In the short 90 days since the Indian Parliament passed the Online Game Promotion and Regulation Act (PROGA), the Indian gold game industry has experienced unprecedented financial shocks: over 700 billion rupees (approximately $7.9 billion) have been written down by publicly traded companies, more than 1 trillion rupees (approximately $11.3 billion) have been lost in total industrial revenue, and fiscal revenue has accumulated losses of nearly 560 billion (approximately $6.3 billion) in taxes on goods services, source deductions and income tax.
Although the bill has not yet been formally introduced, panic enforcement is expected to lead to a sharp contraction of the industry. The listed game companies alone raised over Rs. 700 billion in investment losses, and the entire industry reduced its staff by over 7,000 within less than a month. Experts estimate the loss of income at Rs. 100 billion, the shortfall of Rs. 360 billion in revenue from the goods services tax and an additional Rs. 200 billion in loss of source tax deduction and income tax. Since 22 September, the application of a 4 per cent tax on goods and services for online gold games has further exacerbated the economic trauma. Jay Seta, an expert in science, technology and play law, questions the continued silence of policymakers: “It is incomprehensible that the Government, after having completed the entire legislative process within 96 hours, from Cabinet approval to President signature, has issued three months’ notice of the effective date of the law.” He added that legal penalties and restrictions could not be enforced until the official circular of PROGA, which “banks and financial institutions could still provide services until the law came into force, provided that all related operations were terminated immediately after the circular was issued”. The industry’s financial trauma has been seen in the quarterly financial statements of Indian and foreign firms:(a) Flutter Entertainment, whose Indian subsidiary Junglee James stopped all cash-type radial game operations, raised $556 million for impairment, resulting in a net loss of $789 million in September;
Nazara Technologies reduced its investment in its poker platform PokerBazi parent company, Moonshine Technologies, to Rs. 914.7 billion (approximately $103 million), reducing its book value to Rs. 965.3 million (approximately $10.89 million); Canada ‘ s Clarvest Group investments in Head Digital Works confirmed an unrealized loss of Rs. 76 million (approximately $86 million) and a zero asset value; Delta Corp reduced its remaining 49 per cent shareholding and related investment book value to zero at Adda52 parent company, with a cumulative evaporation of Rs. 3,783 million (approximately $43 million). Financial technology enterprises that benefit from game transactions have also suffered: Paytm has suffered a sharp decline of 98 per cent in net profit from the impairment of First Gomes Technology ‘ s loan of Rs. 1.9 billion (approximately US$ 21 million); and Mobikwik ‘ s loss has increased by a factor of 8 to Rs. 2.86 billion (approximately US$ 32 million), and operating income has decreased by 7 per cent. Data from the Indian National Payments Corporation show that the number of game-type UPI transactions dropped sharply from 351 million in July to 270 million in August. The industry retreated in a few weeks to reshape the Indian game: Hike closed the gold game with Rush, Dream 11, MPL and other front platforms to stop all cash games, and technical and operational jobs in Karnataka and Trengana, among others, disappeared to a total of over 7,000 jobs.
Industry executives revealed that the collapse began in August with lightning legislation: the draft was approved by the Federal Cabinet on 19 August, and was quickly adopted by the Wolesi Jirga and the House of Federation on 20 and 21 August, respectively, under almost zero discussion. Within 48 hours, the industry, the fastest-growing consumer science and technology pillar, collapsed in real terms, and almost 90 days after the adoption of the legislation, the law was still not officially notified. As businesses continue to withdraw and contract lines of business, the whole industry is still waiting for an interpretation clause, an exemption policy or a transitional timetable when the Government finally implements the Act.
