• Notification Date: 10-08-2023
  • Notification No: N/A

MPL Lays off Half of its Workforce after 28% GST on Online Gaming

Online gaming and fantasy sports unicorn Mobile Premier League is laying off 350 employees in a bid to survive 28 percent GST on online real-money games, Sai Srinivas, founder and CEO told employees in an internal note. The move will impact the Peak XV Partner-backed startup’s 50 percent of India workforce. 

Srinivas told the employees, “The new rules will increase our tax burden by as much as 350 percent-400 percent. As a business, one can prepare for a 50 percent or even a 100 percent increase, but adjusting to a sudden increase of magnitude means we need to make some very tough decisions.” 

“As a digital company, our variable costs predominantly involve people, server and office infrastructure. Therefore, we must take steps to bring these expenses down to survive and to ensure that the business remains viable,” the CEO added. 

“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.” 

This is the second round of layoffs at startup in about a year. MPL had handed pink slips to more than 100 people and exited the Indonesian market in May 2022. 

The GST Council has decided to continue with the 28 percent GST on online games, casinos and horse racing but this would be on the initial amount paid on the game and not on the total value of each bet placed. GST would not be applicable on the winnings which could be used to place further bets. Last week, Finance minister Nirmala Sitharaman said the decision will be reviewed after 6 months of its implementation or April 2024 by the GST Council to see if any change in rule is required. 

Calling the 28 percent GST on full value of online gaming a "killer blow", gaming industry experts have said that the GST council's decision was a retrograde step that will hurt the thriving sector and lead to job losses. 

E Gaming Federation (EGF) and Federation of Indian Fantasy Sports (FIFS) have stated that the 350 percent increase in GST would drag back the gaming industry.