Following the GST Council’s decision to levy 28% GST on real money gaming and tax troubles with the GST Department, Bengaluru-based Gameskraft has decided to discontinue its fantasy offering, Gamezy Fantasy.
The gaming company is also restructuring its Gamezy super app and moving users of games other than fantasy to separate apps.
“Gamezy Fantasy will not be available from 18th September onwards,” a notice on the Gamezy app says.
Gamezy’s fantasy offering allows users to create fantasy cricket teams and participate in tournaments to win prizes.
Gameskraft is also asking the users of other games, Rummy and Ludo, which were available on the Gamezy app, to move to separate individual apps RummyPrime and Ludo Culture, respectively.
While this suggests that Gameskraft might be shutting down the Gamezy app, a company spokesperson told Inc42 it is temporarily deprioritising the Gamezy super app.
“Over the last couple of years, the Gamezy super app has provided our players a variety of different games… However, both prevailing industry trends and our internal insights have underscored the need for deep category specific experiences to provide a wholesome immersive gameplay to our players. Given the vision with regards to our portfolio, we have made a strategic decision to reassess and temporarily deprioritise our Gamezy super app” the spokesperson told Inc42 in a statement.
“We are focussing our efforts on the development and promotion of dedicated single apps, like our newly launched RummyPrime, LudoCulture and other initiatives. This focus allows us to concentrate on our core competencies and channel greater resources towards delivering unparalleled user experiences,” the statement added.
The company said that the shift will not have any “negative impact” on its workforce planning and “talent deployment”.
The development comes close on the heels of the Supreme Court (SC) staying a Karnataka High Court’s order, which quashed an INR 21,000 Cr tax evasion notice issued by the Directorate General of GST Intelligence (DGGI) to Gameskraft.
The DGGI issued the show-cause notice to Gameskraft in September last year, alleging that the online gaming startup failed to pay INR 21,000 Cr in GST, the biggest such claim in the history of indirect taxation. The notice was for the period between 2017 and June 30, 2022.
Meanwhile, the Supreme Court’s decision has reportedly paved the way for the tax department to send such show-cause notices to about 40 online gaming companies.
Gamezy’s move also comes at a time when the gaming industry has been hit hard by the GST Council’s decision to levy 28% GST on full face value for real money gaming.
However, Gameskraft in its statement said its move is not related to the recent amendments to the GST laws.
Soon after the announcement of the GST Council’s decision, gaming unicorn MPL laid off around 350 employees. Kavin Mittal-led web3 gaming startup Hike followed suit, slashing its workforce by 25%. The company attributed the layoffs to the government’s move to impose a 28% GST, due to which it was staring at a 400% increase in tax burden.
Last month, Spartan Poker too laid off 125 employees, or 40% of its total workforce. Besides these, real gaming companies Quizy and Fantok have shut or halted their operations respectively.
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