Synopsis
Dream Sports CEO Harsh Jain acknowledges the redomiciling to India was poorly timed due to the online gaming ban, impacting revenue. The company, now like a Series B startup, faces a potential valuation drop from $8 billion in 2021. Jain highlights concerns over a retrospective GST demand, emphasising its potential to cripple the industry, but expresses confidence in the company’s future.
Dream Sports cofounder and CEO Harsh Jain said the company’s redomiciling from Delaware, US, to India, which was completed in March, seems like bad timing in retrospect.
“But at least now we are fully an Indian company, paying Indian taxes, and can rebuild from scratch,” he told ET in an interview on Monday.
In March, Dream Sports Inc completed a merger with Mumbai-based Sporta Technologies to revert its domicile to India. At the time, a company spokesperson had said that Dream Sports “has completed ghar waapsi and is now an India-domiciled business”.
Dream Sports is among several new-age tech companies that have moved their domicile back to India to tap the local market, which offers rich valuations to startups.
Jain’s comments come in the aftermath of the government’s blanket ban on online money gaming, hitting the company’s major revenue stream. Dream Sports, like many others in the real-money gaming sector, is not challenging the ban legally. “The government has made it clear they don’t want this. We won’t waste energy fighting and will do what’s allowed by law…if regulation changes again, we’ll re-evaluate. We’d rather build for the future than litigate the past.”
From preparing for an IPO, the company has now become a Series B startup, Jain said. The ban is likely to see its valuation plummet from $8 billion, a level it had reached in 2021.
This is not the first time Dream Sports has faced regulatory shocks. The company’s redomiciling came after the GST Council’s 2023 decision to levy 28% tax on the full face value of bets. “The retrospective tax demand of Rs 2.5 lakh crore is 10x our revenue,” Jain said.
He said that in the GST matter, the Supreme Court is deciding if GST was paid correctly before 2023. “The retrospective demand is industry-killing regardless. Even listed companies have notices larger than their market caps. If imposed, it’s lights out for the sector,” he said.
Jain lauded what he said was positive employee sentiment, with no one seeking an out. “Employees ask if the company will survive. My answer: we’re like a Series B startup with huge advantages: user base, capital runway, and team. We grant fresh ESOPs every year at new valuations,” he told ET.
Source: www.economictimes.indiatimes.com