• Notification Date: 25-08-2023
  • Notification No: N/A

Real Money Gaming Startup ‘Fantok’ halts Operations after 28% GST Rule

Real money gaming app ‘Fantok’ has announced a temporary suspension of its operations, becoming another casualty of the GST Council’s decision to retain 28% tax on online real-money games. 

Earlier this month, Mobile Premier League and Spartan Poker laid off 350 and 125 employees respectively. While Spartan Poker did not comment officially, MPL said that the new rules will increase its tax burden by as much as 350-400%. Hike Rush Gaming Universe also fired 22% of its workforce. Recently, crypto gaming platform One World Nation (OWN) and gaming startup Quizy temporarily shut their operations citing GST regulation in the country. 

“The imposition of a 28% Goods and Services Tax (GST) on the entire realized amount, along with high Tax Deducted at Source (TDS) requirements and challenges related to payment gateways, have compounded the operational challenges faced by the company,” Fantok said in a statement. 

Founded by Ronak Ahuja, Prakhar Saxena and Ashok Vishwakarma in 2022, bootstrapped Fantok is a real money gaming app focused on prediction markets. The Gurugram-based company claims to have amassed over 15,000 downloads within just three months, and a community of more than 130 creators who contributed games to the platform with a trade volume of over $120k. 

“Our decision to temporarily suspend operations underscores our commitment to operating within a legal and compliant framework while exploring new avenues for growth. This pause will enable us to navigate these challenges thoughtfully and consider strategic pivots that align with the evolving landscape,” Ahuja said in a statement. 

The company also added that it will continue to engage with stakeholders, evaluate market dynamics, and assess regulatory developments to determine the best path forward. 

The decision to impose 28% GST on online real money gaming has already caused a stir among the gaming community. Last month, gaming companies including Nazara Technologies, Baazi Games, and Winzo Games, industry body: All India Gaming Federation, and around 30 investors also wrote to the government to reconsider its decision on imposing 28% GST on such platforms. However, the GST Council decided to continue with their decision, which may now force more companies to fire employees and shut down operations like Fantok and OWN in the future.