India is a Sovereign Socialist Secular Democratic Republic which, much like the United States, is broken up into various states and union territories which, while they are free to self-regulate, do have to adhere to the tenets of the Federal law.

The nature of any country governed by state and federal laws is that they can clash. This is currently the issue facing gambling and its taxation in India, as the federal view of the industry is negative, while several states have welcomed it with open arms.

 Hard Hitting Taxation

Legalised online casino entertainment was gaining momentum in states like Sikkim, Goa, Nagaland and others as they adopted a positive view of the sector and implemented fair but strict gambling acts.

While it was moderately higher gambling taxes in Europe and Scandinavia, once operators had paid for their licenses, they were subject to an annual gambling tax of 18% of their gross gaming revenue. A framework that saw online gambling in India well on its way to becoming a $2 billion-a-year industry.

However, the Gambling Act was amended last year, pushing that tax from 18% to a staggering 28%. At the time, it was announced that a review would be conducted after six months to measure the market impact—a review that sadly has not come to fruition.

No Reprieve Forthcoming

Industry experts had hoped that the recent ‘53rd Goods and Services Tax (GST) Council Meeting’ would offer the gambling industry a reprieve from the weight of this decision, but that was not the case.

During the event, the impact of the tax increase was referred to as catastrophic and detrimental to the country. A report by Ernst & Young (EY) and the US-India Strategic Partnership Forum (USISPF) used the term “funding winter” to describe the near-immediate constriction of the sector's revenue generation.

The report outlined the stark reality that the prediction that the gambling sector would grow from 100,000 jobs to close to 400,000 jobs is not longer remotely possible due to revenue growth shrinking from 100% to 200% to less than 50%. A reduction in value that has led to job loss rather than creation.

The only slight glimmer of hope at the event was the discussion of reducing the tax bracket for games of skill; however, this still leaves games of chance out in the cold.

Safer Gambling Challenges

The destructive impact of this tax increase has seen several well-regarded operations leave the country altogether, including Super Group, the company behind the reputable Betway casino and sportsbook.

While the government might see it as a way to bolster their coffers, the loss of brands known for fair play, security, and trustworthiness will directly impact the reputation of India as a gambling jurisdiction and hamper the safety of local players, not to mention the doors that it opens for predatory operators to entice players to unlicensed offshore casinos, which directly increases problem gambling rates.

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