In its updated draft red herring prospectus (DRHP), PhonePe, an India-based fintech company backed by Walmart, revealed a drastic decrease in its real money gaming (RMG) revenue for the first half of FY26. The company’s earnings from this sector plummeted to ₹71 crore ($7.1 million) between April and September 2025, a sharp drop from ₹147 crore ($17.6 million) during the same period in the previous year. The sharp downturn in PhonePe’s RMG income is a direct consequence of the government’s crackdown on real money gaming.
Impact of India’s Online Gaming Ban
The decline in gaming revenue follows the enactment of the Promotion and Regulation of Online Gaming Act, 2025, which came into effect on August 22, 2025, imposing a nationwide ban on real money gaming activities. The ban has effectively removed PhonePe’s income stream tied to advertising and payment gateway services for RMG operators, which had been a substantial part of its business model in previous years.
“We ceased to generate revenues from advertising and payment gateway services associated with real money gaming with effect from August 22, 2025,” the company stated in its filing. The RMG segment had consistently contributed to the company’s growth, with PhonePe earning ₹245 crore from this source in FY25, ₹234 crore in FY24, and ₹208 crore in FY23.
Despite the setback in its gaming division, PhonePe stressed that the impact on its overall revenue was minimal during H1 FY26. Revenue from operations surged to ₹3,918 crore ($470 million), a 22% increase from ₹3,207 crore ($385 million) in the previous fiscal year’s first half. This growth was largely driven by the company’s expanding digital payments ecosystem and other financial services offerings.
PhonePe’s Expanding Business Amid Losses
Although PhonePe has managed to reduce its losses over the past few years, the company recorded an increase in losses during the first half of FY26. The fintech firm reported a loss of ₹1,444 crore for the period ending September 30, 2025, which is higher than the ₹1,203 crore loss recorded in the same period of FY25. This rise in losses was mainly attributed to higher operating expenses, particularly in marketing and user acquisition.
PhonePe’s marketing expenses saw a significant increase, rising by 48% to ₹455 crore in H1 FY26, up from ₹307 crore in the previous year. These costs now account for 7.51% of the company’s total revenue. The company also indicated that it plans to continue this elevated spending as part of its efforts to expand its user base and foster stronger customer engagement.
PhonePe’s IPO and Shareholding Structure
Looking ahead, PhonePe is preparing for its initial public offering (IPO), which will be entirely an offer for sale (OFS) of 5.06 crore equity shares by existing stakeholders. The company will not raise fresh capital through the IPO. Walmart International Holdings Inc. owns a significant portion of PhonePe through its promoter entity, WM Digital Commerce Holdings, with a 71.77% stake. This entity intends to sell 4.59 crore shares, representing 9.06% of the company’s paid-up equity.
Other investors, including Tiger Global and Microsoft, will sell the remaining shares. Public investors such as General Atlantic Singapore and Headstand will also be part of the offering. General Atlantic holds an 8.98% stake in PhonePe, while Headstand holds 5.73%.
A Strong Business Beyond Gaming
Despite the significant fall in its gaming revenue, PhonePe has managed to maintain steady growth in its broader business, signaling the resilience of its core offerings beyond real money gaming. The company’s expansion into digital payments and financial services appears to have insulated it from the full impact of the gaming ban, helping it sustain overall revenue growth.
As the company moves forward, its continued reliance on substantial marketing and user acquisition spend underscores the importance of expanding its consumer base and improving engagement in a highly competitive sector.
Source:
PhonePe’s Real Money Gaming Revenue Drops to Rs 71 Crore in H1 FY26 After Regulatory Ban, storyboard18.com, January 22, 2026
