Delta Corp, India’s largest gaming operator, has recently implemented a unique strategy to counteract the adverse effects of the controversial 28% GST imposed on casino chips. In an attempt to lure back customers following a decline in footfall, the company has introduced one-time promotional casino chips. Despite acknowledging the financial impact of this approach, Delta Corp CFO Anil Malani emphasized its necessity in light of the significant customer loss after the implementation of the new GST requirement in October.
Background and Challenges
Delta Corp faced a considerable challenge when the 28% GST on the face value of chips was introduced, leading to a decline in customer visits. In an interview with Business Today, Anil Malani explained that customers were dissatisfied with the tax burden, and the company realized it needed to take action to prevent further customer attrition. The decline in footfall prompted Delta Corp to reassess its strategy and find innovative solutions to maintain its market share.
Promotional Chips Strategy
To address the customer dissatisfaction and declining footfall, Delta Corp introduced a promotional chips strategy in December. The chips are offered as a one-time promotion, allowing players to use them for gameplay, with the winnings being encashable. While acknowledging a potential 6% to 8% impact on margins, Malani highlighted that the results have been encouraging, with 45% of the fourth quarter revenue generated in December. This approach aims to compensate for the perceived tax burden and entice customers back to the gaming tables.
Customer Satisfaction and Recovery
Despite the anticipated impact on the bottom line, Delta Corp has witnessed a recovery in footfall, reaching pre-October levels. Malani suggested that the success of the promotional chips offer indicates customer satisfaction with the new arrangement. The company is optimistic about returning to previous levels of revenue and profitability by the end of the year, showcasing the effectiveness of the strategic pivot.
Legal Challenges and Subsidiary Notices
In addition to the GST challenges, Delta Corp is currently navigating legal hurdles related to notices sent to three of its subsidiaries. These notices demand back payments totaling 11,439.49 crores (US$1.38 billion) for alleged short payments of GST. While a stay has been granted in Goa, Sikkim, and West Bengal, the company is awaiting a judgment. Malani mentioned that these cases are likely to be consolidated and heard in the Supreme Court, emphasizing the need for a fair resolution.
Future Outlook and Industry Dynamics
Looking ahead, Delta Corp remains focused on its recovery trajectory and aims to restore revenue and profitability. The gaming industry’s competitive landscape and customer preferences play a crucial role in the company’s strategic decisions. As the industry evolves, Delta Corp will continue adapting to market dynamics while addressing regulatory challenges.
Delta Corp’s proactive response to the GST impact on its gaming revenue reflects the company’s commitment to customer satisfaction and business resilience. The introduction of promotional chips, despite its financial implications, demonstrates a strategic pivot that has successfully attracted customers back to the tables. As legal challenges unfold, the company remains optimistic about its future, navigating industry dynamics and regulatory changes to secure its position as India’s leading gaming operator.