Bengaluru-based online gaming startup One World Nation (OWN) has temporarily halted its real money gaming operations, becoming yet another casualty of the GST Council’s decision to levy 28% GST on full face value for real money gaming.
“In light of the recent GST regulations in India, the platform has temporarily halted Real Money Gaming,” a statement on OWN’s website said last month.
“We went live nearly 15 months ago, launching our NFTs with much love from the community. The idea of a gaming platform around cryptocurrencies felt unique and powerful at the same time,” OWN said.
The startup offered non-fungible tokens (NFT)-based play-to-earn games.
While it moved forward despite the challenging conditions of the crypto market crash and the regulatory uncertainties surrounding crypto as an asset class, OWN said the 28% GST levy made its model unviable.
Under the new GST rule, a substantial 28% tax on all deposit amounts for users in India will be mandated, and this tax is non-refundable and non-adjustable. It will be an outright expense for the end user, be it the gaming platform or the gamer, OWN added.
For OWN, the situation is of significant concern due to the fact that approximately 70% of its revenue is derived from India and nearly half of its user base is also located in the country, it explained.
“While large companies in the RMG space may be able to absorb this cost; for smaller companies like us, the business model is simply not viable. Hence, after a lot of deliberation and heartburn, we came to the difficult decision of suspending all real money gaming activities on the platform temporarily,” OWN said.
As per the statement, the platform was to transition to a free-to-play model from September 1.
On using the platform, Inc42 found that users are able to play games for free but buying and selling of NFTs has been temporarily suspended.
Founded in February 2022 by Akhil Gupta, Dinesh Goel, Kunal Jadhav, Mayank Shekhar, OWN raised $2 Mn in its seed funding round from Better Capital, Polygon Studios, Cloud Capital and Indigg last year.
Earlier this year, the GST Council gave a major blow to the real money gaming industry with its decision to levy 28% GST on full face value for online gaming companies, with no distinction between games of skill and games of chance.
The move caused an upheaval in the gaming industry, with a number of startups laying off employees.
Earlier this month, Inc42 reported that Bengaluru-based Gameskraft is discontinuing its fantasy offering, Gamezy Fantasy. Gaming companies such as Quizy and Fantok have also either shut operations entirely or temporarily halted them in response to the changing landscape.
Meanwhile, the likes of unicorn MPL, Kavin Mittal-led Hike, and Spartan Poker sacked employees following the GST Council’s decision.
To add to the woes, online gaming companies are likely staring at tax notices of around 1 Lakh Cr from the Directorate General of GST Intelligence (DGGI).
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