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Gaming Report: Potential Investment Might Double the Valuation of Dream11`s Parent Company to $4 Billion, My11Circle Signs VVS Laxman & More

Gaming Report
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  • Namita Ghosh February 24, 2021
  • 5 Minutes Read

While 2020 was a slow year for fantasy sports, the New Year has brought brighter prospects for this sector and many investors. Earlier this month, Mobile Premier League (MPL), Nazara Technologies, and Gamerji were just a few startups that secured fresh investments. In what comes as another significant development in this space, Dream Sports, the parent company of Dream11, is reportedly at the cusp of closing fresh funding round worth approximately $300 Million (~₹217 Million) from Abu Dhabi-based Alpha Wave Incubation. The deal is expected to double the company’s valuation to $4 Billion (~₹289 Billion) through a secondary sale of shares. The move is expected to grant early investor, the China-based Tencent Holdings, a clean exit from the company.

Fantasy gaming portal, My11Circle roped in cricketing legend VVS Laxman as its latest brand ambassador. Laxman joins Sourav Ganguly, Shane Watson, and Rashid Khan as the newest member of the brand’s ‘Play with Champions’ group of ambassadors.

The renewed interest in sports betting has caught the tax authorities’ attention, especially the Indirect Tax department. The revenue agencies are reportedly looking into possible GST evasion by 11 foreign betting companies, including Betway, Dafabet, ComeonConnect, RoyalPanda, EuropaCasino, 22Bet, Melbet, 10CRIC, 1XBet, Bet365, and LeoVegas.

Most gaming operators, especially those in the casino and fantasy sports sectors, are coming out what was possibly a whitewash year. Gaming and hospitality firm Delta Corp reported a 97.68% drop in profit, earning ₹1.28 Crores in the quarter ending December 2020. Mobile Premier League (MPL) reported a 160% hike in net losses in the last financial year, compared to the year before.

 

New Funding Round Could Double the Valuation of Dream 11`s Parent Company to $4 Billion (289 Billion)

Dream Sports, the parent company of online fantasy sports operator Dream11, is reportedly on the verge of closing a fresh funding round estimated to be in the range of $300 Million. If it comes through, sources close to the deal indicate Dream Sports’ valuation will almost double to $4 Billion (~₹289 Billion).

Dream11

According to an Economic Times report, the company is in talks with several investors, including Abu Dhabi-based Alpha Wave Incubation managed by Falcon Edge Capital.

According to a source quoted in the report, the funding will primarily come through a secondary sale of shares held by early investors, mainly Chinese social media and gaming conglomerate Tencent Holdings. In 2018, Tencent had invested US$100 Million (₹719 Crores) in Dream Sports. The speculated sell-off would essentially mark Tencent’s exit from the Dream11 portfolio of investors.

“Existing investors including the likes of China’s Tencent Holdings, Kalaari Capital, Multiples Alternate Asset Management are among the investors looking to sell their shares. The deal may involve some primary cash infusion, but the final contours are still being worked out,” a source told Economic Times.

If the deal comes through, it will be the fourth significant funding round for the gaming behemoth founded by Harsh Jain and Bhavit Sheth. In April 2019, London-based Steadview Capital had made a secondary transaction worth $100 Million (₹710 Crores) in the company, effectively making Dream11 India’s first gaming unicorn. It is today India`s most valuable gaming company.

Last September, Dream11 raised $225 Million (~₹1,656 Crores) from a group of investors, including the New York-headquartered Tiger Global Management, TPG Tech Adjacencies (TTAD), ChrysCapital, and Footpath Ventures.

 

My11Circle Ropes in VVS Laxman as Brand Ambassador

Get ready to see a new cricketing icon endorsing a fantasy sports platform. Legendary cricketer and one of India’s most iconic batsmen, Vangipurapu Venkata Sai Laxman, has been roped in as a brand ambassador by fantasy sports portal My11Circle.

Laxman will be joining former Indian cricket captain Sourav Ganguly, Shane Watson, and Rashid Khan as the latest celebrity figure entering the company’s ‘Play with Champions’ group of brand ambassadors.

Laxman commenting on his new role at My11Circle, said: “I am delighted to partner with My11Circle, a truly innovative fantasy sports brand in India. India is a cricket-loving nation, and over the last few years, fantasy cricket has gained popularity as an immersive form of entertainment. My11Circle’s ability to understand and respond to user needs has helped it become a household name in less than two years of its launch.”

