Inside Dream Sports diversification strategy; Delhi taxi ban’s impact on cab aggregators


Dream Sports, the largest real-money gaming company in India, is charting its diversification strategy and will now turn to more strategic bets and cease its VC-style bets. This and more in today’s ETtech Morning Dispatch.

Also in this letter:

■ Insurance market seeing uptick in cyber insurance
■ Madras HC strikes down ban on online rummy, poker again
■ Balkrishan Kalra is Genpact’s new CEO

Dream Sports eyes diversification via investments, M&As to cope with tax blow

Harsh Jain Dream11_THUMB IMAGE_ETTECH_2

Harsh Jain, cofounder & CEO, Dream Sports

Hi, Apoorva here in Mumbai. Today, my colleague Samidha and I report on the latest development at Dream Sports, the largest real-money gaming company in India, much of which confirms our scoop from October.

Diversification push:
Dream Sports has been charting its diversification strategy for a few years now. In fact, in this 2021 interview to us, Jain said, “Now, we want to go and build the YouTube, Gmail and Google Maps of sports. We want to build an Alphabet-like entity, not just Google Search.”

It launched an incubator in 2019 and seeded ventures in fintech, travel, and a streaming platform. In 2021, amid a bull market, it launched Dream Capital, its sports-focused corporate venture arm with a committed corpus of $250 million.

As we reported in October, the venture arm has been disbanded. However, the company’s investment ambitions have not. Harsh Jain, cofounder & CEO, Dream Sports, told us in a chat that the company will now turn to more strategic bets aimed at acquisitions and cease its VC-style bets which it made through Dream Capital.

$170 million:
Total amount invested by Dream Capital across ventures since 2019.

What’s changed? At a time when its core fantasy gaming business (Dream11), which contributes 90% to its total revenues, is under strain due to the 28% GST levied on the online gaming sector, Dream Sports is looking to make strategic investments for a significant minority of 26% and upwards stake in companies at the series C stage and onwards.

Dream Sports_ Different Businesses_Graphic_ETTECH_NEW

Also read | DGGI raises Rs 55,000-crore tax demand from Dream11, other online gaming companies

Areas of focus: Commerce, content, and health ventures that could eventually meaningfully contribute to its revenue and benefit from its operational experience in the sector.

Quote, unquote: “We made VC-style investments but learnt that the waiting time for startups to scale is very long and the value we can add is actually not so much at this stage. Our earlier investments were financial investments and that’s what we are flipping completely to a larger vision, deal size, and team. We are looking at it as strategic investments,” said Jain.

Delhi taxi ban likely to hit ride-hailing apps; Uber writes to LG

Uber driver made

The proposed ban by the Delhi government on app-based taxis registered in other states from entering the national capital is likely to disrupt the operations of cab aggregators such as Uber and Ola. Uber has written to the Lieutenant Governor of Delhi-National Capital Territory opposing the move.

Quote, unquote: “Almost 60-70% commercial cars plying in Delhi are registered in bordering states of Uttar Pradesh, Rajasthan, and Haryana…if these cabs are not allowed to enter Delhi, it could create supply disruptions and inconveniences for passengers,” an executive with a cab aggregator platform said.

Uber’s plea: Uber, which has around 70,000 taxis, running either on CNG or electricity-driven, said such restrictions are “impractical and hard to execute”.

“This would be akin to mobility lockdown for citizens of Delhi NCR (National Capital Region, which includes parts of other states) who would be left in the lurch if they need to access critical infrastructure like the airport, railway stations, and even major hospitals,” Uber wrote.

Catch-up quick: On Wednesday, Delhi’s transport minister Gopal Rai announced the ban after the Supreme Court observed that a large number of cabs carrying only a single passenger have registrations in other states. The court had asked that these be monitored so that only Delhi-registered taxis ply during the current period.

Companies rush for cyber insurance on data laws, digitisation

cyber insurance_Startup_cybersecurity_THUMB IMAGE_ETTECH

The Indian insurance market is seeing a strong uptick in demand for cyber insurance. While not as popular as marine or fire insurance covers, cyber insurance is now becoming increasingly important for data-led businesses for whom data theft or fraud attacks are potentially very big issues. As per industry estimates, cyber insurance will grow by around 30% in the next couple of years.

Driving demand: Reasons driving demand for cyber insurance

  • Increased sophistication of fraud attacks
  • Strengthening data norms in the country
  • Mandates from European clients who are already covered by GDPR, the European data protection law
  • General digitisation of businesses, making them more vulnerable.

Key Issues: Cyber insurance is not like any other insurance product. It is complex and needs multiple levels of checks from the insurer as well as the reinsurer. The pricing might not be conducive for small companies and even large ones need to budget for the cost.

Most early-stage companies do not qualify for an insurance cover given the stringent IT norms that are required, and they’re difficult for companies operating at a small scale to adhere to.

Madras HC sets aside Tamil Nadu ban on online rummy, poker again

Online gaming ban

Online gaming companies cheered on Thursday after the Madras High Court struck down the law banning online real money games like rummy and poker for the second time, saying that they are games of skill. This comes amid a raging debate on the constitutionality of online gaming in courts and several states.

Chance or skill? The All India Gaming Federation, Gameskraft, Games24x7, Junglee Rummy, and A23 were among the petitioners who argued that while the game is legally permissible when played physically, it becomes illegal when played online. The court said the ban can still be enforced for games of chance, but it should not apply to rummy and poker, which are games of skill.

This is the second decision in less than three years questioning the constitutionality of banning real money games.

Madras HC Print GFX

Expert take: Gaming and technology lawyer Jay Sayta told ET that the Madras HC order is a reiteration of several recent high court judgments that games of skill, whether played online or offline, with stakes or otherwise, cannot be banned by states.

Recap: The real money gaming industry is facing a tax demand of more than Rs 1.5 lakh crore, after the government decided to levy a 28% GST on deposits made by users to play a game, instead of on the winnings.

Also read | Decoding government’s tax math for online gaming players

Genpact names Balkrishan Kalra as next CEO


Balkrishan Kalra, CEO-designate, Genpact

Global business process management firm Genpact on Wednesday announced that Balkrishan (BK) Kalra would become the next chief executive officer of the company, effective February 9.

Who is Kalra? Kalra is currently global business leader for financial services and consumer and healthcare at Genpact. He joined the company in 1999 and has held various roles since then.

Tiger’s exit: The New York-headquartered company said current CEO NV (Tiger) Tyagarajan, who is also the president, would retire after over 12 years at the helm. Tyagarajan has served as CEO since 2011. He will continue to serve as a member on the board of directors of the company after he retires, the company added.

New chapter: “He understands the importance of investing in emerging trends and technologies with a particular focus on Genpact’s efforts around advanced analytics and AI-enabled solutions. BK’s strategic vision and deep understanding of our clients and business is exactly what Genpact needs as we enter this new chapter,” said James Madden, chairman of Genpact’s Board of Directors.

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Bhupinder Singh, founder & Group CEO, InCred

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Global Picks We Are Reading

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■ Google antitrust trial exposes deepening rift with Microsoft (WSJ)

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