India's Gaming Industry Reels: MPL Cuts 350 Jobs as Steep New Tax Bites

In a significant blow to India's burgeoning online gaming sector, Mobile Premier League (MPL), one of the country's leading gaming platforms, has announced the layoff of 350 employees. This drastic measure comes in the wake of the Indian government's controversial decision to impose a hefty 28% Goods and Services Tax (GST) on the full value of bets placed in online gaming, a policy that took effect on October 1st.

The job cuts represent a substantial portion of MPL's workforce and underscore the severe financial strain the new tax regime is placing on the industry.

MPL's CEO, Sai Srinivas, communicated the grim reality in an internal email to staff, stating that the tax would inflate the company's tax burden by an astonishing 350% to 400%. This exponential increase makes the current operational model unsustainable, forcing companies to undertake painful restructuring.

Srinivas elaborated on the implications, highlighting that while a 50% increase in tax might be manageable, a quadrupling of the tax burden leaves businesses with few viable options other than cost-cutting, with employee layoffs often being an unavoidable consequence.

Beyond the domestic layoffs, MPL is also reportedly shutting down its operations in Indonesia, further consolidating its global footprint in response to economic pressures.

MPL is not an isolated case. The ripple effects of the new GST policy are being felt across the entire Indian online gaming ecosystem.

Other prominent players, including poker platform Spartan Poker and fantasy sports company Gameskraft, have also announced significant layoffs, signaling a broader industry contraction. The All India Gaming Federation, an industry body, had previously warned the government about the potential for widespread job losses and the unfortunate possibility of legitimate businesses being driven to offshore, unregulated platforms due to the prohibitive tax rates.

The government, however, has maintained its stance, clarifying that the 28% GST is levied on "actionable claims" and not specifically on games of skill.

This distinction, while legally framed, has done little to assuage the fears of an industry that was once touted as a high-growth sector attracting substantial foreign and domestic investment. MPL itself has garnered significant backing from major investors such as Peak XV Partners (formerly Sequoia Capital India) and China's Tencent, making the current crisis particularly concerning for its stakeholders.

The new tax policy's implementation, intended to regulate and generate revenue from the online gaming space, appears to have inadvertently triggered a period of uncertainty and retrenchment.

As companies scramble to adapt to the dramatically altered financial landscape, the future of India's vibrant online gaming industry, and the thousands of jobs it supports, hangs precariously in the balance.