On July 11, 2023, the Government of India said that a 28% tax on funds will be imposed on the total amounts the online gaming companies collect from users.
These online gaming companies became very popular right when they came out. After the introduction, India yielded a large amount of money for these companies.
The online gaming industry is worth about $1.5 billion and has attracted foreign investment due to its immense popularity. Finance Minister of India, Nirmala Sitaraman, has detailed that the decision to impose the tax on the total amounts of these gaming companies was taken after consultation with the states. She added that there was no intent to hurt the industry.
The industry representatives are not that convinced by this statement that they said this imposing tax would narrow down their earnings and extra charges were likely to be passed on to customers.
The gaming apps in India are advertising and endorsing famous athletes in India. The majority of these athletes belong to the Indian Premier League or IPL. The IPL is the franchise cricket league tournament conducted annually in India.
The revenue of these platforms rose by 24% from last year to over $342 million during the IPL cricket matches with over 61 million users participating, Redseer consultancy said this month.
Cricket is the most popular sport in India, and the brand ambassadors of these online gaming companies are cricketers. Hence, the popularity of these companies reached every corner of the country.
The other side of this coin is that addiction and financial losses are a tremendous number surrounding these companies. On the app Dream11, users can create their teams for just Rs 8 with a total prize pool of Rs 1.2 million.
These apps offer the ‘legal gambling’ experience where India has not legalized gambling other than in Goa.
