WinZO PMLA case: Court grants bail to Saumya Singh Rathore, rejects Paavan Nanda's plea

WinZO has challenged the ED’s raids and asset freeze before the Karnataka High Court

A Bengaluru sessions court has granted bail to Saumya Singh Rathore, co-founder of the real-money gaming platform WinZO, in a money-laundering case registered by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002.

The court however declined to provide similar relief to her co-founder Paavan Nanda, allowing the agency to retain him in custody for further interrogation, according to a report by Bar and Bench. The order was passed by Principal City Civil and Sessions Judge M Chandrashekar Reddy on December 26.

Why did ED arrest the WinZO co-founders?

The ED arrested Rathore and Nanda on November 26 following questioning at its Bengaluru zonal office. The arrests followed searches at four WinZO locations in Delhi and Gurugram, after which the agency froze assets worth Rs 505 crore, under Section 17 (1A) of PMLA earlier in the month. The case was registered on November 6 on the basis of predicate offences in three FIRs from Bengaluru, Rajasthan and Delhi.

On November 24, the ED said its investigation found that WinZO engaged in "criminal activities and unscrupulous practices i.e. customers were made to play with algorithms or software without being made aware of the fact that they are playing with software or algorithms and not with humans in real-money games".

The agency also said its investigation found WinZO operating real money games in markets such as Brazil, the United States and Germany from India using the same platform as its Indian entity.

About $55 million (Rs 489.90 crore) has been parked in a bank account in the United States held in the name of WinZO US Inc, which the ED described as a shell company, since all operations, day-to-day activities, and bank account management are handled from India.

Additionally, the probe revealed that WinZO prevented or limited withdrawals of monies held by the customers in their wallets, and that about Rs 43 crore is still being held by the company without being refunded to players, despite a ban on real money games since August 22, the agency said.

That said, the online gaming law is yet to come into effect in the country and the draft rules, released on October 2, proposed a 180-day window for gaming companies to repay funds owed to users once the law gets operational.

In a statement on November 24, WinZO said it was “cooperating fully with the investigating agency and will continue to support the process”. Earlier this month, the company challenged the ED’s raids and asset freeze before the Karnataka High Court, where the matter is pending hearing.

Why did the court grant bail to Saumya Singh Rathore?

While granting bail to Rathore, the court noted that she was entitled to the benefit of a PMLA provision that exempts women accused from the law’s strict bail conditions. It also observed that she had already undergone substantial custodial questioning and that continued detention was not warranted.

Rathore was directed to be released on a personal bond of Rs 5 lakh with two sureties, surrender her passport, not leave the country without court permission, and cooperate with the investigation.

Started by Nanda and Rathore, WinZO offers over 100 games in 15 Indian languages developed by third-party game developers from around the world on its platform. It has raised a total of $100 million across multiple financing rounds from investors such as Griffin Gaming Partners, Maker’s Fund, Courtside, and Kalaari Capital until now.

The company discontinued its real-money gaming business in India in August after the government introduced an online gaming law that placed a blanket ban on online money games, where a user makes a deposit, directly or indirectly, with the expectation of earning winnings on that deposit.

In recent months, WinZO forayed into newer areas such as microdramas and digital gold investments. However, the company’s app and website have not been operational since December 2, displaying a maintenance message.