India's gaming, casino firms slide on tax blow
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BENGALURU, July 12 (Reuters) - Shares of Indian casino operator Delta Corp (DELT.NS) lost over a fifth of their value on Wednesday, while online gaming firms also dropped after the country's tax authorities imposed a 28% tax on the money such companies collect from customers.
These companies will now have to pay a 28% tax on the entire amount collected from players, instead of the small tax on the fee they charged for real-money games until now.
The move, announced by India's Goods and Services Tax (GST) Council late on Tuesday, would sap the earnings of the $1.5 billion online gaming sector, said industry experts, although the extra charges are likely to pass on to customers.
Nazara Technologies (NAZA.NS), which licenses games for some children's brands, closed down 2.6%, while Onmobile Global (ONMO.NS) ended 1.1% lower. They had earlier fallen as much as 14% and 9%, respectively, before pulling back.
Nazara said it expects a minimal revenue impact since the new rule will apply to its skill-based real-money games, which accounted for 5.2% of revenue last financial year.
Onmobile, whose real-money gaming platform contributed up to 14% of total revenue last quarter, did not immediately respond to Reuters' request for comment.
Even casino operators will be impacted, since the new 28% tax "will be applicable to the value of chips a person buys before playing," said Vivek Johri, chairman of the Board of Indirect Taxes and Customs.
Delta Corp--which owns casinos in the states of Goa and Sikkim as well as 'Adda52rummy.com' and online poker site 'Adda52.com'--did not immediately respond to Reuters' requests for comment. Its stock closed down about 23%.
The move will also hurt large start-ups such as Dream11, the lead sponsor of India's national cricket team and valued at $8 billion, as well as Mobile Premier League (MPL).
Since the taxation will be on the upfront fees in mobile gaming on the customer end, the valuation of these companies in private markets might crash, said Amit Kumar Gupta, founder of advisory and brokerage firm Fintrekk Capital.
Dream11 and MPL declined to comment.
