First Casualty Of 28% GST: Gaming Platform MPL Fires 350 Employees

In what appears to be the first casualty of the GST Council’s decision to levy a 28% GST on real-money gaming, gaming unicorn Mobile Premier League (MPL) has decided to slash 350 jobs to cut down costs.

In an internal mail to employees, MPL cofounder and CEO Sai Srinivas said that the Peak XV Partners (formerly Sequoia India)-backed startup would lay off about 350 employees. As per the company’s LinkedIn profile, it has around 900 employees.

Placing the blame squarely on the levy of 28% GST on full face value for real-money gaming, Srinivas told employees that the new levy has increased the tax burden on the company by as much as 350-400%. 

“As a digital company, our variable costs predominantly involve people, server and office infrastructure… We have already initiated work on revisiting our server and office infrastructure costs. However, despite this, we will still have to reduce our people related costs. Regrettably, we will have to let go of around 350 of you,” said Srinivas. 

Terming the current times ‘uncertain’, Srinivas told employees that the company spent a ‘lot of time evaluating and re-evaluating’ the layoffs. He added that the unicorn eventually decided that ‘the sooner we are able to deliver certainty to everyone, the better’.

A mail sent by Inc42 to MPL seeking a comment on the latest development didn’t elicit any response till the time of publishing this story. 

Last month, the GST Council decided to impose a 28% GST on the amount being paid at the entry level for online gaming. Solidifying the move, Finance Minister Nirmala Sitharaman said earlier this month that the government is looking to amend the GST Act during the ongoing Monsoon Session of the Parliament, with an eye on effective implementation by October 1.

The move prompted huge hue and cry from all segments of the gaming ecosystem. Many termed the new taxation regime ‘unconstitutional’ and ‘irrational’, while others called for the revocation of the proposed mandates. 

A clutch of investors also wrote to the union government calling for the rollback of the 28% GST on online gaming, citing adverse impact on the local gaming industry. 

The new tax appears to have wreaked havoc at MPL, which, as per Srinivas’ internal mail, recorded its ‘best ever month in terms of business performance’ in June and subsequently in July. 

“As a business, one can prepare for a 50% or even a 100% increase (in tax burden), but adjusting to a sudden increase of this magnitude means we need to make some very tough decisions,” the mail said. 

Caught In A Storm

Curiously, this is not the first time that MPL has laid off employees. In May, the Bengaluru-based startup fired more than 100 employees and shut its Indonesia business.

Founded in 2018 by Sai Srinivas Kiran G and Shubham Malhotra, MPL offers a bouquet of offerings, including fantasy sports, sports games, puzzles, casual and board games. The startup turned unicorn in 2021 after raising a mega $150 Mn Series E funding round from the likes of Legatum Capital, Accrete Capital, among others, at a valuation of $2.3 Bn. 

However, the ongoing funding winter has affected MPL as well, like many other startups. The company was reported to be in talks with now-defunct crypto exchange FTX to raise a new round of investment but the deal failed to materialise. 

Meanwhile, its losses continue to mount. MPL’s loss zoomed 3X to $149.3 Mn in the financial year 2021-22 (FY22) from $48.3 Mn in FY21. Meanwhile, revenue from operations jumped only 29% to $65.6 Mn from $50.8 Mn in FY21.

The company has also been marred by legal cases with various state governments over the legality of online gaming and unclear regulations in the space. Meanwhile, competitors continue to be on the prowl. MPL competes with the likes of Dream11, WinZo Games, and Junglee Games. 

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