How 28% GST is harming India's real money gaming industry
The online real money gaming (RMG) industry in India has witnessed a major slowdown, under the new Goods and Services Tax (GST) regime introduced last year. The tax reform, which levies a 28% tax on total deposits, has drastically changed the RMG segment's landscape. Despite overall growth in the online gaming sector, the RMG segment's growth has fallen from a strong 25% compound annual growth rate (CAGR), to only an estimated 8% CAGR between 2025 and 2028.
GST hike leads to operational challenges, start-up shutdowns
The new GST regime has significantly increased operational costs for gaming platforms, with GST burden rising 300-400%. Forced to absorb costs to retain customers, companies have witnessed a 50% dip in margins. The financial strain has also stifled innovation and user acquisition efforts. Industry sources reveal over 25% start-ups have shut down within a year of the tax hike, leading to job losses, and reduced investments.
Funding struggles and user migration to offshore platforms
The RMG sector, which attracted over ₹22,000 crore since FY19, is now finding it hard to raise funds due to the twin blows of higher GST and retrospective taxation. Further, a worrying trend has emerged with users shifting to offshore betting platforms operating outside India's legal ambit. These platforms reportedly receive deposits worth ₹8,20,000 crore annually, causing a potential GST loss of ₹2,29,600 crore/year to the Indian government.
GST revenue growth and industry's call for regulatory clarity
Despite the challenges faced by RMG platforms, the government has witnessed a 340% surge in monthly GST revenues from this industry, from ₹250 crore to ₹1,100 crore. However, sustainability of this revenue growth depends on the industry getting regulatory clarity and resolution of retrospective tax demands. The industry had requested a review of the tax but got no amendments in the 54th GST Council meeting.
