Dream11 Reports Profit Of Rs. 188 Crore In FY23, 32% Higher Than Previous Year

India’s startup industry might still be currently grappling with layoffs and struggling to emerge from the prolonged funding slowdown, but there seems to be no stopping the country’s fantasy gaming apps.

Dream11 has reported a 32 percent jump in its net profit in FY23. The startup registered a net profit of Rs. 188 crore in FY23, compared to the Rs. 142 crore profit it had reported in FY22. Dream11’s revenue also rose by 66 percent over the year, rising from Rs. 3,845 crore in FY22 to Rs. 6,384 crore in FY23.

This isn’t the first time Dream11 has reported profits. In FY20, the company had turned profitable after netting a profit of Rs. 180 crore. In FY21, the company’s profit had zoomed to Rs. 327 crore, but had contracted to Rs. 142 crore in FY22. In FY23, Dream11 again managed to grow its profits, ending the year Rs. 188 crore in the black.

But while Dream11 is having a dream run in an industry where most unicorns struggle to make any money, there are dark clouds looming on the horizon. In October 2023, the new GST laws for the online real gaming industry were implemented. These laws had mandated a 28 percent GST rate for the online gaming industry compared to the 18 percent previously, and to make matters worse, this tax was to be applied to the full amount of the money companies received from customers, as opposed to only on the profits they made. As such, gaming companies had vehemently protested the laws, but to no avail — the laws had stood, and are currently being implemented.

Gaming companies had tried to take the new mandate in their stride — they’d taken the GST hit on the own balance sheets, often reimbursing users the for the GST tax that would’ve been deducted from the money they’d put into their platforms. But matters didn’t seem to end there — the government had also sent notices to these companies, asking them to retrospectively pay GST as per the new regulations. As such, Dream11 was slapped with a Rs. 28,000 tax notice over past taxes, which it is currently in the process of contesting.

Dream11 has reported less than Rs. 1000 crore of profit through its lifetime, and coughing up Rs. 28,000 crore in backdated taxes could be challenging for the firm. This was flagged by the company’s auditor as a part of its FY23 statements, saying the tax demand “may cast significant doubt on Group’s ability to continue as a going concern”. Dream11 has also revised its profit target for FY24 downwards by 80% following the new GST rules.

This could mean that Dream11 could see its profits fall sharply in the coming years. But even at 80 percent lower profits than what it currently makes, Dream11 would still be amongst the handful of Indian unicorns that manage to make any money. And given how Dream11 and other fantasy gaming apps have often been accused of being a thinly veiled proxy for real-money betting, and also causing severe financial harm to vulnerable users in small towns and cities, ending up making any amount of money might not be the worst outcome for this somewhat controversial industry.