A recent announcement by India's Goods and Services Tax (GST) Council in July, effective from 1 October, revealed a flat 28% turnover tax for online gambling, casino, and horse race betting. This tax model applied to the full-face value of bets instead of gross gaming revenue (GGR) has caused industry stirrings, with Super Group being one of the entities voicing concerns.
Super Group CEO Neal Menashe emphasized the importance of regulatory adaptability,
We remain committed to exploring long-term growth opportunities globally, basing our decisions on the evolving regulatory scenarios across various markets.
Despite their departure from the Indian market, Super Group ensures their annual financial projections remain unaffected.
Industry Body Blasts Higher Rate
The new tax structure, applied to the complete value of all online gambling bets, has not been well received. For land-based casinos, the tax will be calculated based on the face value of chips purchased, and in horse racing, it will be levied on the full bet value placed with bookmakers and totalisators.
The All India Gaming Federation (AIGF), the nation's premier industry body for online gambling, has expressed its reservations. Suggesting that the heightened tax could render business operations challenging, the AIGF cautioned against a potential increase in users gravitating toward unlicensed operators. The body highlighted the exorbitant financial implications: "With GST on deposits potentially escalating liabilities by 400%-500%, we anticipate substantial job losses."
Wider Changes in India Market
This tax imposition is not the sole alteration the Indian online gambling sphere has witnessed this year. Earlier in January, the Indian government unveiled a fresh compilation of rules for the online gambling sector.
The newly minted regulations stipulate that any offered online game must adhere to pre-existing laws, including those state-level gambling prohibitions.
Furthermore, the government introduced proposals for establishing self-regulatory bodies to be formed by online gaming enterprises. These bodies would shoulder the responsibility of drafting guidelines for the industry.
Self-regulatory organizations should prevent player harm, address gambling addiction, prevent financial transgressions, and protect minors from online gambling.
The introduction of the 28% turnover tax has undeniably ruffled the Indian online gambling market. Super Group's exit is a significant development that underscores the challenges faced by operators in adjusting to these new financial and regulatory conditions. How other significant players will navigate the evolving landscape remains to be seen.