Real money gaming (RMG) firms are watching with alarm as illegal offshore gambling sites and apps grow at a rapid rate in India.
Real money gaming (RMG) firms are watching with alarm as illegal offshore gambling sites and apps grow at a rapid rate in India, but have not yet been able to convince the government to reduce taxes on the legal industry as a way to curb illegal players.
Indian RMG firms, which offer games and fantasy sports that allow users to stake money for rewards — with the risk of losses — have largely been given legal status, thanks to successive legal judgements in their favour. Courts have ruled that their activities do not constitute betting and gambling, thus insulating them from State bans.
But the 28% GST imposed on these firms has increased their costs significantly, and given an opening to offshore services with no claim to legality. The existence of these offshore firms have long been potent fodder in RMG executives’ efforts to seek lower taxes from the government. Since these firms operate illegally in India, switching domains and using “mule” bank accounts to stay online and collect payments from players, they do not pay GST at all, and cannot be regulated, unlike Indian firms like Dream11 and PokerBaazi.
Swift growth
Even as that argument has been floated as an effort to reduce the domestic industry’s tax burden, Indian RMGs are now increasingly worried by the fast growth of foreign competitors doing business in India. One industry executive said that offshore apps have been growing at a compound annual growth rate (CAGR) of 30%, similar to the initial days of the legal RMG industry before GST imposition. The legal industry’s growth rate has now plateaued to 10 to 15%, the executive said.
A 2024 industry report by a group called the Think Change Forum estimated the cumulative size of the illegal betting firms at ₹8.2 lakh crore, noting that this is growing rapidly. Authorities have cracked down on some of these, such as the Mahadev app. But those based on foreign shores, such as 1xBet, are harder to crack down on, since they constantly change their banking providers.
The argument — that the government is foregoing tax revenues with the proliferation of such betting sites — has so far not convinced policymakers to change tack.
Industry consolidation
In the meantime, the RMG industry is consolidating. Head Digital Works, an RMG firm, acquired the parent company of Adda52, one of India’s oldest poker platforms, for ₹491 crore last month.
Nazara Technologies, which offers both RMG and video games, has acquired a major stake in Moonshine Technology, which runs PokerBaazi. Another firm, OneVerse, has acquired the platform PokerDangal.
Regulations seem to be in pause mode, with the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Amendment Rules, 2023 on standby, as the government is yet to formally recognise any self-regulatory body under the Rules’ provisions. The industry has taken a few steps to burnish its own legitimacy in light of this inaction, such as assisting a study that positively assessed the effectiveness of playtime limits, and putting out a code of ethics that reaffirmed RMG firms’ existing safeguards.
Published – March 14, 2025 08:30 pm IST