On July 11, India’s Goods and Services Tax (GST) Council raised taxes on online gaming, casinos, and horse racing from 18 to 28 per cent. The move has sent shockwaves across an industry that has boomed in recent years and is now valued at C$2 billion annually. The brunt of the tax is expected to be passed on to consumers, but the move could also lead to job losses, hinder innovation, and curtail foreign investment.
A big hit for a booming industry
There are 1,069 gaming startups in India, with the industry employing more than 100,000 people nationwide.
One of the biggest recent draws for online gaming are fantasy gaming platforms, which, during this year’s Indian Premier League season alone, raked in C$451 million in revenue. Some of India’s top cricket players have endorsedthese gaming platforms. In a country where cricket is followed with a feverish intensity, these endorsements have helped expand the industry: in 2023, more than 61 million people in India played on gaming platforms. The tax increase on the industry was first proposed in 2022 by the GST Council but was held in abeyance due to the ensuing outcry. However, a series of tax evasion incidentswithin the gaming industry over the past year prompted the government to push ahead with the amendments.
Stocks take immediate tumble
In addition to the tax increase, a greater portion of company revenue will now be taxed as 28 per cent is levied on the full-face value of bets. Gaming stocks tumbled after the tax announcement.
The industry, which has attracted C$3 billion in foreign investment in recent years, could see money from abroad dwindle due to the new tax. Industry players opined that the move could force companies seeking to retain investors out of the country and boost dicier ‘offshore’ platforms — even illegitimate ones.