Online betting and gaming have become a multi-billion-dollar industry worldwide, with governments unable to resist the temptations of regulating and taxing operators. India has become the latest country to introduce its new set of taxation laws after publishing a 28% levy on all the money collected by online gaming companies.
In India, where cricket is a national sport, top-rated professional players frequently promote gaming apps. However, there have been concerns about potential addiction and financial losses among bettors.
India's sports betting and iGaming industries have attracted a lot of foreign investment lately, with figures showing the industry has expanded by 28% to 30% annually.
An excellent example of foreign investment in the industry is the partnership between Dream 11, the primary sponsor of India's national cricket team, and Tiger Global, an investment firm from the United States.
The government floated the proposal to increase the betting levy by 30% in February 2023. This proposal was part of the Finance Bill 2023 during a budget presentation by Nirmala Sitharaman, the country's finance minister. On Tuesday, July 11, the finance minister stated that the decision came after lengthy deliberations. Sitharaman also chairs the goods and services tax council comprising state finance ministers.
The minister said:
“The GST Act will be amended to include online gaming and horse racing. Very substantive discussions have taken place on the matter of online gaming. All the states presented their views today, including Sikkim and Goa, which see a lot of tourism for casinos.”
As expected, customers on regulated online betting platforms may have to shoulder much of the extra costs. This is after industry leaders suggested they could have to increase game prices to pass on the extra costs to their customers.
Aaditya Shah, chief operating officer at IndiaPlays, said:
“The implementation of a 28 percent tax rate will bring significant challenges to the gaming industry. This higher tax burden will impact companies' cash flows.”
The CEO of All India Gaming Federation, Roland Landers, called the decision to introduce a 28% tax "irrational" and “unconstitutional.”
Before this proposal, all gaming businesses in India paid a small tax on the funds collected for providing real-money games. However, the new adjustment means they must part with 28% of their collections.