MPL lays off 350 employees amid no respite from GST on real-money games

Mobile Premier League (MPL) has laid off 350 employees days after the GST Council decided to retain 28% tax on online real-money games. 

“Last week, it was confirmed that a 28% GST will be levied on the full deposit value rather than on Gross Gaming Revenue. The new rules will increase our tax burden by as much as 350-400%. 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,” Sai Srinivas, founder and CEO of MPL, said in an email to the company employees. Entrackr has reviewed the email.

According to Srinivas, the firm’s variable costs predominantly involve people, server and office infrastructure and it must cut down these expenditures to survive and ensure business viability.

The firing was investible ever since 28% GST announced by the government on online real money games. The new tax structure is expected to be implemented from October 1. This is the second layoff for the Bengaluru-based company in the past 15 months.

In May 2022, it sacked around 100 employees and also announced its exit from the Indonesian market. The company turned unicorn in September 2021 at a valuation of $2.3 billion. Entrackr was first to report the development.

Srinivas further said  that the company has turned EBITDA positive since December last year. While MPL is yet to file its audited financial statement for FY23, the company’s losses soared 202% to Rs 1,122 crore in FY22 against 28.9% jump in revenue to Rs 497 crore in the fiscal year ending March 2022.

Ever since the introduction of the new GST structure, the real money gaming ecosystem in India has been vehemently voicing against it. Besides various gaming companies including Nazara Technologies, Baazi Games, and Winzo Games, industry body: All India Gaming Federation, and around 30 investors also wrote to the government to reconsider its decision on imposing 28% GST on such platforms. However, the GST Council did not provide any immediate relief to these companies and said that it may review the taxation structure on online games after six to eight months.