Shares of Delta Corp, India’s prominent casino and online gaming operator, fell more than 3 percent on January 14, 2025, closing at Rs 106, following the company’s disappointing financial results for the third quarter of fiscal year 2024-25 (Q3FY25). The drop reflects the company’s ongoing struggles as it grapples with a variety of challenges impacting its gaming operations and broader business performance.

Weak financial performance in Q3FY25:

For the quarter ending December 31, 2024, Delta Corp reported a slight increase of 3.5 percent year-on-year (YoY) in net profit, amounting to Rs 35 crore. However, the overall financial results were concerning, as total revenue decreased by 7.5 percent YoY to Rs 194 crore. The company’s operating profit also took a significant hit, with its EBITDA plunging 42.4 percent to Rs 32.2 crore. As a result, EBITDA margins contracted sharply, shrinking by 1,000 basis points YoY to just 16.6 percent. This decline signals a challenging environment for the operator, which has already been grappling with market fluctuations and regulatory hurdles.

Delta Corp’s performance comes amid ongoing legal challenges related to Goods and Services Tax (GST) demands from the Indian government. According to Money Control, the company, along with several others in the sector, has been served with notices seeking back payments of taxes for alleged shortfalls in GST contributions. In particular, the Directorate General of GST Intelligence (DGGI) issued a series of notices between mid-2023 and early 2024, demanding a substantial tax payment of Rs 1.12 lakh crore from 71 online gaming companies. These tax demands are based on a new clarification issued by the GST Council in August 2023, which imposed a 28 percent GST on the full value of bets placed, rather than on the gross gaming revenue. This new rule is particularly contentious, and gaming companies have pushed back, challenging the validity of these demands in court.

Delta Corp has received a temporary reprieve, however, as the Supreme Court of India granted a stay on the GST proceedings, halting any tax collections until the court issues a final ruling. This has provided some relief to Delta Corp and other online gaming firms, which have expressed confidence in a favorable legal outcome. “We are of the view that all the above notices and tax demands are arbitrary in nature and contrary to the provisions of law. The companies have challenged such tax demands and initiated necessary legal proceedings,” a Delta Corp spokesperson stated, as reported by Inside Asian Gaming.

Mixed performance across segments:

Despite the challenges, Delta Corp’s broader business remains diversified, with operations spanning casinos, online gaming, hospitality, and real estate. The company operates three prominent casinos under the Deltin brand in Goa, including Deltin Royale, Deltin JAQK, and Deltin Caravela. Additionally, Delta Corp has been expanding its footprint in the hospitality sector, owning several hotels, including the Deltin Suites in Goa, and the Deltin hotel in Daman, which is an integrated resort with a proposed casino.

In its most recent quarterly report, Delta Corp noted some positive developments in certain areas. While gaming revenue from its casino operations saw a slight decline in Q3FY25 compared to the previous year, the company reported a strong performance in its online skill gaming segment. Revenue from online gaming activities grew by 9.2 percent compared to the previous quarter, reaching Rs 45.45 crore. Furthermore, Delta’s hospitality division also posted an impressive growth rate of nearly 48 percent, helping offset some of the declines seen in other areas.