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Real-money online gaming sector sees consolidation phase amid 28% GST rule


The Indian real-money online gaming players are grappling with the new 28 per cent GST regime, which does not differentiate between games of skill and games of chances, that have led to a consolidation wave in the industry, say industry players.

On July 11, the GST Council announced the decision to levy a 28 per cent tax on the full face value. In another meeting on August 2, the council clarified that the taxation will be applicable on the deposits made by players to participate in a game, thus avoiding repetitive tax when they use their winning money to play more games.

Some of the top real-money online gaming firms are seeing acquihire opportunities from other players in the industry, according to industry players.

“There is likelihood of consolidation as some of the top players in the sector who have enough cash in the bank could absorb other smaller players,” said a spokesperson of the All India Gaming Federation (AIGF).

There will be opportunities of acquihire too, said another industry player requesting anonymity. The top companies are looking at opportunities to acquire the brand and the user base.

“Industry players will look to acquire more users to expand operations, however, they would not retain the talent. We can expect more layoffs in the industry,” said the industry player,

Layoffs, shutdown

Earlier this month, unicorn online gaming company Mobile Premier League (MPL) laid off 350 employees — nearly 50 per cent of its workforce, while Spartan Poker laid off 125 employees and Hike Rush Gaming Universe also reduced its workforce by 22 per cent.

Other firms — crypto gaming platform One World Nation and gaming start-up Quizy have temporarily shut their operations.

The online skill gaming sector with a $20 billion enterprise valuation, $2.5 billion in revenue, and $1 billion in annual taxes, is set to grow by 30 per cent CAGR to reach $5 billion in revenue by 2025, according to industry estimates.

India’s gaming industry attracted $575 million in investments between 2014 and 2020. However, in 2021 and Q1 of 2022 alone, $1.7 billion was invested in the online skill gaming sector.

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