MPL Cuts 50% of Workforce Following India’s 28% Gaming Tax

Mobile Premier League (MPL), the Bengaluru-based gaming unicorn, is slashing its workforce by approximately 50%. The move, which impacts roughly 350 employees, comes as a direct response to the Indian government’s recent decision to impose a 28% indirect tax on the online real-money gaming sector.

The company, which boasts a valuation of $2.2 billion, confirmed the layoffs following internal communications sent to staff this week. Founder and CEO Sai Srinivas explained that the restructuring is a necessary measure to maintain business viability in the face of a significantly increased financial burden.

The Impact of New Taxation Rules

According to Srinivas, the new tax regime introduced by India’s Goods and Services Tax (GST) Council effectively increases the company’s tax liability by 350% to 400%. In an email to staff, the CEO noted that the company’s primary variable costs—personnel, server infrastructure, and office overhead—must be reduced to navigate the current climate.

The industry-wide tax hike has faced fierce pushback from major stakeholders. The All India Gaming Federation, representing companies like Gameskraft, Paytm First Games, and Dream11, has publicly condemned the policy as “unconstitutional, irrational, and egregious.”

Industry-Wide Financial Strain

The ripple effects of the tax change are being felt across the sector:

• Investor pushback: Major backers, including Peak XV, Tiger Global, and DST Global, have urged Prime Minister Narendra Modi to reconsider, warning of potential $2.5 billion in write-offs and the loss of 1 million jobs.
• Profit revisions: Industry giant Dream11 reportedly slashed its operating profit projections by 80% for the fiscal year ending March 2024, as reported by The Arc.
• Regulatory adjustments: While the government intends to implement the tax on October 1, the GST Council recently introduced a measure to partially alleviate concerns by taxing total deposits rather than individual bets.

Despite these minor adjustments, the government has shown no intention of rolling back the 28% tax. For MPL, which has raised $396 million from investors like Peak XV and Times Internet, the decision to cut staff was reached after extensive internal deliberation.

“We have spent a lot of time evaluating and re-evaluating this decision,” Srinivas stated in his correspondence to the team. “We believe that in uncertain times, the sooner we are able to deliver certainty to everyone, the better.”