Amidst a situation where the online gaming industry has been facing adverse impacts of the 28% goods and service tax (GST) on full deposit value, it is believed that offshore betting platforms have gained popularity among users. Albeit illegal in India, offshore betting platforms have continued advertising on billboards, cabs, influencers, and franchise league jerseys among other avenues. This is despite the guidelines set by the Ministry of Information and Broadcasting (MIB) and the Advertising Council of India (ASCI) which demarcated that gambling platforms are illegal in India and shouldn’t be allowed to advertised. The MIB also warned influencers against endorsing offshore online gambling platforms. “Despite several decisive steps by the government, offshore betting platforms continue to operate and advertise in India due to legal ambiguity and their adept use of technology. Additionally, their adaptive strategies, such as frequently changing domain names and using mirror websites, further complicate enforcement efforts by regulatory authorities,” Shalabh Saxena, partner, Grant Thornton Bharat told BrandWagon Online.
Not to mention, these offshore betting platforms are not registered in India and hence do not pay any taxes to the government. As a result of gambling platforms operating in India, the Indian exchequer has been losing almost Rs 2.5 lakh crore, according to a report by Think Change Forum. Industry experts believe that educating the mass on responsible gambling and building awareness about such things is the need of this hour. “Given the current confusion regarding regulations about the legality of some offshore betting or gambling apps, and how these companies can operate in India, it is very important to crack down on the violating companies. I think the biggest question here is also on how to educate the masses on responsible gaming and building awareness around these topics,” Aruna Sharma, policy advisor, practitioner development economist, and former secretary, Government of India said.
It is widely believed that the imposition of 28% GST on the whole deposit value has motivated users to choose offshore betting platforms over onshore ones. As per experts, users have been opting for offshore platforms as they don’t have to pay the GST amount there. “Other nations that impose a tax on contest entry amounts have subsidised tax rates ranging from three to 15% with a rising tendency towards taxing gross gaming revenue rather than the full face value of bets placed. With the reduced prize pools from domestic gaming platforms and lower tax burdens for offshore counterparts, a potential shift in consumer preference towards offshore alternatives has been observed,” Krishan Arora, partner, Grand Thornton Bharat, said.
However, the question remains, will only revisiting tax policies be sufficient to retain users? According to industry experts, a holistic approach is needed. “Only addressing GST rates alone may not suffice and the government may also focus on other taxation and regulatory reforms (including withholding tax obligations and FDI regulations), infrastructure enhancements (like payment gateways), and IT reforms to bolster the legitimacy and security of onshore gaming platforms. A holistic approach that integrates taxation andregulatory frameworks, operational costs, user experience, and market access is necessary to promote the growth of onshore gaming in India,” Arora added.