Dream Sports relocates headquarters from US to India
Dream Sports, the parent company of the fantasy sports platform Dream11, has made a move by shifting its headquarters from the United States to India. This strategic move follows a pivotal regulatory adjustment in September 2024 when the government passed a law enabling firms to sidestep long legal obstacles. Through this action, Dream Sports emerged as the first major company to benefit from the new legislation.
How Dream11 made the move?
A reverse flip occurs when an overseas company initially based outside returns to its domestic base. It is usually a complicated exercise of legal and financial acrobatics, but now it is less so after new regulations in India.
Dream Sports executed the reverse flip by merging its US-based entity, Dream Sports Inc., with its Indian subsidiary, Sporta Technologies. Thanks to the regulatory reforms, Dream Sports was able to gain approval directly from the Corporate Affairs Ministry’s regional director rather than going through the National Company Law Tribunal (NCLT), which traditionally has a long backlog of cases.
Why did Dream11 shift its headquarters?
One of the primary reasons for this shift is India’s strong taxation of online gaming. The government’s demand for ₹1.1 lakh crore ($13.1 billion) in retrospective Goods and Services Tax (GST) left the industry stunned, with Dream11 and other sites seeing a 60 percent plummet in profit margins.
The Indian government’s shifting stance on online gaming taxation has created an uncertain business environment. However, by relocating to India, Dream Sports can navigate these challenges more effectively and align with local policies.
Since it is an Indian company, Dream Sports can potentially launch an initial public offering (IPO) on Indian stock exchanges more easily. This will enable it to raise money locally, leveraging the increasing investor appetite in tech startups.
During FY23, Dream Sports posted revenue of ₹6,384 crore ($760 million), a year-over-year growth of 66 percent, and profits of ₹188 crore ($22.4 million). Analysts forecast a decline in profitability for FY24 as tax liabilities rise. With the relocation of its headquarters to India, Dream11 will be able to access domestic capital markets more easily and possibly local investors, enabling it to continue growing.
GST Controversy: A major factor in Dream11’s decision
In October 2023, the GST Council levied a 28 percent tax on the face amount of online betting. Several such companies, including Dream11, opposed the move, proposing that taxation in this case could be done according to Gross Gaming Revenue (GGR) instead.
On 10 January 2025, the Supreme Court put the government’s ₹1.1 lakh crore tax notice to gaming companies on hold. Nonetheless, the tax regime over the long run continues to remain unclear, hence, it becomes paramount for Dream Sports to anticipate ahead of regulations.
Dream11’s action will prompt other Indian startups to relocate their headquarters to India, solidifying India’s position as a global gaming and technology hub.
The Supreme Court’s decision to halt GST proceedings against 49 online gaming firms has given temporary relief to the industry. This move has also positively impacted the stock prices of listed gaming companies.
