India’s largest gaming operator Delta Corp says it has started offering customers one-time promotional casino chips in an effort to lure them back following a recent decline in footfall due to the impact of a controversial 28% GST imposed on the face value of chips purchased.
In an interview with local media outlet Business Today, Delta Corp CFO Anil Malani revealed the company would take a financial hit as a result of its promotional chips approach but that such action was necessary given a significant decline in its customer-based after the new GST requirement came into effect in October.
“Customers were unhappy with the 28% levy and we soon realised that we will lose our customers as there are several [other] options available [to them] in the industry,” Malani said. “So, we did a pivot in December and decided that whatever the customer wants, we should try and in some form or fashion compensate the burden of tax that he is facing.”
According to Malani, the results have been encouraging with 45% of its 4Q23 coming in December, when the promotional chips offer was introduced.
“They are not cash chips, so you can’t really go and encash it but you can play with them and the winnings against it can be encashed,” he explained. “We were doing this off and on for several years and in several of our locations but now this has become a practice at our casinos.”
While the promotional chips “will impact our bottom line and our margins will come down by 6% to 8%,” Malani added that footfall had recovered to pre-October levels, suggesting customers were satisfied with the new arrangement. Delta Corp is hoping to return to its previous levels of revenue and profitability by the end of the year, he said.
Meanwhile, the company is awaiting a judgement on notices sent to three of its subsidiaries demanding back payment of 11,439.49 crores (US$1.38 billion) for alleged short payment of GST, having already been granted a stay on all three in Goa, Sikkim and West Bengal.
“It is my understanding that most of these are now going to be clubbed together, and now will be heard in the Supreme Court,” Malani said.
“We were always paying 28% GST on casinos and the methodology followed by us was identical to what was being done by us in the pre-GST era.”
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