Inside Gameskraft’s Crisis: CFO Scandal, ₹250 Cr Loss, and Policy Headwinds

India’s gaming industry has been riding through one of its toughest years yet — and Gameskraft, one of the country’s largest gaming startups, is finding itself at the epicenter of turbulence. Already reeling under the impact of India’s ban on real-money gaming (RMG) and the crippling 28% GST regime, the Bengaluru-based unicorn is now staring at a storm from within its own boardroom.

According to the media reports Gameskraft has accused its former group chief financial officer (CFO), Ramesh Prabhu, of siphoning off company funds for personal trading activities in the futures and options (F&O) market. The alleged misappropriation has reportedly cost the company a staggering ₹250+ crore, making it one of the most serious internal crises to ever hit an Indian gaming startup.

Gameskraft Crisis

The controversy surfaced after Gameskraft filed a First Information Report (FIR) with Bengaluru’s Marathahalli Police Station on September 9, 2024. The FIR accuses Prabhu of theft, criminal breach of trust, forgery, and other offenses under multiple provisions of the Bharatiya Nyaya Sanhita.

Shockingly, the company claims that Prabhu himself admitted to the wrongdoing in an email to the management on March 5, 2024 — while also clarifying that no other Gameskraft employee was involved.

According to the FIR:

• ₹211.53 crore was wrongly recorded as “investments” in the company’s books.

• By March 2024, the value of these alleged “investments” ballooned to ₹250.57 crore.

• An additional ₹19.86 crore had to be expensed as “investments” in FY25.

• In total, Gameskraft had to write off ₹270.43 crore in its financial statements.

Adding to the mystery, Prabhu reportedly stopped reporting to work after March 1, 2024, and disappeared from communication altogether following his confession email. All attempts by the company to track him down have since failed, leading to his official termination in August 2024.

The Modus Operandi: How the CFO Allegedly Pulled It Off

The FIR paints a picture of a highly calculated operation. Prabhu allegedly misused a company account with RBL Bank, over which he had exclusive control. He is said to have:

• Transferred company funds into his personal bank account without authorization.

• Falsely reflected these transfers as investments in Gameskraft’s financial books.

• Fabricated records and altered bank statements to hide the transactions.

• Inserted or deleted line items in financial documents to mislead auditors.

• Even went as far as to create fake mutual fund statements to cover his tracks.

Alarmed by the scale of the alleged misconduct, Gameskraft roped in two external firms to conduct a forensic audit, which confirmed the irregularities. Sources close to the company have indicated that the financial hit was absorbed in FY25, and Gameskraft is now reportedly tightening its internal controls to prevent such lapses in the future.

Trouble Upon Trouble: Gameskraft’s Regulatory Woes

The timing of this scandal could not have been worse.

In August 2024, Parliament passed India’s new Online Gaming Act, effectively banning all forms of real-money gaming in the country. Gameskraft, which operated platforms like RummyCulture, Playship, RummyPrime, and LudoCulture, had little choice but to pause its RMG offerings.

This was just the latest blow. Earlier, in May 2024, Gameskraft had suspended its online poker platform Pocket52, struggling under the weight of the 28% GST regime that was introduced in October 2023.

The tax overhaul has been devastating for India’s gaming industry. Previously, a 18% GST applied only to platform fees for skill-based games. Under the new regime, the entire value of bets is taxed at 28%, lumping skill-based games together with games of chance.

Gameskraft itself was hit with a ₹21,000 crore tax evasion notice from the Directorate General of GST. While the Karnataka High Court initially quashed the notice, the Supreme Court later stayed the HC order, leaving the company’s legal troubles far from over.

Founded in 2017 by Prithvi Raj Singh, Deepak Singh, Rajkumar Taneja, and Sindhu Devi Jha, Gameskraft rose to prominence as one of India’s biggest RMG startups, attracting millions of users across its gaming platforms.

But between the policy crackdown and this CFO scandal, the company now finds itself at a precarious juncture. Industry observers believe that Gameskraft’s immediate focus will be on:

• Regaining investor and stakeholder trust after the financial mismanagement revelations.

• Navigating the uncertain regulatory environment, especially with the ban on RMG.

• Pivoting its business model towards permissible forms of online gaming, if any.

• Reinforcing corporate governance and financial oversight structures.

For India’s gaming ecosystem, the Gameskraft episode is a sobering reminder of how quickly fortunes can shift in this volatile sector. From tax battles to leadership scandals, the challenges ahead for one of the country’s most high-profile startups are monumental.

And as the investigation against its former CFO unfolds, the gaming giant’s next moves will be closely watched — not just by regulators and investors, but by an entire industry battling to survive the changing rules of the game.