In a LinkedIn post, the startup said that the evolving regulatory landscape in the real money gaming sector has led to complex legal hurdles
The recent imposition of a 28% GST on the entire realised amount has further compounded these challenges, Fantok said
After the announcement of 28% GST, gaming unicorn MPL, other gaming startups such as Hike, and Spartan Poker laid off employees
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Real money gaming startup Fantok has suspended its operations following the recent decision of a 28% Goods and Services Tax (GST) on gaming startups.
In a LinkedIn post, the gaming startup said that the shifting regulatory environment for real money gaming in India has led to complicated legal challenges, compelling the company to reassess its future course.
“The recent imposition of a 28% GST on the entire realised amount, coupled with high TDS and issues related to payment gateways, has further compounded these challenges. Additionally, the substantial cost of customer conversion has placed a significant strain on our resources,” Fantok said.
“In light of these circumstances, we have made the difficult decision to temporarily suspend operations at Fantok. This pause will allow us the time needed to explore a pivot that aligns with both the evolving regulatory landscape and our mission to deliver meaningful experiences,” it added.
Founded in 2022 by Ronak Ahuja, Prakhar Saxena and Ashok Vishwakarma, the Gurugram-based Fantok is a social gaming platform for real money binary prediction games hosted by social media creators on short videos.
Within three months of its launch, Fantok had surpassed 15,000 downloads and amassed a community of over 130 creators.
Fantok is not the first gaming startup to be impacted by the 28% GST decision. Earlier this month, gaming unicorn Mobile Premier League (MPL) decided to slash 350 jobs. MPL cofounder and CEO Sai Srinivas told employees that the new levy has increased the tax burden on the company by as much as 350-400%.
Later, web3 gaming startup Hike slashed its workforce by 25% and online gaming platform Spartan Poker fired 125 employees.
Last month, the GST Council decided to levy 28% GST on online real-money gaming at full face value. The move came under heavy criticism from industry stakeholders, with many gaming startups, industry bodies and investors writing to the government seeking to rethink the decision.
On the last day of the Parliament Monsoon Session, the Lok Sabha approved the amendments to the Central and Integrated GST laws to levy 28% GST on the full face value of bets for online gaming, casinos and horse race clubs. Finance Minister Nirmala Sitharaman said after the last GST Council meeting that the decision to levy 28% GST on real-money gaming will be implemented from October 1 and will be reviewed six months after it comes into effect.
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