A23 owner Head Digital Works forays into online poker ahead of the 28% GST rollout

“We remain confident that A23’s Poker launch will enable us to unlock more value and scale in the card-based gaming segment while maintaining our fundamental ethos of profitable sustainable growth,” he said.

Sharma expects the real-money game to make up nearly 20 percent of the company's revenues over the next three years. Real-money games are those where transfer of money is involved.

"As a market, poker is not nearly as large as rummy and I'm not sure it will be the same size as rummy in the future but it is a highly profitable and attractive market to be in," Sharma said.

This is because poker is a faster game than rummy due to which the number of games that a poker player would play is higher, which results in a higher revenue on a per-person basis, despite a low take rate. Poker currently has about a 3-5 percent take rate compared to 10-12 percent in online rummy. Further, the retention expense is also much lower in poker than in rummy, Sharma said.

Head Digital Works, which is majority-owned by Canadian private equity firm Clairvest, is taking a graded approach in terms of its rollout over the next 12 months, Sharma said.

"This is not a business where you come, splash the cash and win the market. So you have to play the patient game. Not be too conservative, but at the same time not be excessively aggressive either," he said.

The launch is happening at a time when the government is yet to notify self-regulatory organisations (SROs) to regulate the sector, nearly six months after the gaming-related amendments to the IT Act 2021 were notified in April 2023. SROs are expected to determine whether a real-money game is permitted to operate in India or not.

With this move, A23 Poker will take on pure-play online poker operators such as PokerBaazi, Adda52, and SpartanPoker as well as platforms such as Mobile Premier League (MPL) that offer online poker.

Sharma however believes the market is still very nascent albeit a growing one, since a lot of offline usage is yet to convert to online.

"There is a decent amount of category building that's being done on social gaming through the Zyngas of the world, but it hasn't translated to real money yet. I don't think poker will become a monopolistic market and I believe there's room for large operators to come in and grow this market," he said.

Tackling steep learning curve

That said, poker has a steep learning curve as compared to other real-money gaming formats such as rummy and fantasy sports, due to which a lot of effort is required in terms of education and awareness around the game format.

Sharma said they are planning to tackle this through a range of initiatives such as poker schools, workshops, and offline activations among others.

While the company plans to leverage its understanding of player behavior and analytical engines from its online rummy product, Sharma said there is not much overlap between online rummy and poker players. Therefore, this launch could act as a growth lever, helping them attract a new set of players onto the platform.

"This is part of a larger five-year roadmap for us to build ourselves up as a well-established leading operator in the poker space," Sharma said.

Real-money gaming segment accounted for 77 percent of India's gaming sector revenues in 2022, which stood at Rs 13,500 crore, according to a recent FICCI-EY report. It is set to grow to Rs 16,700 crore in 2023 and Rs 23,100 crore in 2025, the report added.