However, the company’s auditor, SR Batliboi & Co, has noted in Dream11’s financial statements that notices issued to the firm by goods and services tax (GST) authorities seeking more than Rs 28,000 crore in tax dues “may cast significant doubt on the group’s ability to continue as a going concern.”
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 amounting to Rs 55,000 crore to Dream11, Games 24×7 and Head Digital Works.
Following the implementation of the new GST regime for online real money gaming firms in October 2023, Dream11 expects its financial performance to worsen significantly. 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 the full face value of bets placed, compared to the 18% tax paid earlier on the platform fee, or gross gaming revenue (GGR).
Discover the stories of your interest
GGR, which is a percentage of bets placed on the platform, is the only source of operating revenue for Dream11.During FY23, Dream11’s expenses on advertising and promotions stood at Rs 2,964 crore, up 37% on year. A majority of its advertising spend happens during sporting events such as the Indian Premier League and the T20 World Cup. The company’s staff costs also more than doubled 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.