The Finance Ministry has invited multiple stakeholders from the real-money gaming (RMG) industry to a meeting to discuss issues related to money laundering in online gaming. The stakeholders on Friday will also address challenges faced by the industry, including GST and the growing presence of offshore gambling companies in India.
According to a report by Ernst & Young and the US-India Strategic Partnership Forum (USISPF), the online gaming sector was projected to create 250,000 jobs by 2025. However, under the new GST regime, this figure has dropped significantly, with only 30,000 additional jobs now expected. Additionally, 83.3% of companies are struggling with employment creation. Foreign Direct Investment (FDI) in the sector has also nearly stalled under the new tax framework, a sharp contrast to the $1.7 billion FDI received in 2021.
Officials from the Financial Action Task Force (FATF), an intergovernmental organization that sets international standards to prevent money laundering and terrorist financing, will also be present at the meeting. The FATF will outline its agenda and the government’s stance on the industry while seeking feedback and suggestions on curbing money laundering in online gaming.
An RMG operator told Storyboard18, “The Finance Ministry aims to discuss strategies for combating money laundering in the online gaming space. We anticipate a swift crackdown on offshore gambling platforms that are illegally operating in India. These unregulated offshore betting companies not only affect the revenue of legitimate businesses but are also involved in terror financing and money laundering, which is a serious concern.”
A source close to the development stated, “During the 40-minute open discussion session, we will address the challenges faced by the RMG industry, including GST issues and the infiltration of offshore gambling firms that operate in India without paying taxes.”
It is important to note that in its 50th meeting held in July 2023, the GST Council decided to impose a 28% tax—the highest slab—on the full face value of online gaming, bringing it in line with casinos and horse racing. In September 2024, Finance Minister Nirmala Sitharaman announced that revenue from online gaming had increased by 412%, reaching ₹6,909 crore within six months. Meanwhile, casino revenues saw a 30% rise.
A recent report by Ernst & Young and USISPF highlighted the impact of the 28% GST. Among the 12 companies surveyed, 20% of early-stage startups were forced to shut down, 40% halted hiring, and 20% laid off employees.
Approximately 30 petitions have been filed by RMG companies challenging retrospective GST demands exceeding ₹1.5 trillion, calculated at 28% on the face value of bets. Of these, 27 pleas have been transferred to the Supreme Court from various High Courts. The original petition was filed by Head Digital, Play Games24x7, and Baazi Games, while the GST department has also challenged a Karnataka High Court verdict.