Dream11 Profit Up 32%, Top Line Surges 66% In FY23
Sporta Technologies Pvt.'s revenue and profit rose in fiscal 2023, amid an increasingly volatile environment for fantasy gaming companies.
The Dream11 operator posted consolidated revenue from operations of Rs 6,384.5 crore in the last fiscal, in comparison with Rs 3,840.7 crore in fiscal 2022. Its profit increased to Rs 187.8 crore from Rs 142 crore, according to filings sourced via TheKredible.
Dream11's expenses ballooned to Rs 5,838.7 crore in fiscal 2023 from Rs 3,762.4 crore, but its scale helped maintain profitability and even expand the bottom line.
In its earnings, the fantasy sports company also mentioned the receipt of a show cause-cum-demand notice of Rs 28,294.2 crore, pertaining to the period between July 2017 and March 2023, under the Goods and Services Tax Act.
"The management proposes to contest this demand and is in the process of filing a response with the authorities," it said. "Given the group's financial position, as of March 31, 2023, this indicates the existence of a material uncertainty, which may cast significant doubt on the group's ability to continue."
"The management is of the view that the current business model of the company does not involve gambling, betting, or wagering and believes that the show-cause notice received from the GST department lacks legal sustainability in line with the recent modifications in the CGST and IGST Act," Dream11 said.
It also highlighted amendments to the IT Rules, which directed online games to not involve wagering on any outcome while requiring verification from self-regulatory bodies that haven't been notified by the Ministry of Electronics and Information Technology. "The holding company continued operations as its online gaming model is dependent on receiving such certification from the self-regulatory bodies."
Real-money gaming companies were hit after the Union government decided to retain the 28% GST on online gaming revenue last August. The app Fantok halted operations, while Mobile Premier League and Hike's Rush Gaming cut large parts of their workforce as cost-cutting measures.
The decision to levy the tax on gross gaming revenue was met with a backlash from gaming companies. Roland Landers, chief executive officer at the All India Gaming Federation, had called the decision "unconstitutional, irrational, and egregious."
While Dream11's financials came in stronger, it is to be seen how the tax levy impacts its numbers in the current fiscal.
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