The Directorate General of GST Intelligence issued notices worth Rs 55,000 crore to three online gaming companies, Dream11, Games 24x7 and Head Digital Works, according to a report published on January 19, 20241. Dream11 alone faces a demand for more than Rs 28,000 crore in past tax dues1.
Dream11's auditor, EY affiliate SR Batliboi & Co, wrote in the company's financial statements that the demand "may cast significant doubt on (the) group's ability to continue as a going concern"1. In accounting, a going concern is an entity with enough resources to keep operating and avoid bankruptcy for the foreseeable future1. The Tiger Global-backed company has contested the tax demand1.
The notices followed a change in how India taxes online real money games. From October 2023, platforms are subject to a 28% levy on the full face value of bets placed, compared with the 18% tax paid earlier on the platform fee, or gross gaming revenue1. Dream11 has said GGR, a percentage of bets placed on its platform, is its only source of operating revenue1. After the new regime took effect, Dream11 projected a significant worsening of its financial performance and cut its profit target for FY24 by 80%1.
Dream11's filings show a 32% increase in net profit and a 66% jump in operating revenue for fiscal 20231. It posted a profit of Rs 188 crore on revenue of Rs 6,384 crore for the year ended March 31, 20231. Advertising and promotion spending came in at Rs 2,964 crore, up 37%, and staff costs more than doubled to Rs 1,154 crore1. Dream11 is the biggest fantasy sports platform in India by revenue1.
Other Indian gaming firms also reported FY23 results.
| Company | Revenue from operations | Net result |
|---|---|---|
| Gameskraft | Rs 2,662 crore, up nearly 25% | Net profit up 14.2% to Rs 1,062 crore1 |
| Mobile Premier League | Revenue up 63% | Narrower loss of $37.04 million, against $194.47 million the previous year, with expenses down1 |
"the Directorate General of GST Intelligence had issued notices worth Rs 55,000 crore to Dream11, Games 24x7 and Head Digital Works"
What it means for players
The notices concern tax the government says is owed on past bets, not the legality of the games themselves. India's rules on what gambling is permitted, and how games of skill are treated differently from games of chance, are set out in our guide to gambling in India and our explainer on games of skill vs games of chance. The 28% levy applies to the full face value of bets placed on online real money games, not to the platform's commission, which is the basis Dream11 says it previously paid tax on1. How much of that cost a platform passes on to players through entry fees, and whether contests remain available at current prices, has not been reported. The dispute itself is between the companies and the tax authority; the notices do not change what players may or may not do under state and central gambling law, which is covered in our gambling law overview for Asia.
What happens next
Dream11 has contested the demand1. No hearing date, appeal outcome or payment deadline has been reported. Dream Sports, Dream11's parent company, has said it will look at investments in sports and related sectors such as sports commerce, content, experiences, fitness and healthtech to widen its revenue streams, according to cofounder and CEO Harsh Jain1.
Sources1 sources
- dream11 fy23 revenue: Dream11 posts higher profit, revenue; auditor flags risk from GST demand - The Economic Times, economictimes.indiatimes.com
