Raids, Arrests And Crisis: The Unravelling Of WinZO

2025 has been nothing short of a judgement year for India’s real-money gaming (RMG) industry. With sweeping regulatory changes coming into force, several startups, including gaming unicorns, were forced to pause their core RMG operations, while others attempted hurried pivots.

What unfolded at WinZO, once hailed as the poster child of India’s gaming startup ecosystem, proved far more unsettling.

After the Promotion and Regulation of Online Gaming Act (PROGA) imposed a de facto ban on RMG, WinZO announced a strategic pivot. The company said it was entering the US market to tap one of the world’s most ‘mature and lucrative gaming ecosystems’, leveraging what it described as its ‘plug-and-launch’ distribution model.

Within India, it expanded into adjacent categories, rolling out a short-video product, Zo TV, and experimenting with offerings such as digital gold. For a brief moment, it felt like the company was finding its footing amid the regulatory upheaval.

But this was merely the calm before a bigger storm.

In November, the Enforcement Directorate (ED) arrested WinZO cofounders Saumya Singh Rathore and Paavan Nanda under provisions of the Prevention of Money Laundering Act (PMLA). A month later, a Bengaluru sessions court granted bail to Rathore but denied bail to Nanda, leaving one cofounder behind bars as legal uncertainty continued to loom over the company.

With one cofounder out on bail and the other still facing judicial scrutiny, WinZO is currently operating under severe strain. The company has scaled back its operations significantly.

Sources told Inc42 that the RMG startup is currently running on a lean setup, with 70% of its workforce having exited in recent months.

Also, with INR 700–880 Cr frozen, cash flows have become a major issue. It only has around INR 15 Cr in usable funds. Only a minimal number of employees are coming to the office to ensure compliance, while salary payments to existing staff and dues to vendors remain unsettled.

One of its vendors, Paytm, has already approached the National Company Law Tribunal (NCLT) over unpaid dues. Meanwhile, WinZO is awaiting hearings in the Karnataka High Court regarding its plea seeking relief from the freezing of its funds.

Sources added that there has been no progress on content or operations at the newly launched Zo TV during this period.

How WinZO’s Fall Began

The trouble started with ED raiding premises of WinZO and Gamezkraft as part of a money laundering investigation in November. The agency conducted search operations at four locations in Delhi and Gurugram between November 18 and November 22, 2025. The searches were carried out by the ED’s Bengaluru zonal office and targeted premises linked to WinZO Games Pvt Ltd.

During the operation, the agency said it froze assets worth approximately INR 505 Cr, which it identified as proceeds of crime. The assets were frozen under Section 17(1A) of the PMLA and included bank balances, bonds, fixed deposits and mutual fund investments.

According to the ED, the investigation was initiated on the basis of multiple FIRs filed against WinZO Games and other entities. The FIRs alleged offences including cheating, impersonation, misuse of permanent account numbers, wrongful blocking of user accounts, and the alleged misuse of customer KYC details.FIRs also allege that users suffered financial losses due to fraudulent activities on the platform.

WinZO said it was cooperating with investigators and emphasised its compliance posture.

ED’s Charges Against WinZO

The ED said its investigation found that WinZO continued to operate RMG services in overseas markets, including Brazil, the US and Germany from India via the same platform deployed for its domestic operations. According to the agency, the company continued to operate even after the Union government’s ban on RMG that came into effect on August 22, 2025.

It is important to note that the company started to push into overseas markets after the 28% GST implementation affected its growth in India. WinZO was already live in Brazil, where operations have been underway for the past seven to eight months, cofounder Paavan Nanda told Inc42 in July last year.

The ED also alleged that WinZO’s global operations, including the hosting and operation of real-money games, were conducted through a single application platform managed from India. Investigators further claimed that funds originating from the Indian entity were diverted to overseas jurisdictions, including the US and Singapore, under the guise of foreign investments.

According to the agency, approximately $55 Mn was parked in bank accounts in the US held in the name of WinZO US Inc., which the ED described as a shell entity, alleging that all operational control, including day-to-day business activities and banking operations, continued to be exercised from India.

“This has created unease among other gaming startups that were considering international expansion in the aftermath of the ban. Many are now reassessing potential legal risks, regulatory loopholes and the structure of their overseas operations to ensure that similar scrutiny does not follow them. If they do proceed, they are likely to do so through entirely new entities,” said a legal expert who advises large gaming firms.

Moreover, the ED alleged that approximately INR 43 Cr remained with the company after the ban and was not refunded to users. The agency alleged that WinZO engaged in what it described as ‘unscrupulous practices’, including the use of algorithms or software-driven gameplay in real-money games without adequately disclosing to users that they were competing against automated systems rather than human players.

The ED further alleged that the company restricted or delayed withdrawals of user funds held in WinZO wallets. It said that the company generated ‘proceeds of crime’ in the form of betting amounts lost by users through such gameplay mechanisms, with the funds subsequently credited to the company’s bank accounts.

WinZO’s Fight For Survival

As of now, Rathore has moved the Karnataka High Court, challenging the ED’s jurisdiction to investigate the matter from Bengaluru. In her petition, she has sought the quashing of the Enforcement Case Information Report (ECIR) registered by the agency, along with all proceedings initiated pursuant to it.

The petition also seeks a writ restraining the ED from continuing the investigation and requests an interim stay on further proceedings, including remand orders passed by the trial court.

During a preliminary hearing, Rathore’s counsel urged the high court to direct the ED to investigate from Delhi, as the company is headquartered there. After hearing initial submissions from both sides, a bench led by Justice M. Nagaprasanna scheduled the matter for further hearing on January 14 and directed the ED not to precipitate the matter until then.

With nearly INR 800 Cr in funds frozen, the road ahead is unlikely to be easy for WinZO. Beyond the operational disruption, mounting legal expenses are expected to drain the company further.

WinZO’s financial performance in the years leading up to the crackdown underscores both the scale of the business and what is now at stake. The company reported revenue of INR 673.94 Cr in FY23 and crossed INR 1,055.20 Cr in FY24. Its adjusted profit after tax more than doubled to INR 315 Cr in FY24, up from INR 125 Cr in the previous year.

However, the company has yet to file its financial statements for FY25. In an interview, Nanda said that WinZO was unlikely to see comparable growth in the current year due to intensifying regulatory headwinds.

For now, the outlook looks uncertain for WinZO. How long can it continue to drag its operations?

[Edited by Shishir Parasher]