Delta Corp investors lose Rs 1,321 crore as gaming and casino stock slips another 10%
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The crash in Delta Corp Ltd shares in early deals today led to a decline in the market capitalisation of the gaming and casino firm by Rs 1,321.45 crore. Market cap of Delta Corp fell to Rs 5287.14 crore today against Rs 6608.59 crore in the last session. The correction in the stock came after the GST Council decided to levy a 28 per cent GST on online gaming, horse racing, and casinos. The decision sparked instant outrage from the online gaming industry. Delta Corp is engaged in the operation of casinos business. Its segments include real estate, online gaming, hospitality and others.
The decision to raise GST by 10% online gaming shattered investor sentiment for the online gaming firm. Currently, online gaming platforms pay 18 percent GST on the platform fees. The charge is also known as Gross Gaming Revenue (GGR) and not on the full value of the transaction, also known as Contest Entry Amount (CEA).This is the fees charged by online gaming portals.
Subsequently, shares of Delta Corp hit the lower circuit of 10% at Rs 222.15 in early deals today against the previous close of Rs 246.80 on BSE. The stock opened lower at Rs 222.15 on BSE.
Later, due to increased selling pressure, the stock hit the lower circuit of 20% at Rs 197.45 on BSE. Total 2.13 lakh shares of the firm changed hands amounting to a turnover of Rs 4.46 crore. However, the stock is still up 10 per cent in one year but lost 8.31 per cent since the beginning of this year.
In terms of technicals, the relative strength index (RSI) of Delta Corp stands at 53.1, signaling it's trading neither in oversold nor in the overbought zone. Delta Corp stock has a one-year beta of 1, indicating average volatility during the period.
"We have offered exemption on GST for satellite launch services provided by private organisations. Online gaming, horse racing and casinos will be taxed at 28% (all three activities) and they will be taxed on full face value," said Union Finance Minister Nirmala Sitharaman.
Kishore Kumar, Lead, Indirect Tax, Taxmann said, “India's gaming industry, which has witnessed a remarkable growth in recent times and is growing at a CAGR of 28-30% is saddled with the decision taken in the 50th GST Council Meeting with regard to its taxability.
India is probably the only Country to levy GST on full face value on all categories of online games. The blanket proposal to levy GST on full face value on online gaming will possibly put an end to the sub-judice debate of ‘game of skill’ vs ‘game of chance. This change will bring game of skill at par with wagering contracts which are in the nature of gambling and betting. From a revenue perspective, the proposed amendment may significantly contribute to the Government exchequer and will make states like Goa and Sikkim important from revenue generation perspective. This change will require host of amendments under the GST law especially with respect to the definition and taxability of actionable claims under GST. What remains to be seen is whether this change is going to apply prospectively or have a retrospective impact.”
Delta Corp operates its gaming and hospitality businesses under the DELTIN brand. The company owns three casinos in Goa, including Deltin Royale, Deltin JAQK and Deltin Caravela.
