India gets iGaming Boost Despite Complex Regulatory Landscape

India is home to one of the most promising iGaming industries in the world, despite having a complex regulatory and taxation landscape.

Gaming giants Flutter Entertainment recently demonstrated its commitment to India by opening a new Global Capability Centre in Hyderabad.

The Republic of Ireland-headquartered firm’s new facility will focus on data engineering, game integrity and customer support services to drive their global expansion plans.

India’s Regulatory & Taxation Challenges

India’s iGaming market is growing at a steady pace, but tax rules and regulatory complexities threaten to hamper the growth.

India’s Goods and Services Tax (GST) Council introduced a 28 percent tax on online gambling, casinos and horse race betting last October.

The tax hike boosted government revenues by a jaw-dropping 412% in just six months, reaching ₹6,909 crore (about $823 million).

Land-based casino revenue shot up by 30% in the six months to ₹1,214 Crore ($25.5m), forcing industry leaders to voice their concern about the negative impact of high taxation.

Many operators and industry experts believe the tax rate stifles the sector’s growth. Former Indian government official Economist Dr Aruna Sharma joined the chorus of discontent. He noted that the costs will likely be passed on to players, reducing their interest in participating.

A report from EY and the US-India Strategic Partnership Forum highlighted that no new capital has been raised in the gaming sector since the tax hike.

However, the complaints appear to have fallen on deaf ears, with the GST Council refusing to shift its stance, which only adds to the growing tension between all parties.

India’s fragmented regulatory framework compounds the high tax burden. Each state controls its own gambling laws, with some still operating under the outdated Public Gambling Act of 1867, which fails to address the complexities of modern online gaming.

Such inconsistency creates an uncertain environment that could ward off iGaming companies who are interested in investing in the Indian market.

Why iGaming Companies are Keen to Invest in India

The regulatory challenges plaguing the Indian iGaming market are enough to ward off interest from even the most volatile risk-takers, yet companies still view the country as a promising option.

With over 1.4 billion people and a growing middle class, the demand for online gaming and betting platforms is too great for interested companies to turn a blind eye.

With a massive population and growing smartphone usage and internet access, the environment is perfect for operators of online casinos to thrive.

Many brands are in direct competition with Flutter in Ireland and will likely be eager to follow the Dublin-headquartered firm’s strategic move into the Indian market.

For most iGaming companies, it becomes a case of the pros far outweighing the cons, reducing the previously concerning regulatory challenges to an inconvenience rather than a deal-breaker.

The increasing disposable income among the middle class will fuel demand for entertainment options such iGaming, which further bolsters India’s appeal despite the legal hurdles.

India’s tech-savvy workforce is another major attraction for iGaming companies. Flutter’s new Hyderabad centre highlights India’s importance as a key centre for innovation.

Flutter can tap into the country’s vast pool of talented engineers, data scientists and operational experts to develop new products and services for their global audience.

The company’s commitment to environmental sustainability and community support is evident in its investment in Hyderabad.

Flutter’s workspace has earned LEED Gold certification for its eco-friendly design, and the company donated ₹30 lakh (approximately $36,000) to local initiatives, reinforcing its focus on positively impacting the community.

India Has Plenty to Learn from Global Markets

India could learn a thing or two from other countries that have successfully regulated their iGaming sectors.

For example, the United States has adopted a model where both federal and state governments collaborate to oversee online gambling.

India could use the US model as a blueprint for its own iGaming regulations. A system where both national and state governments work together could create a unified and transparent market.

That would make it easier for operators to comply with the law. It would also boost government revenue and reduce illegal betting activities, which was estimated at $150bn in 2016.

Germany, Denmark and Australia have also developed licensing systems that separate games of skill from games of chance. Those clear distinctions help with taxation and ensure gaming companies operate under consistent regulations.

If India adopts a similar approach, it could address many of the current challenges in its iGaming sector, including the uncertain legal status of some of its gaming platforms.

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Adam Regan

Deputy Editor

Features and account management. 3 years media experience. Previously covered features for online and print editions.

Email Adam@MarkMeets.com