MPL Lays Off 350 Employees After 28% GST On Online Gaming Setback
MPL is one of the first companies that has taken a cost-cutting measure ever since the 28% tax was retained by the GST Council.
The unicorn Mobile Premier League will lay off 350 employees, or about 50% of its workforce, after the government retained a 28% Goods and Services Tax levy on online gaming revenue.
"Last week, it was confirmed that a 28% GST will be levied on the full deposit valued, rather than on Gross Gaming Revenue. The new rules will increase our tax burden by as much as 350-400%," Sai Srinivas, founder and chief executive officer of MPL, told employees in an internal email viewed by BQ Prime.
"As a business, we can prepare for a 50% or even 100% increase, but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions," he said.
MPL is one of the first online real money gaming companies that has taken a cost-cutting measure ever since the tax was retained by the GST Council.
MPL had also fired around 100 employees in May 2022 amid the funding winter.
MPL didn't respond to queries sent by BQ Prime at the time of publishing.
The decision to levy 28% 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.
"With over 400% increase in GST liability, a vast majority of entrepreneurs ... would be disproportionately impacted with many of MSMEs and startups going out of business. Since the decision, multiple companies have announced their closure or widespread layoffs and we believe this trend will only increase in the coming months," an All India Gaming Federation spokesperson told BQ Prime.
"Unfortunately, the decision will result in an 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, though, even their revenues and valuations will significantly fall," the spokesperson said.
