Online gambling has been one of the fastest-growing industries in India. That is not surprising since technology has reshaped this sector, while the population structure provides a great playground for gamblers and operators. However, the ministers’ panel could disrupt online gambling expansion in India due to a proposed tax model. The industry might face many challenges in the upcoming period, and this proposal has raised many discussions. What could be the impact of the new Goods and Services taxation model on the online lottery in the world’s second-most populated country? We are going to investigate the potential consequences in this article.
Tax Increase and Its Impact on the Indian Online Lottery
The online gambling sector could likely suffer a heavy setback if the new taxation model, prepared by Meghalaya Chief Minister Conrad Sangma and his panel, gets voted on. The major change comes with the significantly increased tax rate, from the existing 18% to the proposed 28% blanket tax. This increase could slow down the industry’s growth, including the online lottery as its important part. The tax increase brought up many divided opinions, but facts indicate that it wouldn’t bring many good things to this industry.
Over the past few years, the Indian online gambling market, including online lottery, has experienced significant growth. Since the law doesn’t prevent online gambling, many domestic and offshore operators have started exploiting this huge market. However, this expansion could likely be held back by the proposed tax change. Many gambling companies, including the best online lottery sites, according to the experts from bestonlinecasinos.in, will find it much harder to keep their businesses profitable. Although the final report still hasn’t been submitted, this tax rate hike has already triggered many discussions. After the first date push from 10th August to 17th December, we saw another delay.
The Indian online gambling market could face a huge disbalance after the GST implementation. Since many offshore gambling companies that also offer lottery have entered the market, this tax could create a substantial advantage for them. On the one hand, domestic operators could experience a tax rate hike from 18% to 28%. But on another, international gambling companies operate under jurisdictions of other states, mostly “tax heavens” for gambling activities. Therefore, online gambling businesses operating from Curacao or Malta could get a huge market advantage since they will need to pay much lower taxes to their authorities. Consequently, they might start dominating Indian online gambling, including lottery, as they will have a much better strategic position than domestic operators.
Major Flaws of the New Taxation Model Proposal
A lot of concerns are surrounding the newly-proposed GST tax model. Perhaps the biggest one is the lack of casino activities categorization. Other jurisdictions make a clear distinction between “games of skill” and “games of luck.” Although it might seem irrelevant, it’s quite important to apply separate tax schemes to these two major types of casino games.
For example, if you play blackjack, poker, fantasy games, or rummy, you can apply certain strategies to lower the house edge and increase your chances of winning. That’s why these are the most popular games of skill. On the other hand, those who prefer spinning the reels and playing roulette or the lottery depend solely on their luck. Therefore, no strategy or skill can impact the outcome of these games. Although other jurisdictions separate these two types of casino games in their regulations, the GST Council has missed to do it, and all casino games are equally taxed.
Consequently, the failure to make casino games categorization brings online lottery companies and players into a tougher position. Operators will need to find ways to attract players who will turn their focus to offshore lotteries. On the other hand, players won’t count on legal help if they get scammed by unfair international companies. That’s why the ministers’ panel needs to address this problem as soon as possible.
How Will It Impact the Indian Online Lottery Market
The online gambling market in India, including online lottery, could experience many downsides of the proposed tax model. Although the tax rate would be higher, bringing more GST collections to authorities in the short term, it is questionable whether that is sustainable. It could stifle domestic online gambling operators, including already-established companies. They would need to keep their businesses profitable, while offshore gambling sites will continue operating under lower taxes from their jurisdictions.
That might be a major reason for players to gamble at international companies. We have already seen many new gambling sites regulated outside of India in the Indian gambling market. With the new tax model, their number will keep increasing, but domestic operators will face a tough time maintaining profitability and starting new gambling companies.
However, this tax proposal might have an indirect impact on players, not only on gambling companies. As international operators would have more space to offer better promotions, they will likely attract many Indian players. However, with so many operators in the market, some of them will inevitably face problems with gambling sites’ fairness. It could trigger many security issues, from inappropriate usage of players’ sensitive data to refusing withdrawals. Since those operators are not under the jurisdiction of Indian authorities, players might become unprotected in these cases.
Therefore, players should raise their online security awareness, especially since online gambling deals with personal data and real-money transactions. Of course, most offshore operators are reputable and trustworthy, especially those licensed by the UK Gambling Commission or the Malta Gaming Authority. They are strictly audited, and these two regulatory bodies are the leaders in the global online gambling market.
Conclusion
The future of the Indian online gambling market, including the online lottery, might become uncertain with the new taxation model. For us, nobody wins with the proposed GST rate of 28% on revenue. International gambling companies will get the market advantage, while domestic businesses will fight for survival. Players will continue to enjoy online lottery and other casino games, but the security level will drop. Eventually, the country won’t have long-term benefits if this tax scheme stifles domestic gambling businesses. Therefore, this hot topic should continue to be discussed.
Disclaimer: Gambling involves an element of financial risk and may be addictive. Please play responsibly and at your own risk. This post contains material that may or may not be legal in your country. Please play subject to applicable law.
