Real money gaming app Fantok has halted operations, as the government's decision to retain the 28% Goods and Services Tax levy on online gaming revenue continues to claim victims.
"Over the past few months, our dedicated team has worked tirelessly to create an engaging platform in the prediction market...However, the journey has been met with a unique set of challenges. The evolving landscape of regulatory measures in the real money gaming sector in India, as announced earlier this year, has presented complex legal hurdles that have forced us to reevaluate our direction," the company said in a statement.
Fantok's legal advisors have indicated that the current environment creates uncertainties that it can't ignore, it said. "The recent imposition of a 28% GST on the entire realized amount, coupled with high TDS and issues related to payment gateways, has further compounded these challenges. Additionally, the substantial cost of customer conversion has placed a significant strain on our resources," Fantok said.
"In light of these circumstances, we have made the difficult decision to temporarily suspend operations at Fantok. This pause will allow us the time needed to explore a pivot that aligns with both the evolving regulatory landscape and our mission to deliver meaningful experiences."
Gurugram-based Fantok was started in 2022 by Ronak Ahuja, Prakhar Saxena and Ashok Vishwakarma. It claims to have over 15,000 downloads within just three months and a community of more than 130 creators.
Fantok is at least the third startup that has either halted operations or laid off staff after the 28% tax levy. Earlier this month, Mobile Premier League and Hike's Rush Gaming cut large parts of their workforce as cost-cutting measures. MPL had fired as many as 350 employees, while Rush laid off about 55 employees.
The decision to levy the tax on gross gaming revenue was met with backlash from gaming companies. Roland Landers, chief executive officer at the All India Gaming Federation, had called the decision "unconstitutional, irrational, and egregious".
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