Online real money gaming company Mobile Premier League (MPL) is laying off 350 of its staffers, citing increased costs due to an impending rise in goods and services tax (GST).
In an email to employees on August 8, MPL cofounder and chief executive Sai Srinivas said the 28% GST levy “will increase our tax burden by as much as 350-400%.” This, he said, had made it imperative for the company to take “some very tough decisions.”
Times Internet, which is a part of the Times Group that publishes ET, is an investor in MPL.
The company’s variable costs mainly involve people, server and office infrastructure, which would have to be brought down to keep the business viable, he said.
Despite initiating work on trimming server and office infrastructure costs, people-related costs would still have to be cut, and the company would have to “let go of around 350 of you,” the email said.
The GST council on July 11 decided to impose a 28% tax on online gaming at full face value. This came as a surprise to the gaming industry, which had been batting for the tax to be levied on the GGR, or the platform fee, charged to users.
Following the announcement, stakeholders of the online gaming industry, including companies and investors, made multiple appeals to the government, urging a relook into the new tax rules.
While the new tax regime is yet to kick in, the industry expects a manifold rise in tax costs once the 28% levy is imposed. Investors backing online real money gaming companies have also said that the decision could lead to a potential write-off of the $2.5 billion capital invested in the sector.