Fantasy sports and online gaming unicorn Mobile Premier League’s founder and CEO Sai Srinivas informed staff members in an internal memo that the organisation is laying off 350 employees in an effort to withstand the 28 per cent GST on online real-money games. The decision will have an impact on the startup’s 50 per cent Indian employees, which is backed by Peak XV Partners.
“The new rules will increase our tax burden by as much as 350-400 per cent,” Srinivas said in the email. “As a business, one can prepare for a 50 per cent or even a 100 per cent increase, but adjusting to a sudden increase of magnitude means we need to make some very tough decisions.”
He added, “As a digital company, our variable costs predominantly involve people, servers and office infrastructure. Therefore, we must take steps to bring these expenses down in order to survive and ensure that the business remains viable. However, despite this, we will still have to reduce our people-related costs. Regrettably, we will have to let go of around 350 of you.”
Previously, the company laid off around 100 employees before exiting the Indonesian market in May 2022.
The GST Council has opted to keep the current 28 per cent GST rate on online games, casinos, and horse racing; however, this rate will only apply to the initial payment made for the game, not to the sum of all bets made. The gains, which might be utilised to make more bets, are exempted from GST. The decision will be reviewed by the GST Council six months after it is put into effect, or in April 2024, according to last week’s statement from finance minister Nirmala Sitharaman, to see whether any changes in rules are necessary.
MPL launched in 2018 and its investors include Times Internet, MSA Novo, Crown Capital, Composite Capital and Moore Strategic Ventures apart from Peak XV Partners.