The brand new regulation has erased 95% of Dream Sports activities’ income and 100% of its earnings, marking the top of the real-money gaming trade in India.
“The federal government has made it clear they don’t need this. We received’t waste vitality preventing and can do what’s allowed by regulation…if regulation adjustments once more, we’ll re-evaluate,” cofounder and CEO Harsh Jain instructed ET. “We’d slightly construct for the longer term than litigate the previous.”
Jain mentioned the pace of the shutdown had shocked the corporate, calling it a “knockout punch.”Dream Sports activities was final valued at $8 billion in 2021, when it raised $840 million from marquee buyers together with Alpha Wave International, Tiger International, DST International, and TPG.
The invoice moved swiftly: cleared by the Union Cabinet on Tuesday, passed by Lok Sabha on Wednesday, by Rajya Sabha on Thursday, and signed into law by the President on Friday. “In 72 hours, a 14-year-old enterprise was gone,” Jain mentioned.
The Mumbai-headquartered Dream11 had grown quickly after the Punjab & Haryana Excessive Courtroom upheld fantasy gaming as a recreation of talent in 2017, a view reaffirmed by the Supreme Courtroom in 2019. It now claims 260 million registered customers, which Jain mentioned could be the cushion as the corporate resets.
Tax blows earlier than the ban
Regardless of its dominance, the agency was not proof against regulatory shocks. The brand new regulation follows the GST Council’s 2023 choice to levy 28% tax on full face value, which had already hit the sector laborious via retrospective calls for. “The retrospective tax demand of Rs 2.5 lakh crore is 10x our income,” Jain mentioned. “Even public firms received notices price greater than their market cap. If this stands, it can ship 400 companies to the Nationwide Firm Regulation Tribunal.. It’s a loss of life blow.”
Betting on AI
With real-money gaming off the desk, Dream Sports activities is pinning its future on sports activities AI, free-to-play fan engagement, and creator-led merchandise. “We’ve constructed a model cherished by tens of millions and know scale profitably. AI will disrupt each a part of sports activities, content material, commerce, efficiency, teaching, and we will go AI-first to construct for that chance,” Jain mentioned, including the corporate nonetheless has 800 staff, together with 500 engineers, and sufficient capital to assist a reset.
Dream11 has shifted to free-to-play fantasy contests with ad-sponsored prizes. Jain pointed to parallels with the English Premier League’s Fantasy Premier League, the place followers spend on third-party analytics instruments regardless of no money winnings.“Folks play for bragging rights and mental problem. The creator economic system will probably be big,” he mentioned.
Different Dream Sports activities verticals proceed unaffected, together with FanCode, its sports activities streaming and merchandising platform with contracts for F1 and La Liga, and DreamSetGo, its sports activities journey enterprise.
Additionally Learn: Dream11 parent testing app to foray into financial services under DreamSuite Finance
A tough reset
“It’s like shifting from working in a pre-IPO firm to all of a sudden being in a Collection B startup. That’s the mindset shift everybody has to make,” Jain mentioned.
On March 31, ET reported that Dream Sports activities had quietly shifted its domicile from Delaware, US, to India via the reverse merger route. Dream Sports activities Inc merged with Mumbai-based subsidiary Sporta Applied sciences. It was among the many first examples of a new-age agency utilizing the fast-track mechanism for cross-border mergers, below which a international holding entity can merge with its Indian subsidiary with out NCLT approval.
Based in 2008 by Jain and Bhavit Sheth, the corporate had no quick IPO plans, although Jain admitted the timing of the flip-back was “not nice,” given the tax liabilities incurred within the US.
“Entrepreneurs should be delusionally optimistic. Even after shedding 95% of income and 100% of our earnings, we nonetheless have FanCode, DreamSetGo, Dream Cricket, Dream Cash, and a powerful staff. That is the toughest hit in 18 years, however we’ll come again,” Jain mentioned.
Jain underscored that with Dream11’s income and earnings impacted, the corporate’s valuation can even reset.
“The valuation of the corporate goes to plummet…however buyers have to have a look at it virtually like a recent funding. Given what they know concerning the firm, the staff, founders, consumer base, and model, I feel they’ll again us. Indians are able to construct world merchandise,” he mentioned.
“These are very early days, however I’m assured I’ll have the entire assist of our board and most buyers to pursue these alternatives,” he added.
Even earlier than the ban, GST adjustments had already pushed the corporate into the crimson after greater than 5 years of profitability. For FY23, Dream Sports activities reported a revenue of Rs 188 crore on income of Rs 6,384 crore. It has but to file financials for FY24 and FY25.
Jain mentioned present money reserves present the corporate with a number of years of runway.
In 2023, Dream11 signed a Rs 358-crore deal to sponsor the Indian Cricket Crew, with its brand on the jersey till March 2026. However with the ban, it’s now in discussions with the BCCI on transfer ahead. “On the Dream11 facet, we’re going to slash all our advertising spends to zero,” Jain mentioned. “We’re in contact with them (BCCI) on resolve this going ahead.”
Additionally Learn: BCCI begins process to find new sponsor following Dream11’s exit
Discover more from News Journals
Subscribe to get the latest posts sent to your email.
