Dream11’s FY23 Revenue Crosses INR 6,000 Cr Mark; Profit Jumps 32% To INR 188 Cr

Fantasy gaming unicorn Dream11 has posted a 32% surge in its net profit to INR 187.83 Cr in the financial year 2022-2023 (FY23) from INR 141.97 Cr in the previous fiscal year.

The company, founded by Harsh Jain and Bhavit Sheth in 2008, logged a 66% jump in its operating revenue to INR 6,384.49 Cr in FY23 from INR 3,840.75 Cr in the previous financial year.

It is pertinent to mention here that Dream11 earns revenue from fantasy gaming business and sale of goods. For fantasy sports business, the group recognises the platform fee received from users as revenue, also known as gross gaming revenue (GGR).

The gaming unicorn’s total income saw a 62% rise, reaching INR 6,580.84 Cr in FY23, as compared to INR 4,065.03 Cr in the previous fiscal year.

Dream11’s Expenses In FY23

In line with its growing business, Dream 11’s total expenses increased 55% to INR 5,838.73 Cr in FY23 from INR 3,762.4 Cr in the previous financial year.

Employee Cost: The gaming company’s expenditure towards employee benefit expenses surged 132% to INR 1,154.1 Cr in FY23 from INR 496.5 Cr in the previous fiscal year. The startup spent INR 452.1 Cr for salaries and wages, whereas its other employee-related expenses stood at INR 629.18 Cr in FY23.

Advertising Promotional Cost: For Dream11, other expenses accounted for INR 4,574.25 Cr in FY23. The gaming unicorn spent INR 2,963.87 Cr for advertising promotional purposes, which is a 37% jump as compared to INR 2,158.3 Cr in the previous fiscal year.

GST Threat Looms

Dream11’s ROC filings mentioned that it had received a show cause notice of INR 28,294.19 Cr under Section 74 of the Central Goods and Service Tax Act, 2017 in September 2023 from the Directorate General of GSTIntelligence, Mumbai ( DGGI ).

The notice covers the period from July 1, 2017, to March 31, 2023, stating that the company’s online Fantasy Sports, which covers betting, should be subjected to GST. So, instead of applying GST at the rate of 18% on the platform fees, the notice said that the tax should be levied at a higher rate of 28% on the entire contest entry amount.

“The management proposes to contest this demand and is in process of filing the responses
With the authorities, and based on the legal views obtained, is confident of successfully defending its position and does not envisage any adverse financial consequences arising from the said show cause cum demand notice,” the filing said.

The problems began after the GST Council raised the tax imposed for real money games to 28% in July this year, which is now to be levied on gross revenue or total prize pool. The amended provision came into effect from October 1.

Although large players like Dream11 have been bearing the brunt of additional GST till now, they are expected to see a sharp decline in growth and revenue once they start charging users the additional fee. To survive in the changing scenario, many players are trying to diversify their business.

Last year, Dream Game Studios, owned by Dream11 parent Dream Sports, launched its first mobile game in India and Pakistan, Bangladesh.