MPL Reacts to 28% Gaming Tax with 50% Workforce Cut

MPL

Mobile Premier League (MPL), a domestically grown online gaming platform, has made a significant reduction in its workforce, affecting approximately 350 jobs. This decision comes in the wake of the 51st GST Council meeting’s unwavering stance on imposing a 28% Gaming Tax on gross value collected from online gaming.

As per a report by TechCrunch on Tuesday, the startup based in Bengaluru initially unveiled its job-cutting plans to its employees last week. Subsequently, it formally communicated these changes to the impacted employees.

Sai Srinivas, the founder, and CEO of MPL, penned an internal email explaining the rationale behind these measures. He highlighted that, being a digital enterprise, a substantial portion of their variable costs is linked to personnel, server, and office infrastructure. To ensure the company’s viability and survival, steps were imperative to curtail these expenses.

The layoffs within MPL coincide with the government’s resolute decision to levy a 28 percent tax on online gaming. Industry participants have expressed dissatisfaction, contending that imposing GST on deposits rather than the technology platform commission imposed by companies will render the unit economics unfeasible, severely impacting 80 percent of the sector.

The repercussions of this will largely affect micro, small, and medium-sized enterprises (MSMEs) as well as startups that champion innovative business models.

In a joint statement, the Federation of Indian Fantasy Sports and E-Gaming Federation articulated that the new tax structure, while aiming to provide clarity and resolve uncertainties, will result in an onerous 350 percent increase in GST, setting back the Indian online gaming industry by several years.

There is a silver lining as the GST Council has committed to revisiting tax rates and valuations six months after the implementation of these amendments, offering a glimmer of hope for the industry’s future.

DONT MISS  Honor Pad 5 launched in India: Features, Specifications and Price

Among MPL’s investors are Peak XV, Times Internet, MSA Novo, Crown Capital, Composite Capital, and Moore Strategic Ventures. Despite being one of the most esteemed gaming platforms, MPL faced losses amounting to approximately $149.3 million in FY22, experiencing a threefold increase from $48.3 million in FY21.

Established in 2018, MPL orchestrates a multitude of tournaments every month and boasts the trust of over 90 million registered users spanning India, Indonesia, Europe, and the US.

Anand Narayanaswamy is the editor-in-chief of Netans. He was recognized as a Microsoft Most Valuable Professional (MVP) for 9 years (2002 to 2011) and again as a Microsoft MVP in Surface under Windows and Devices in January 2024. He worked as a Chief Technical Editor with ASPAlliance and was part of ASPInsider program. Anand has published several articles and reviews related to various software and hardware products for various software and technology related websites. He is also active on social media and also participates as an Influencer for various brands. Anand can be reached at admin@netans.com