Talking about signing up, Laxman, the Vice President of My11Circle, Saroj Panigrahi, said, “Over 16 million sports enthusiasts have already trusted us since 2019, making us the country’s fastest-growing fantasy sports platform. We are delighted to welcome legendary Indian cricketer Mr. Vangipurapu Venkata Sai Laxman as a new Champion in the ‘Play with Champions’ family. Our skill gaming community has enjoyed testing their skills against Mr. Sourav Ganguly, Mr. Shane Watson, and Mr. Rashid Khan. With Mr. Laxman’s appointment, we will continue to engage our existing users and extend awesome game-playing experiences to more and more fantasy sports enthusiasts.”

The site is a venture of Games24x7 launched in January-end 2019. It currently claims to be India’s only fantasy gaming portal offering real-time match scores.

 

Indian Tax Authorities Investigating 11 International Betting Sites For Possible GST Evasion

The Indirect Tax department has initiated an inquiry to assess possible Goods and Tax (GST) evasion by 11 international betting companies. This includes online gaming and betting companies registered in Australia, Curaçao, Cyprus, Malta, the Philippines, and Russia.

The tax authorities have observed that many Indian residents regularly visit online gambling sites, and there was a massive surge in gambling traffic during the lockdown months in 2020.

Foreign betting sites including Betway, Dafabet, ComeonConnect, RoyalPanda, EuropaCasino, 22Bet, Melbet, 10CRIC, 1XBet, Bet365, and LeoVegas did not pay the requisite GST applicable during this time, basis the argument that they were hosting skill-based games.

An Economic Times report quoted a partner at Deloitte India, MS Mani, commenting on the issue, “The place of supply, for the purpose of GST collection, needs to be evaluated for determining whether an overseas service provider having customers in India would be required to register and charge GST in India for services provided to customers in India. This is an area that is susceptible to multiple interpretations.”

The Indirect Tax department believes that all foreign betting sites must pay GST on all transactions involving a resident Indian. For now, Director-General, GST Intelligence has written to banks to share the complete details of these 11 websites and their holding companies to evaluate the revenue they have earned from the Indian market and to assess their GST liability.

 

Delta Corp Registers 97.68% Drop in Net Profit in Q3

India’s only BSE-listed gaming and hospitality giant Delta Corp reported a 97.68% drop in profit in the quarter ending December 2020. Falling from ₹55.07 Crores reported during the same quarter last financial year, this year, the company reported a net profit of only ₹1.28 Crores.

Delta Corp

The company’s latest filings indicate that its sales declined 41.10% to ₹120.82 Crores in the quarter ending December 2020, as against ₹205.13 Crores in the same quarter in 2019.

However, 2020 was an unprecedented year for many businesses, and casinos were possibly the worst hit. Chairman of Delta Corp, Jaydev Modi, is optimistic for the way ahead. In an interview with Economic Times, Modi emphasized that business was picking up gradually and said that now that casinos are open, they will drive the company`s revenue in the last quarter of the ongoing financial year.

Talking about the drop in profit, Modi said, “The Q3 are not representative of the way forward because out of the three months we only operated for less than two months where all the costs built up, we were trying to get staff back, people were not able to come back to work, etc. We carried the load of Q1 and Q2 right up to the end of December, and so, in my opinion, making a profit in Q3 under these circumstances was incredible. But going forward, we are now fully staffed, we have good footfalls, we have a lot of people visiting casinos, and so we can expect to do better in Q4.”

Modi also went through the role that the company’s online gaming segment has played in the last year – “The first quarter was good because the lockdown was complete and people were home, and we saw a significant jump in revenue. But from the second and third quarter, it again flattened to pre-COVID levels, and we think that it will stay flat for the moment. But business on an annual overall basis is growing, and we think that it’s a good business for the future.”

 

Mobile Premier League (MPL) Reports 160% Increases in Losses YoY

Bengaluru-based Mobile Premier League (MPL) closed a massive Series D funding round worth $95 Million (~₹691 Crores) earlier this month, doubling its valuation to $945 Million. Following the funding boost, MPL released its financials for last year, reporting a 160% increase in net losses compared to the year before.

MPL - Mobile Premier League

In its latest filings, MPL has revealed that its net loss for the financial year 2018-2019 was ₹106.3 Crore, while it incurred a loss of ₹278 Crore during 2019-20. Much of this was attributed to a 168% increase in expenses in 2019-20. The company’s operating costs grew by 57.42%, while the marketing and advertising expenses were as much as ₹137.67 Crores.

However, MPL has also underlined that the expenses made have helped it emerge as one of the country’s gaming giants. It currently boasts of six crore registered users in India alone, along with roughly 3.5 Million users in Indonesia, where it began operations last year.

The site earns its revenue through fees paid by participating players and fees levied on real-money games. It is a major sponsor for the reality show Big Boss and has several tie-ups with the Indian cricket team.

MPL launched poker in 2020, and they even sponsored two teams at the recently concluded PSL Season 3 (Virtual).

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