The ill-fated decision by the India GST council to increase taxes on gambling to an unprecedented 28% is beginning to erode the legal market as Super Group announces its exit. How many will follow suit, and what does this mean for local channelisation?
Earlier this year, the Goods and Services Tax Council made their position on the acceptance of online gambling in India loud and clear when it voted to levy a 28% tax on the sector.
At the time, this prompted the CEO of The All India Gaming Federations, Roland Landers, to state:
Quote"We believe this decision by the GST Council is unconstitutional, irrational and egregious. The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities.”
It is worth noting that this was not done in concert with bodies where gambling has been legalised. Instead, it was an isolated decision with little input from those it impacted most.
Was This An Intentional Blow Against Gaming?
In what is proving to be a moment of prophetic clarity, Ankur Gupta, an indirect tax specialist at SW India, said:
Quote“… levying a 28% tax rate on the gaming industry will be a big setback for Indian players.”
A statement which mirrored Landers' own concerns:
Quote“This decision will wipe out the entire Indian gaming industry - and the only people benefitting from this will be anti-national illegal offshore platforms.”
What made the tax particularly egregious is that it was applied not to profits but to the value of casino chips purchased or bets placed. The tax would also be the same regardless of whether the gambling activity was games of chance or skill-based.
GST Council Decision Claims Its First Major operator
While the silent cost of the GST Council's ill-advised decision will be difficult to calculate at such an early stage, we have seen the first significant gambling operator bow out of the Indian market.
In a press release earlier today, the Super Group, owners and operators of Betway and Spin Casino announced that they would be exiting India immediately.
Neal Menashe, Chief Executive Officer of Super Group, stated:
Quote“We are continuously evaluating evolving regulatory landscapes across the many markets we serve. Informed by years of operating our geographically diverse business, we remain confident about the long-term growth opportunities in front of us.”
The press release clarified that the fixed 28% tax rate made the “Indian market no longer commercially viable” for the operator but that they would still meet their annual revenue projections regardless of this change in direction.
We expect to see more announcements like this in the near future, and along with the decrease in legally generated gambling income for the country, there is the genuine danger of increased activity by unregulated operations looking to profit from a newly unserved player base.
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