The Indian online gaming industry, especially the smaller offshoot of the foreign betting industry that operates in India, has always been a bit murky when it came to laws. The online gaming industry grew, with both domestic and international brands catering to users who wanted to bet on sports, horse racing, or casino games.
However, the recent steps taken by the Indian government seem to signal a chance at some legal framework to be made in the near future, even for off-shore operators, who have enjoyed relative anonymity so far.
Starting October 1st 2023, the Finance Ministry is planning on charging a 28% GST on the full value of each from all online gaming operators, including foreign companies. This can have a huge impact on the online gaming industry.
Such a similar tax was already announced for India-based fantasy gaming brands as well. However, now this tax is also going to be levied on any and all off-shore betting companies that accept players from India. In order to pay these taxes, off-shore betting sites will have to get a GST registration in India and then pay 28% of the full value of each bet placed.
Needless to say, this is a significant sum for any betting company to pay, and this announcement has already had a big impact on the industry. Recently, two of the biggest international betting sites, Bet365 and Betway, have both exited the Indian market due to the impending fear of taxes. Bet365 was immensely popular amongst Indian users for cricket, football, and horse racing, and now many players are left with no choice but to find other sites like Bet365 to bet. Similarly, Betway was a beloved brand that has also left the Indian market.
However, it seems like there is still some time before this latest regulation can be implemented in full swing. Gaming companies have pointed out that some states are yet to make these changes to their SGST Acts, which means that there is still some ambiguity left when it comes to implementation.
Other gaming companies have also asked the Indian government for an appropriate amount of time to transition to the new regulation. This means that users should soon expect to see changes in their favourite betting companies. These companies will have to make changes to their product as well as maintain user data repositories in order to comply with the GST regulations in the country.
Does this make these latest regulations bad for the online gaming industry in India? Not necessarily. Such a move does portray the Indian government’s intention to perhaps legalise and regulate the industry. Such moves have been made by many other countries in recent years and have created a space for even more innovation and competition in the field.