Axe On Workers As Gaming Ban Becomes Law

(MENAFN- Live Mint)

The ban on real money gaming has begun to take a toll on jobs, even as the Union IT ministry stands firm against the sector it says causes losses, addiction and social harm.

While Games24x7 and Baazi Games began rolling out the layoffs on Monday, Mobile Premier League sacked half of its staff a day earlier. Dream11, the country's largest gaming operator, is yet to announce its plans so far, though its founder has previously said the ban would slash its revenue.

Games24x7, India's third-largest money gaming platform, and Baazi Games, backed by publicly listed Nazara Technologies, are reducing staff by half, three people aware of the matter said. The two companies have begun communicating the decision to employees gradually.

Key Takeaways

• India's new gaming law has triggered a widespread job crisis.
• MPL and Games24x7 have already laid off thousands of employees.
• Nazara Technologies terminated a key investment due to the ban.
• The ban on real-money gaming has led to mass layoffs.

Spokespersons of Games24X7 and Baazi Games did not respond to requests for comment.

Total ban

The Promotion and Regulation of Online Gaming Act imposes a complete ban on all real-money online games, regardless of whether they are based on skill or chance. The government has justified the ban by citing concerns over financial distress, addiction, and links to illicit activities like money laundering, dealing a body blow to India's $23 billion gaming industry, dominated by real money games.

"The decision has been a long time coming, and was largely inevitable since the ban is impacting the core source of our revenue," said a Games 24X7 employee who was laid off. While the company plans a restructuring, roles across divisions, including marketing, sales and engineering, are being slashed, the person said on the condition of anonymity.

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The operations at Baazi Games, a 300-employee company which runs PokerBaazi, are now "skeletal", a third person said. "There's no other way, since our core revenue path has been declared illegal overnight," the person said, adding the company was still in process of rolling out the layoffs.

Just a year ago, pure-play gaming firm Nazara Technologies had decided to invest ₹982 crore in Moonshine Technology, the parent of Baazi Games, for a 47.7% stake. On Sunday, Nazara cancelled its plan to buy an additional stake in the firm, citing the ban on money gaming.

Big cut

Mobile Premier League (MPL), which offers a variety of real-money games, including fantasy sports, card games and puzzles, has also decided to slash its workforce of 500. Galactus Funware, which operates MPL, has emailed its staff about the decision, a company executive said. Founder Sai Srinivas said in an internal email that the company will lay off“more than half" of its staff, as it works to comply with the new law.

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With this, thousands of employees at money gaming startups are now staring at a bleak festive season-amid a weak overall tech jobs environment in the country. Industry stakeholders said that those not losing their jobs right away would also remain in an uncertain environment, as the companies look to pivot into digital payments, esports events, content streaming and other such areas.

Industry officials met Union IT minister Ashwini Vaishnaw on Monday, but there was little hope for them.

Promoting e-sports

“The discussions with stakeholders focused on promoting e-sports and social games. Points related to an orderly transition away from money gaming, and protection of users' money, were also discussed. It was noted that the industry has taken steps to ensure compliance with the Act," an official who attended the meeting said.

After the President's assent to the bill, the ministry has started the process of framing its rules. Once the rules are finalized and notified, the new law will take effect, rendering all money gaming illegal.

Also Read | Gaming ban deals a $1 bn blow to India's ad industry-and cricket sponsorship

The industry has tried to push back. Head Digital Works, the parent company of the online gaming platform A23, has challenged the new online gaming law in the Karnataka High Court, arguing that the legislation unconstitutionally bans games of skill. The Centre will respond to the petition for interim relief on 8 September.

Growth derailed

The layoffs will compound the impact on companies that were on a steady growth path. As per data from the Registrar of Companies (RoC), Games24x7's latest regulatory filing for FY23 showed that its revenue grew 70% year-on-year to ₹1988 crore. Baazi's FY23 revenue rose 55% to ₹415 crore. Latest industry projections say the sector will see revenue declines of more than 80%, starting this fiscal.

The sector claims to employ 200,000 people, including indirect employment for social media influencers and others.

Dream11, which has 1,500 employees, is yet to convey downsizing decisions. According to a senior executive, founder Harsh Jain said at a company town hall recently that shutting down money games will reduce the company's revenue by over 90%.

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The industry is also waiting for a landmark Supreme Court verdict on retrospective taxation of gaming companies from FY17 to FY22, expected later this year. While a judgement is pending, industry stakeholders remain wary that the Centre's refusal to entertain the industry's“skill versus chance" argument may add further woes to its misery.

"The entire idea of skill gaming and chance gaming were constructed concepts. Fantasy gaming was never a conventional game, and there is no argument that holds ground on it not being a form of gambling," a senior government official said at a media roundtable last month.

Jatin Grover contributed to this story.

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