Layoffs and shutdowns as GST chars real-money gaming companies

economictimes.indiatimes.com:

Consider this: Bengaluru-based unicorn Mobile Premier League (MPL) has laid off 350 employees, citing the additional tax burden. Kavin Bharti Mittal’s Rush Gaming Universe also has sacked 55 staffers, representing almost a fourth of its workforce, anticipating impact from the GST move. Many smaller firms are either shutting down or looking to get consolidated with larger platforms.

Venture capital firms that were in midst of fundraise discussions with some real money gaming companies are now looking to deploy their funds in other segments within gaming not affected by the GST decision. Investors are estimating deep valuation cuts for larger players in the ecosystem. “We’re expecting deep valuation cuts for all the players in the ecosystem, and it will be exacerbated by the broader lack of liquidity and venture interest in the market,” said Rajeev Suri, managing partner of Orios Venture Partners.

“Moreover, venture capital is moving towards more stable businesses that have a clear emphasis on top line and bottom line resilience… The sector (real money gaming) might have great cash flows but the regulatory risks will put off private equity… The headwinds are very strong,” Suri told ET. Orios is an investor in Gurgaon-based real money gaming startup Zupee. In a move that surprised the industry, the GST Council on July 11 decided to impose 28% tax on the full face value, instead of levying it on gross gaming revenue (GGR), or platform fee, as companies had sought.