Indian Government Considers Increase in Online Gaming Tax The Financial Times featured a report on India this week, focusing on plans to introduce a new tax on online gaming in the country.
The proposal has led to opposition from companies and investors who argue that it could impact the fast-growing industry for fantasy sports and other real-money games. Although gambling is largely prohibited in India, courts have ruled that real-money gaming can be categorized as "games of skill" rather than gambling.
This legal distinction allows players to compete for cash prizes in games like online rummy and fantasy sports, even without specific gambling regulations in place. The recent surge in the popularity of these games and real money online casinos has raised concerns among authorities. As a result, there's a proposal to increase tax rates to address these concerns.
Currently, companies offering real-money games collect commissions from player stakes and pay an 18% tax on that revenue. Under the proposed change, which could take effect in October, the tax rate would rise to 28%, potentially discouraging players.
This change might pose challenges for companies in the industry, especially smaller ones. Roland Landers, CEO of the All India Gaming Federation, stated that while larger companies might manage, smaller ones could struggle and even face closure.
Saumya Singh Rathore, a co-founder of real-money game platform WinZo, mentioned that under the new proposal, a significant portion of these games might become unfeasible, affecting platforms like WinZo. This situation could have implications for India's economy.
A report by Lumikai, a gaming-focused fund, estimated that India's real-money gaming market was valued at around $2.6 billion in the year leading up to March 2022. A group of investors has already communicated with Prime Minister Narendra Modi, urging the government to reconsider the tax.
If the proposed changes move forward, India's gaming industry might experience a slower growth rate.
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