E-gaming – The next Islamic investment frontier?

Saudi Arabia, the global beacon for Islamic finance, is making an assertive – and for some, uncomfortable – push into gaming and e-sports. The ambition is clear. Whether it aligns with Shariah investment principles is less so.

The Kingdom is not playing games – it wants gaming and e-sports to be an economic growth engine under Vision 2030. It expects this sector to contribute at least US$13.3 billion to its GDP, along with tens of thousands of jobs by the end of the decade.

It is investing serious money. From the many funds and financing schemes, one stood out to us: the two venture funds collectively worth US$450 million to be established by the National Development Fund and the Shariah compliant Social Development Bank. Their existence alone signals that institutions see gaming not merely as entertainment, but as a legitimate target for Islamic capital.

The commercial logic is hard to dispute: the global gaming industry generated an estimated US$184.3 billion in revenue in 2024, according to GamesIndustry.biz. Market researchers at The Business Research Company project revenues will reach US$345.3 billion by 2025. E-sports revenues are expected to rise to US$2.9 billion in 2025, with global viewership projected at 640.8 million, according to DemandSage. The segment’s popularity among younger demographics has reinforced its appeal to thematic investors.

Nonetheless, this sector – once seen primarily as consumer entertainment, but now has evolved into a complex digital ecosystem, spanning content development, online distribution, live streaming and competitive esports – raises Shariah concerns.

Saad Malik, the co-founder of US-based Halal investing platform Zoya, told IFN Investor that the sector should be viewed “neither as a blanket opportunity nor a universal red flag” but assessed on a case-by-case basis.

“The label ‘gaming company’ tells you very little on its own. What matters is the substance of the business, its content and how it makes money,” he said.

One of the core screening challenges lies in content complexity. A single listed gaming company may publish dozens of titles, some permissible and others not, making company-level assessments difficult. In addition, monetization models have evolved beyond simple game sales to include microtransactions, loot boxes and other mechanics that may resemble gambling or chance-based outcomes.

Revenue sources add another layer of complexity. Many gaming companies generate income through sponsorships or advertising linked to non-compliant industries such as alcohol or gambling.

“These revenue streams need to be evaluated alongside the content itself,” Saad noted, adding that gaming rarely presents the clear-cut screening outcomes seen in more traditional sectors.

Selective exposure may be possible where companies focus on family-friendly or educational content or use transparent subscription-based revenue models. However, he cautioned against attempts to group gaming into a homogenous Halal investment theme.

“The industry is too diverse for a dedicated gaming index to be meaningful. Investors are better served evaluating these companies as part of broader technology or media exposures,” he opined.

The debate around gaming underscores a larger tension within Islamic finance as it engages with rapidly evolving digital industries. Business models often outpace regulatory frameworks and scholarly guidance.

From a Shariah perspective, recreation may be generally permissible in principle, Malik noted, but scholars also weigh broader social effects, including addiction and misuse of time.

For now, Shariah compliant exposure to gaming is likely to remain selective and heavily scrutinized – an uneasy fit for a sector built on scale, speed and constant reinvention.