A major period has commenced around the Indian iGaming market, as debate over the GST framework takes centre stage amongst government officials and iGaming operators.
The 28% GST tax levy has caused much debate in India, with operators departing the regulated market and the black market continuing to grow.
As reported by media outlet, The Hindu, the debate this week could have a key impact on the future of gambling within the Indian market.
The debate looks to tackle the issue of which games fall under the umbrella of the levy, with the senior advocate A.M. Singhvi underpinning his views that the character of the game isn’t altered simply because money is wagered.
His case has been put forward as the debate lines are intensifying between games of skill and games of chance, with the Government stating that skill games should transition into a new genre once bets have been placed on them.
Singhvi responded: “Is the government saying that in chess, the moment I put money on it, the game metamorphoses from a game of skill into a game of chance? The character of a game cannot be changed.”
Earlier in the year, there was welcome news for the gaming industry in India, after a decision was made to review the legitimacy of the GST tax in terms of backdated tax and whether it can be applied to retrospective activities.
Nonetheless, there remains very minimal sign of movement when it comes to the shifting of the much-maligned tax.
The crippling levy rates have significantly increased the GST levy – it is also imperative that they are applied to all deposits and have led to a myriad of departures from the market.
One of the key departures was Superbet, with the firm revealing that the tax rules make the Indian market no longer commercially viable.
Black market anxiety
The state of the Indian market is in focus following a report by the All India Gaming Federation, which detailed the extent of which players in the country engage with the black market.
The report outlined that unlicensed betting platforms had a total of 1.6 billion visits over a three month period.
The volume of visits underlines the struggling strategy when it comes to current measures that are utilised to combat the black market, specifically pinpointing website blocking measures as not having the desired effect.
This partially comes down to illegal operators utilising mirroring websites to enable users to circumvent blocking regulatory takedowns and blocking protocols.
Central to this is the usage of new UPI accounts to evade detection from website blocking strategies.
The report cited RBI data from July 2024, which states that mules funnel around $300m in illicit funds every month, with the illicit gambling market being one of the most significant beneficiaries of these transactions.
It revealed that mules provide one of the key ways for the illicit market to evade regulatory and financial frameworks, an evasion they rely on to be sustainable.
Furthermore, there is also evidence, according to the report, that using blocking as the sole strategy when it comes to crippling the black market is simply ineffective. The report cited Norway, the UK, Denmark, Belgium and the United States as markets that highlight this.
The network utilised by illegal operators was described by the report as “highly sophisticated”, engaging with a myriad of payment journeys and currencies – these include UPI transactions facilitated through mule accounts, cryptocurrencies, and international wallets.
