By moving its headquarters from the US to India, Dream Sports, the parent company of the massive fantasy sports company Dream11, has taken a risk. It is the first contemporary company to take advantage of India’s recently loosened regulations on cross-border reverse mergers thanks to this calculated move. What does this signify for Dream11 and the game industry as a whole, though, and why did the business take this action? Let’s get started.
Credits: Delhi Courses Academy
Relocating a company’s headquarters across international borders is typically a difficult and drawn-out procedure. However, Dream Sports accelerated this shift by combining its Indian affiliate, Sporta Technologies, with its US-based company, Dream Sports Inc.
A September 2024 regulatory change allows Indian corporations to seek clearance from the regional director of the Corporate Affairs Ministry rather than the National Company Law Tribunal (NCLT), which frequently has a backlog of cases. Dream Sports was able to finish the move swiftly and effectively because to this simplified procedure.
The move comes against the backdrop of a significant tax burden imposed on online gaming companies. The Indian government’s demand for ₹1.1 lakh crore in retrospective Goods and Services Tax (GST) sent shockwaves through the industry. Dream Sports, like other gaming platforms, did not pass this burden on to users, leading to an expected 60% drop in profit margins.
The Supreme Court has since put a temporary hold on these tax demands, but uncertainty still looms. By relocating to India, Dream Sports positions itself better to navigate regulatory challenges and potentially benefit from local financial structures, including a future Indian IPO.
Dream11’s financial trajectory has been impressive. In FY23, the company reported a revenue of ₹6,384 crore, marking a 66% year-over-year increase, with profits of ₹188 crore. However, the new tax structure could significantly impact these numbers.
The company has yet to file its FY24 financials, but analysts expect a decline in profitability due to the heavy tax burden. However, being headquartered in India could offer Dream Sports better access to capital markets, enabling it to raise funds more effectively through a domestic IPO.
Dream11 is not alone in making this strategic shift. Several Indian startups have recently reversed their domicile back to India, including Zepto, Groww, and PhonePe. Other companies such as Flipkart, KreditBee, Pine Labs, Razorpay, and Meesho are also reportedly considering similar moves.
Why? Because India’s startup ecosystem is maturing rapidly. With a robust investor base, regulatory improvements, and growing public market opportunities, Indian companies are finding it increasingly advantageous to be headquartered in their home country rather than abroad.
The online gaming industry has been at the center of a major tax dispute. In October 2023, the GST Council imposed a 28% tax on the face value of online bets, leading to massive tax demands from the government. The industry, however, has been pushing for taxation based on Gross Gaming Revenue (GGR) rather than face value.
On January 10, 2025, the Supreme Court stepped in, temporarily halting the ₹1.1 lakh crore GST demand against 49 gaming companies. If fully enforced, the total liability could rise to ₹2.3 lakh crore, as the law allows for penalties equal to 100% of the tax amount. While the SC’s ruling provides short-term relief, the long-term regulatory landscape remains uncertain.
Dream11’s headquarters shift is a signal that Indian startups are becoming more confident in their home market. The move could encourage other gaming companies and tech startups to follow suit, strengthening India’s position as a global tech hub.
However, the GST issue still casts a shadow over the industry. If the government continues to push for taxation on face value rather than GGR, companies may face severe financial strain. The industry is lobbying for a fairer tax regime, and the Supreme Court’s intervention suggests that a more balanced approach may be possible.
Credits: Indesign Live
Dream Sports made the strategic and defensive move to move to India. It puts Dream11 in a position to access India’s expanding finance markets while also assisting the business in navigating tax and regulatory obstacles. The startup environment in India may change in the upcoming years as a result of additional startups following suit.
Dream11 has taken a proactive step to safeguard its future, but the game industry’s conflict with the government over GST is far from done. How India’s financial and regulatory environment develops over the next few months will determine whether this approach is successful.
