NEW DELHI: Shares of Delta Corp and Nazara Technologies cracked up to 28% on the BSE in Wednesday’s intra-day trade after the Goods and Services Tax (GST) Council on Tuesday approved the imposition of a uniform 28% tax on online gaming, casinos, and horse racing.
Delta Corp shares opened at a 10% lower circuit of Rs 222.15 apiece on the BSE, but then continued its downfall to hit an intraday low of Rs 178.20 apiece. Delta Corp closed 23% lower at Rs 189 a piece. Nazara shares opened 14% lowest at Rs 605 apiece but recovered later to close at ₹688, down 3% from its previous day’s closing.
Gouri Puri, Partner, Shardul Amarchand Mangaldas & Co said: “This is a major setback to the online gaming industry. Taxing the prize pool at 28 per cent may impact gaming volumes and viability of gaming companies that were up until now growing impressively. This sends mixed signals to investors, considering that recent policy changes to regulate the online gaming industry had recognised its separate status and economic potential.”
In a stock exchange filing, Nazara Technologies clarified that this tax, once implemented, will apply only to the skill-based real money gaming segment of its business. The contribution of this segment to the company’s overall consolidated revenues for the financial year FY23 was 5.2%. “To the extent required, the company will proactively take steps to mitigate any potential impact to this segment of our business, and we anticipate minimal impact to our overall revenues,” Nazara Technologies said.