MPL Lays Off 350 Employees After 28% GST On Online Gaming Setback

Gaming platform Mobile Premier League will lay off 350 employees as it takes steps to “survive” the 28% GST imposed on online gaming companies, according to an internal company mail on Tuesday.

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 the rule is required. 

During its recent meeting, the GST Council decided to apply a 28% GST rate to the complete face value of placed bets. This process aims to facilitate the incorporation of the legal changes by October 1. 

Sai Srinivas, one of the co-founders of MPL, conveyed via an employee email that it was confirmed last week that the new 28% GST rate would be imposed on the entire deposited amount, rather than on the Gross Gaming Revenue. 

He stated, ”Under these new regulations, our tax liability could surge by approximately 350% to 400%. While businesses can anticipate and adapt to a moderate increase of say 50% or even 100%, acclimating to an abrupt escalation of this magnitude necessitates us to make exceptionally challenging choices.”

He stated that being a digital company, our primary variable costs revolve around personnel, server, and office infrastructure. 

“However, even with these actions, we will still need to reduce costs associated with personnel. Sadly, we will have to make the difficult decision of letting go of around 350 employees. This process has been emotionally challenging as it affects many of our friends and colleagues,” expressed Srinivas. 

It is not clear how many employees the company currently has. MPL is backed by Peak XV, previously known as Sequoia Capital India. 

More than 100 gaming firms said in a letter to the finance ministry that the tax will stifle foreign investment and put USD 2.5 billion already invested in the sector at risk. 

This is the second round of layoffs at the Bengaluru-based startup in over a year. It had let go of more than 100 people and exited the Indonesian market in May 2022. 

Started in 2018 by Sai Srinivas and Shubh Malhotra, MPL offers over 60 games across categories such as daily fantasy sports, quizzing, board games, puzzle, and casual games on its Android and iOS apps. It also claims to have over 90 million registered users across Asia, Europe, and North America. 

Upon the government’s initial announcement of a 28% GST, certain Indian online gaming stocks such as OnMobile Global, Nazara Technologies, and Deta Corp exhibited negative market reactions. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.