India’s online gaming and fantasy sports startups have been hit hard by the recent increase in GST, resulting in layoffs across the industry. Following Mobile Premier League’s reported layoff of 50% of its workforce, Hike, the owner of Rush Gaming Universe, has laid off around 22% of its employees. The layoffs at Hike were necessary to absorb the impact of the GST hike on online gaming, which led to a 400% increase in taxes. Hike’s CEO, Kavin Bharti Mittal, stated that despite the business being in good shape, the GST increase is a major challenge.
Hike’s investors include Tencent, Foxconn, Bharti Group, Tribe Capital, Flipkart co-founder Binny Bansal, entrepreneur Bhavin Turakhia, and Cred Founder Kunal Shah. With 5.2 million monthly active users, the gaming platform distributes over $308 million to winners annually.
In addition to Hike and Mobile Premier League, smaller gaming startups like Quizy have also announced closures due to the increased taxation. In a memo to employees, MPL’s founder and CEO, Sai Srinivas, expressed the need to make difficult decisions to adjust to the significant increase in taxes and ensure the company’s viability.
The recent decision by the GST Council to impose 28% taxation on total deposits for playing online games, rather than individual bets, offers little relief to affected companies. However, the council has announced that it will review this decision within the next six months. The increased GST will be implemented from October 1st.
