholders. Previously, skill-based games were taxed at a lower rate of 18%. The retrospective application of this higher rate, going back to 2018, has further exacerbated concerns.
Tax experts have voiced their concerns. Saurabh Agarwal, Tax Partner at EY, described the upcoming March hearing as pivotal for shaping the regulatory framework. “A balanced taxation system is crucial to nurture this rapidly growing sector,” he noted.
Industry Reactions: Hope Amidst Uncertainty
The Supreme Court’s stay has sparked optimism across the online gaming industry. Abhishek Rastogi, legal counsel for several gaming companies, highlighted the significance of the decision. “This stay prevents coercive action by tax authorities and safeguards procedural fairness,” he stated.
Anuraag Saxena, CEO of the E-Gaming Federation, welcomed the ruling as a “win-win” for both operators and the government. He expressed confidence that a fair resolution could catalyse investment, job creation, and sector growth. The market mirrored this optimism, with Delta Corp’s stock surging by 17% following the announcement.
Challenges Ahead: Legal and Financial Hurdles
The Supreme Court’s intervention comes amidst a broader crackdown on alleged GST evasion. Between 2022 and mid-2023, the Directorate General of GST Intelligence issued 71 show-cause notices to online gaming firms. The government claims that these companies exploited ambiguities in taxation laws to underreport liabilities.
The industry’s challenges are compounded by the mandatory registration of overseas gaming firms in India, a policy introduced in October 2023. Gaming platforms have also criticised the government for taxing the total value of bets instead of the gross gaming revenue, arguing that this approach undermines the viability of their operations.
A Defining Moment for Online Gaming
The March 2025 hearing will be a turning point for India’s online gaming landscape. A decision to tax skill-based games differently from gambling could pave the way for regulatory clarity, fostering innovation and global competitiveness. Conversely, maintaining the current approach may jeopardise the industry’s growth, with several firms warning of potential closures.
Looking Ahead: Balancing Growth and Governance
The resolution of this GST dispute will not only shape the future of online gaming in India but also set a precedent for balancing taxation with innovation. As India aspires to become a global hub for digital gaming, the industry hopes for a regulatory environment that supports its potential while addressing legitimate governance concerns.
