Zupee told the market on 16 October that it was leaving gaming to build “AI-led” businesses for India. A month later, it has laid off its entire remaining workforce and looks close to shutting down, Inc42 reported, with severance covering staff until January 2027. Along the way, it closed its microdrama app Zupee Studio and its astrology platform NeoAstro. Investors had put more than $121 million into the company, roughly ₹1,000 crore at today’s exchange rate, on the promise that it was one of India’s leading gaming platforms.
The collapse was triggered by a law, not by a scandal, and nothing reported suggests Zupee broke any rules. Yet its rise and fall show how easily a fashionable label can stand in for a business. Zupee called itself a gaming company from 2018 until October, and when the money ran out it reached for the next label investors like. The question is what, beneath both labels, anyone was actually backing.
Zupee’s profits came from money contests, not from games
Zupee was founded in 2018 by Dilsher Singh Malhi and Siddhant Saurabh, two IIT Kanpur graduates. Malhi studied chemical engineering and worked as a research associate at EPFL in Switzerland, according to his IIT Kanpur profile, while Saurabh was a software engineer at the trading firm Graviton Research Capital. Neither had worked in games before Zupee, according to those profiles. The company started as a quiz app, then found its market in Ludo, Snakes and Ladders and Carrom, played for cash entry fees and cash prizes.
That model made serious money while it lasted. Zupee reported revenue of more than ₹1,100 crore and its first full-year profit, ₹146 crore, in the 2024 financial year, according to Entrackr. It closed a $102 million round in January 2022, with reports putting its valuation above $500 million, and signed a content partnership with Reliance Jio. Those numbers, however, came from players paying to compete for cash, not from players buying or playing games for their own sake.
The difference became obvious once paid contests ended. Zupee shut all of its paid games in August 2025 and kept free versions of Ludo Supreme, Ludo Turbo and Snakes and Ladders running. Without the entry fees, those games could not carry the company, and it cut about 170 jobs in September 2025 and about 200 more in January, YourStory reported. A business that loses its revenue overnight when cash prizes are removed was a contests business with games attached.
The regulatory risk was visible years before the ban
None of this should have surprised anyone writing cheques. Karnataka and Tamil Nadu both tried to outlaw real-money games before 2025. The 28% GST on the full value of deposits, in force since October 2023, showed how little goodwill the sector had left with policymakers. The industry’s defence rested on a label: these were games of skill, it argued, and so they were “gaming”, not gambling. Investors priced Zupee as a gaming platform, while its revenue depended on a legal distinction that the government could remove.
The central government removed that distinction in 2025. The Promotion and Regulation of Online Gaming Act received presidential assent on 22 August 2025 and banned money games outright, whether based on skill or chance. It came into full force on 1 May 2026, along with a ban on advertising such games and on processing their payments. Dream11, MPL and Gameskraft also stopped paid contests after the bill passed. Companies that earned money from games themselves, such as Krafton with BGMI, carried on, and Indian esports kept funding events such as the ₹1 crore BGMI Showdown.
‘AI’ became the next label, without a plan behind it
Zupee’s last move followed a pattern that is familiar from other start-ups. Before October, it had already tried microdramas and astrology, two of the more fashionable consumer bets of the past year. Its October statement then promised AI-led businesses built on its real-time multiplayer technology and its experience with first-time internet users, but named no product, partner or timeline. “There was no AI plan,” a source told Inc42.
The one asset Zupee could point to was scale, as it cited experience serving more than 200 million users. That audience, however, was built around cash contests that Indian law no longer allows. An audience gathered by prize money is hard to carry into an unrelated AI product, and Zupee never said how it would try.
Zupee is far from the only company to lean on the word. Builder.ai, backed by Microsoft, raised more than $450 million on the promise of AI-assisted app development, before entering insolvency in May 2025 amid questions over its sales figures, TechCrunch reported. In the US, the Securities and Exchange Commission fined two investment advisers in 2024 for what it called “AI washing”. “Such AI washing hurts investors,” then chair Gary Gensler said.
The contrast with companies that actually build things is stark. Krafton, which makes games, released its own on-device AI model this week with published specifications, a licence and a model card. Zupee’s pivot came with a press statement and nothing anyone could test. Investors who funded a cash-contest platform as a games company, and then heard “AI” as a next step, were buying the label both times.
What is left of Zupee, and of its investors’ money, is unclear. Inc42 said the company’s remaining cash, assets and liabilities are unknown, and its proposed purchase of the microdrama start-up Vertical TV fell through.
