However, the company’s auditor SR Batliboi & Co, an affiliate of EY, has noted in Dream11’s financial statements that notices issued to the company by goods and services tax (GST) authorities seeking more than Rs 28,000 crore in past tax dues “may cast significant doubt on Group’s ability to continue as a going concern”.
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The Mumbai-based company is currently in the process of contesting the government’s tax demand.
In September, ET had reported that the Directorate General of GST Intelligence (DGGI) had issued notices worth Rs 55,000 crore to Dream11, Games 24×7 and Head Digital Works.
Following the new GST regime for online real money gaming getting implemented in October 2023, Dream11 expects a significant worsening of its financial performance. The company had revised its profit target for FY24 downwardly by 80% following the new GST rules.
Under the new tax regime, online real money gaming platforms are subjected to a 28% levy on full face value of bets placed, compared to 18% tax paid earlier on platform fee, or gross gaming revenue (GGR).
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GGR, which is a percentage of bets placed on the platform, is the only source of operating revenue for Dream11.During FY23, Dream11’s expense on advertising and promotions came in at Rs 2,964 crore, up 37% on year. A majority of the company’s spend on advertising happens during sporting tournaments such as Indian Premier League, and ICC cricket competitions such as the T20 World Cup that took place in October-November 2022. The company’s staff costs also increased more than two times during FY23 to Rs 1,154 crore.
Dream11 is the biggest fantasy sports platform in India by revenue. Bengaluru-based bootstrapped online gaming firm Gameskraft has reported revenue from operations of Rs 2,662 crore in FY23, up nearly 25%. Gameskraft’s net profit also rose 14.2% on-year to Rs 1,062 crore.
Similarly, ET reported on December 6 that Mobile Premier League (MPL) saw its net loss narrow significantly to $37.04 million in FY23, from $194.47 million in the previous year. MPL’s revenue grew 63% year-on-year amid a decline in expenses.