Shares of Indian casino and online gaming cos plummet
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The imposition of a 28 percent tax on the money collected from customers by Indian gaming companies, including online gaming firms and casino operators, has had a significant impact on the industry.
This move, announced by India’s Goods and Services Tax (GST) Council, has resulted in a substantial decline in the value of shares for companies such as Delta Corp, Nazara Technologies, and Onmobile Global.
The online gaming sector, valued at $1.5 billion, is expected to see a decline in earnings due to the additional tax burden. Previously, these companies were only required to pay a small tax on the fees charged for real-money games. However, with the new regulation, they will have to pay a 28 percent tax on the entire amount collected from players. This change is likely to lead to increased charges for customers, as companies pass on the additional costs.
Nazara Technologies, which licenses games for children’s brands, experienced a 2.6 percent drop in its stock value.
Onmobile Global also saw a 1.1 percent decline, after initially falling as much as 14 percent and 9 percent, respectively.
Nazara Technologies expects minimal revenue impact as the new tax rule will only apply to its skill-based real-money games, which accounted for 5.2 percent of its revenue last year.
Onmobile, on the other hand, did not respond to Reuters’ request for comment.
The casino operators, including Delta Corp, are expected to be affected by the new tax. The 28 percent tax will be applicable to the value of chips purchased by individuals before playing. Delta Corp, which owns casinos in Goa and Sikkim and operates online poker sites, experienced a significant decrease in stock value, closing down approximately 23 percent.
The impact of this tax extends beyond online gaming firms and casino operators. Large start-ups such as Dream11 and Mobile Premier League (MPL) are likely to suffer as well. Dream11, valued at $8 billion and the lead sponsor of India’s national cricket team, and MPL both declined to comment on the situation. The upfront fees in mobile gaming will be subject to taxation on the customer end, which could lead to a decline in the valuation of these companies in private markets.
Overall, the imposition of a 28 percent tax on the money collected from customers by Indian gaming companies is expected to have a negative impact on the industry. The additional tax burden will likely affect earnings, lead to increased charges for customers, and potentially result in a decline in the valuation of affected companies.
