Indian Government Concerned Over Tax Losses From Offshore iGaming Operators

Indian Government Concerned Over Tax Losses From Offshore iGaming Operators

India continues to say no to legalized iGaming but that hasn’t stopped the iGaming industry from growing significantly in India, especially after the COVID-19 lockdown. Offshore gaming operators continue to target Indian players and make significant profits while the Indian government watches helplessly as millions in gaming taxes evade them.

The latest Lumikai reports show that India’s gaming market encompassing cloud, PC, and mobile gaming is estimated to be around $2.6 billion. Experts expect this figure to quadruple over the next few years to $8.6 billion by 2027.

iGaming Market Growth Will Not Slow Down

The gaming and interactive media venture fund Lumikai reports that up to 120 million Indians play for real money, generating minimum revenue of $20 per user. Indian gamers account for 15 billion game app downloads in 2022, making the country the biggest consumer of mobile games in the world.

Lumikai Founding General Partner Justin Shriram Keeling says that the number of gamers in India crossed the half-a-billion mark in 2022. This rapid growth is because of a fast-rising gamer base, a high conversion to paid users, and the rising sophistication of Indian gamers.

Lumikai also reports that 48% of Indian gamers purchase mid-core games, and 65% make in-app purchases at least once. It also notes that the number of female gamers in India is fast rising. The ratio of Indian male to female gamers is 60:40, split equally between non-metro and metro cities.

Tax Evasion Causes Economic Loss

After the ICC T20 World Cup commenced in Australia, Indian cricket fans are experiencing a bombardment of online gaming and betting apps from offshore gaming companies. These ads enjoy the endorsement of Indian television and film actors and sports stars. But they all belong to foreign companies or offshore gaming operators, which do not pay taxes to the Indian government.

The Indian government is aware of the massive tax evasion from offshore gaming companies and the millions of dollars in revenue they are missing out on. As a result, the Indian revenue department is discussing the possibility of banning offshore betting apps with the Ministry of Electronics and Information Technology. Local media reports that the Income Tax Department, the Directorate General of GST Intelligence, and the Enforcement Directorate are keeping an eye on foreign online betting and gaming apps.

Pari Match, Dafabet, 1xBet, and others operate from the Isle of Man, Gibraltar, Curacao, Malta, Belize, and other gambling jurisdictions with liberal tax regulations, enabling them to evade taxes in India. Although offshore betting companies have Indian connections, their owners do not reside in India. Despite the ban on gambling-related ads in India, betting companies use sports and entertainment media to attract customers in India.

Zee News India reports that offshore betting companies earn over INR5000 crore per month. In addition to booking spaces on digital, OTT, and television platforms, these companies open news websites in partnership with sports teams and display their logos on team jerseys and sports websites.

All India Gaming Federation Gets Three More Members

Meanwhile, three more members have joined the All India Gaming Federation (AIGF), the apex industry body for Indian online gambling, always at the forefront of consultations with policy-makers to demonstrate the benefits of standardizing and recognizing its self-regulatory framework for games of skill.

With Glance Gaming, Head Digital, and Myteam11 joining the AIGF, the industry body has more than 100 members across multiple gaming formats, including card games, fantasy gaming, virtual gaming, egames, casual games, and esports.

AIGF represents operators of skill gaming sites from all gaming formats and drives conversations with relevant stakeholders to protect its members’ interests. The apex body raises awareness among all concerned about the socio-economic benefits of the online skill gaming industry through research reports, representations, events, seminars, and surveys.

The AIGF also regulates all real money forms of gaming, including the freemium, free-to-play, play-to-earn, and pay-to-play formats. It has created a self-regulatory charter with excellent standards for conduct, certification, and audit for its members. The Independent Online Skill Gaming Council (SGC) oversees the activities of the AIGF.

AIGF CEO Roland Landers says playing skill-based games is legal in India. He points out that India’s online mobile gaming industry is a sunrise sector worth $1.5 billion, has a CAGR of 38%, and is expected to become worth $5 billion by 2025 and as a result the AIGF is bringing stakeholders together to prepare for the market boom ahead!

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