Canada-based private equity firm Clairvest Group has written down its investment in Head Digital Works, the operator of A23 Rummy. “In the second quarter, Head Digital Works experienced a material adverse regulatory development as a result of the Government of India passing a law banning real money gambling and associated facilities,” Clairvest said in a quarterly earnings report. “This development has made it illegal for Head Digital to do business.”Among domestic companies, Nazara Technologies booked an impairment of ₹914.7 crore on its investment in Moonshine Technologies parent PokerBaazi. “During the quarter, new regulations on real money gambling prompted Nazara to record an impairment on its investment in Moonshine… based on a fair valuation under accounting standards,” Nazara CEO Nitish Mittersain said during the earnings call.
Similarly, Delta Corp has written down the value of its investments in Deltatech Gaming, Head Digital Works and OpenPlay Technologies to zero. The move led to a reduction in fair value of ₹378.3 crore as affected companies shut down revenue-generating activities.
Fintech company Paytm saw its net profit plunge 98% after booking an impairment charge of ₹190 crore on a loan to its joint venture First Games Technology. More companies with exposure to poker, rummy and fantasy sports are expected to report similar impairments in the next two quarters, especially those that raised capital during peak valuations in 2020-2022. Payment companies that previously profited from gambling transactions are also under pressure. Mobikwik reported an eight-fold rise in net loss to ₹28.6 crore for the September quarter, besides a 7% year-on-year decline in operating revenue to ₹270.2 crore.
A payments company executive said the decline in payment flows due to the RMG ban is temporary and businesses can recover even if volumes decline by 10-15% month-on-month. However, smaller payment aggregators with high exposure to gaming could continue to see a meaningful impact on profitability, the person said.
Meanwhile, several gaming companies have exited India or scaled back their operations. Hike shut down its RMG app Rush, WinZo exited the RMG segment locally and expanded into the US, and MPL shut down all cash gaming in India, with founder Sai Srinivas telling employees that 50% of the group’s revenue disappeared overnight due to the new law. Unified Payments Interface transactions under the gaming category fell to 270 million in August from 351 million in July after the ban came into effect, according to data from the National Payments Corporation of India.
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