Hike's Rush Gaming Cuts 22% Workforce After 28% GST Levy
Hike used to be a messaging app and had raised about $260 million in funding, but pivoted to real-money gaming in 2021.
Rush Gaming Universe—a casual skill gaming app from Kavin Bharti Mittal's Hike—has laid off 55 employees, or about 22% of its workforce, as the government's decision to retain a 28% Goods and Services Tax levy on online gaming revenue has hit startups.
"Business is in the best shape ever, but this 400% increase in GST is a bazooka pointed at us. We'll need to absorb some of it," Mittal said in a statement. About 24 of the 55 laid-off employees were in non-full-time roles.
The 51st GST Council has recommended that a 28% tax be levied on face value for online games, horse racing, and actionable claims in casinos at the entry level.
Mittal's Hike used to be a messaging app and had raised about $260 million in funding, but pivoted to real-money gaming in 2021.
Earlier this month, Mobile Premiere League became the first online real-money gaming company to take a cost-cutting measure since the tax was retained by the GST Council. It had fired as many as 350 employees and said that the new rules would lead to an increase in their tax burden by as much as 350–400%.
The decision to levy the tax on gross gaming revenue was met with backlash from nearly all gaming companies. Roland Landers, chief executive officer at the All India Gaming Federation, had called the decision "unconstitutional, irrational, and egregious" in July.
"Unfortunately, the decision will result in the emergence of an oligopolistic market. Only a few established and well-entrenched companies will be able to scrape through this change by using their existing capital reserves; even their revenues and valuations will significantly fall," an AIGF spokesperson said.
