Karnataka Gambling Ban: No Significant Impact On Delta Corp's Online Skill Gaming Business
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Online skill gaming has been a key growth area for the company in recent quarters, as the company's core businesses like its casino and hospitality business was severely impacted by Covid-19 induced lockdowns.
October 13, 2021 / 05:07 PM IST
Ace investor Rakesh Jhunjhunwala-backed casino and hospitality firm Delta Corp doesn't expect Karnataka's recent gambling ban to have an impact on its online skill gaming operations.
Delta Corp currently operates an online poker site Adda52 and rummy platform Adda52Rummy through its subsidiary Gaussian Networks. Earlier this year, it launched a multi-game destination called Adda Games that offers fantasy sports and card games.
Moneycontrol was the first to report on October 6 that several gaming platforms including Adda52, MPL, Games24x7 (RummyCircle, My11Circle), Ace2Three, and RummyCulture among others started blocking access to residents in Karnataka after the state government notified the online gambling law with immediate effect on October 5. Fantasy sports major Dream11 also suspended operations on October 10.
Several of these gaming platforms have approached the Karnataka High Court appealing against the state's online gambling law, Moneycontrol reported on October 10.
Responding to a shareholder query on the impact of Karnataka's recent gambling ban and share of online revenue from the market at the company's earnings conference call on Tuesday, Delta Corp group CFO Hardik Dhebar said, "I don't think we have a contribution of more than 7-10% at best (to Adda52). It's not a large number that we are looking at from Karnataka at this point of time."
Growth of online skill gaming business
Online skill gaming has been a key growth area for the company in recent quarters, as the company's core businesses like its casino and hospitality business was severely impacted by COVID-19 induced lockdowns due to which it had to suspend operations for several months this year and last year.
For the September-ended quarter (Q2-FY22), Delta Corp earned Rs 40.45 crore through its online skill gaming operations, down 9.3% from Rs 44.59 crore in the corresponding quarter last year. The segment however posted a loss of 0.08 crore during the quarter, as compared to a profit of Rs 1.27 crore in the same quarter last year.
For the full financial year ended March 2021 (FY21), Delta Corp had generated revenue of Rs 183.37 crore from its online skill gaming business, registering a 13.09% growth from Rs 162.14 crore in FY20. The segment accounted for 35.6% of the company's gross revenues for the fiscal.
During the earnings call, Dhebar said they have witnessed "a little bit of up and down on how the online businesses have behaved" in the financial year 2021 and the current fiscal.
"This is because online platforms including ours saw a very abnormal spike in the quarter of April-June 2020 when the lockdown was at its peak, and it was the strictest of lockdowns that any country would have seen. It was an aberration, since we have now seen things normalize," Dhebar said.
Dhebar said they clocked "some unprecedented numbers during the April-June 2020 quarter". However, things started easing off from July 2020 onwards and they saw a "tapering down effect on the revenue as far as the online space is concerned, since a lot of people started going back to other activities as businesses started opening up. This is something that happened with the entire industry".
Delta Corp has also used the past 18-20 months to build a "robust back end system" and streamline the team and the platform. Shivanandan Pare was elevated as the CEO of Gaussian Networks in January this year. He had joined the company in July last year as the CEO of Adda52Rummy.
"In addition to this, we have a new Chief Technology Officer, a new head of business and a new head of market intelligence and have done a lot of things to streamline the platform," Dhebar said.
Future focus areas
During the earnings conference call on October 12, Dhebar said while they continue to remain poker-focused, they are now investing in growing the multi-game platform along with the rummy platform.
"The multi-gaming platform Addagames and the rummy platform which is now dovetailed to the multi-gaming platform is going to act as a funnel to attract more registrations on the platform. Through this funnel, we will be able to get more people onto the poker website," Dhebar said.
He said this is crucial since unlike other skill-based games, poker is a little bit of a niche game.
"Not every person on the street can start playing poker overnight, he needs to learn the game, understand it and has to get excited about the game before he starts playing regularly." Dhebar noted during the earnings call. "Even if a small percentage of the crowd gets diverted onto playing poker, then the revenue and the profitability of the business will be coming back and it will be robust."
