Mobile Premier League, a unicorn startup, will lay off 350 employees, or about half of its workforce after the government decides to retain a 28% Goods and Services Tax (GST) on online gaming revenue.
Sai Srinivasan, founder and chief executive officer of Mobile Premier League (MPL), told employees in an internal email viewed by BQ Prime that the government's decision to levy a 28% GST on the full deposit value of online gaming, rather than on gross gaming revenue, would increase the company's tax burden by as much as 350-400%.
Sai Srinivasan said that as a business, MPL can prepare for a 50% or even 100% increase in taxes, but adjusting to a sudden increase of 350-400% is not possible without making some tough decisions. MPL is one of the first online real money gaming companies to take a cost-cutting measure after the GST Council retained the tax. In May 2022, MPL also fired around 100 employees amid the funding win.
The decision to levy a 28% GST on gross gaming revenue was met with widespread criticism from the online gaming industry. An All India Gaming Federation spokesperson told BQ Prime that the 400% increase in GST liability would disproportionately impact a vast majority of entrepreneurs, with many MSMEs and startups going out of business.
The spokesperson added that since the decision, multiple companies have announced their closure or widespread layoffs, and they believe this trend will only increase in the coming months. Even these companies will see their revenues and valuations significantly fall.