Rush Gaming Universe (RGU) by Hike has laid off about 55 workers, which represents 22% of the total workforce. The government’s decision to impose a 28% GST on online real-money games is having a significant negative impact on a second business.
“Business is in the best shape ever. This 400% increase in GST is a bazooka pointed at us. We’ll need to absorb some of it,” Hike CEO and founder Kavin Bharti Mittal said in a statement.
Previously known as Hike, this P2P messaging service received over $260 million in funding from companies like Tiger Global and Tencent. To enter the real money skill-based gaming market in January 2021, it shut down its main product and moved to a different platform.
It raised confidential funding from Polygon, an Ethereum-based blockchain scaling service provider, shortly after starting from scratch. In May 2022, the startup raised an additional undisclosed round from investors including Web3 investor Jump Crypto, Tribe Capital, and others.
In FY22, Hike’s operational revenue increased from Rs 18 lakh to Rs 19.21 crore. Annual losses for the company decreased 7.3% to Rs 118.7 crore in FY22 from Rs 128 crore in FY21. The business asserts that it has grown by 4X in the last 12 months and has been profitable since October 2022. The startup has not yet submitted its financial report for FY23.
More real-money gaming startups may soon make course corrections as a result of the new GST regulations. Mobile Premier League (MPL) terminated 350 workers earlier this week, blaming the new tax system. According to MPL, the new regulations will result in a 350–400% increase in the tax burden.
Following the GST council decision, several players in the industry raised concerns about the negative impact on gaming startups. The new GST rule, which is anticipated to go into effect on October 1, has also been opposed by real money gaming platforms like Nazara Technologies, Baazi Games, and Winzo Games as well as the industry association All India Gaming Federation.
