Dream Sports, the parent firm of fantasy sports major Dream11, has shifted its domicile from Delaware, United States to India, joining the ranks of several top Indian startups moving their base back to the home country, often referred to as 'reverse flipping', amid favourable economic policies and compliance requirements.
"Dream Sports is leveraging tech to unlock the massive potential of India’s sports ecosystem. We have completed a ‘ghar waapsi’ and are now an Indian domiciled business" a company spokesperson told Moneycontrol.
With this development, Dream Sports will be joining a slew of internet firms who have moved their domicile back to India such as PhonePe, Zepto, and Groww. Many other firms are also in the process of 'reverse flipping' including Razorpay, Meesho, Pine Labs, Udaan, and Flipkart.
This move comes months after the Indian government introduced new rules under the Companies Amendment Rules, 2024, in September 2024 to fast-track cross-border transactions and streamline the compliance process, particularly for mergers and amalgamations involving foreign holding companies and their wholly-owned Indian subsidiaries.
As per the rules, any such merger can bypass approval from the National Company Law Tribunal (NCLT) but requires prior approval from the Reserve Bank of India (RBI).
Through this transaction, the company's board has approved the merger of Dream Sports Inc with Mumbai-based Sporta Technologies Private Limited, as per the company's regulatory filings with the Registrar of Companies, accessed from the startup data firm The Kredible.
It also stated that this merger will enable the company “achieve cost savings from more focused operational efforts, lead to consolidation of the group and elimination of intercompany transactions”.
This includes a reduction in overhead costs, including administrative expenses and statutory compliance, as well as improved efficiency. Additionally, it will enable the group to have a streamlined holding structure and 'optimally allocate and utilise resources by avoiding duplication between India and Delaware'. The development was first reported by The Economic Times.
This move comes as India's real-money gaming (RMG) sector is navigating through a turbulent period due to lack of regulatory clarity and the impact of the 28 percent Goods and Services Tax (GST) regime. Dream11 and other gaming platforms are still absorbing the additional tax burden without passing it on to the players, in a bid to avoid the potential user churn.
To make matters worse for the industry, Indian authorities have also served retrospective tax notices to a slew of skill-based gaming firms including Dream Sports for alleged tax evasion to the tune of over Rs 1.5 lakh crore. The Supreme Court has granted a stay on these notices in January 10, following over 50 petitions filed by RMG companies. The apex court is set to hear the matter again in the forthcoming weeks.
For the financial year FY23, Dream Sports saw its revenue from operations jump 66 percent to Rs 6,384.49 crore, up from Rs 3,841 crore in FY22. The company has yet to file its financials for FY24, however, sources earlier told Moneycontrol that the firm is expected to witness a revenue drop of 40–50 percent in the current financial year, while operating profit may decline by about 80 percent.
Read More: Death knell, fight for survival - Retro tax haunts India’s real-money gaming
Founded in 2008 by Harsh Jain and Bhavit Sheth, Dream Sports was last valued at $8 billion when it bagged a $840 million funding round led by Falcon Edge, DST Global, D1 Capital, Redbird Capital, Tiger Global, TPG and Footpath Ventures in November 2021.
Apart from Dream11, the company houses brands such as sports content and commerce platform FanCode, sports experiences platform DreamSetGo, mobile game development unit Dream Game Studios, and its philanthropic arm Dream Sports Foundation.
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