How India's Tax Backlog Could Affect India's Gambling Industry

India's online betting market is a multi-million dollar industry that is projected to rise above $1.11 billion by 2027. However, recent developments could significantly impact the industry's ability to grow as Indian tax authorities attempt to implement backdated levies against operators.

In total, the Indian government is demanding approximately $12 billion from betting operators following changes to the Goods and Services Act. Changes include a 28% tax rate for gaming operators, with many being targeted for back payments.

There are still disputes between gaming and fantasy sports operators and Indian authorities over what constitutes gambling. Operators claim the services they offer are based on skill rather than chance.

The current tax rate most operators work under is 18%, but this is set to change soon. The news has sent shockwaves through the Indian gambling industry with many fearing that costs will be passed over to customers.

One of the main benefits of online betting is the ability to shop around for the best odds and deals. Some of the top online bookmakers offer excellent incentives for players to sign up and competitive odds to ensure they stay. Fears that raised taxes for regulated betting operators in India could impact their ability to compete with offshore operators could see a shift in how people choose to bet.

If the plans move ahead, it is not only the Indian betting operators that will suffer. Software and hardware developers that rely on the industry could also be hit if operators attempt to cut costs.

Offshore betting operations appeal to many gamblers already because of their extensive range of games and betting markets. The highly competitive market ensures operators maintain high standards. This includes using state-of-the-art technology to enhance the user experience.

If Indian operators are hit with higher tariffs, they will not be able to invest as heavily in keeping their service up to date. This could see offshore operators pull ahead and entice a larger number of customers to move away from regulated operators.

This will also have a negative effect on the revenue authorities are able to take from the industry. While the tax rate may be higher, it is likely to come from a smaller amount if the changes go ahead.

One of the most significant hurdles for the Indian government in recouping the $12 billion is that this is more than 10 times the current annual revenue generated by the gambling industry.

Some operators have spoken about pulling out of the market with experts warning that higher taxation will not only slow down the growth of the industry but kill it.

The potentially detrimental effect of the plans on the Indian betting industry and economy could see changes being made to accommodate both parties. It could also open the door to updated betting regulations in the country.

Betting is strictly monitored in the country with concerns over its morality and the possibility of addiction. Greater tax rates could be used for initiatives to promote sensible gambling and provide help where it is needed.

The lack of regulations and frameworks around online gambling in the country also needs to be adjusted to reflect the age we live in. Mobile use and internet access mean the popularity of online betting has risen significantly. 

Proper regulatory frameworks and realistic tax rates provide operators and investors with a more attractive proposition. The uncertainty around the current tax rates will dissuade new businesses and encourage existing ones to consider their futures.

Photo by Vikas Makwana on Unsplash