There is a need to distinguish between games of skill and games of chance and to tax the skill-based online gaming sector based on platform fees in line with the global benchmarks. “For Indian companies to compete on a global stage, we need a level playing field with progressive tax and regulatory policies that align with international standards. Our benchmarking of global gaming markets reveals there is a distinct separation between games of skill and games of chance, with skill-based games often receiving conducive treatment,” says Mukesh Aghi, president and CEO, USISPF.

Abhishek Malhotra, partner, TMT Law Practice, says India's current approach to taxing and regulating online gaming under a one-size-fits-all framework poses "significant challenges". "By conflating skill-based games with games of chance, we are stifling innovation. A more nuanced regulatory and taxation regime would foster sustainable growth."

Among the key findings, the report reveals all 12 countries have a separate legal definition for games of chance, ensuring a clear distinction from skill gaming formats. 8 of the 12 countries’ laws or the regulator, also define fantasy sports for distinct regulation and/or taxation. Skill-based games receive unique treatment as a standalone category in all 12 countries, it finds.

The tax rates for skill-based games are generally lower than those for games of chance, it says. Across all nations, skill-based games are taxed on platform fees or gross gaming revenue (GGR), ranging from 2% to 25%. Within skill-based games, fantasy sports are taxed higher than other games of skill owing to the difference in business models and format.

"This is similar to India’s previous GST regime, which taxed online skill gaming at 18% of platform fee, akin to other digital services. France has transitioned from taxing on total pooled amounts to taxing on platform fees to align with international best practices. Additionally, skill-based games do not require permits, licences or whitelisting and are largely unlicenced," says the report.

USISPF-TMT

India's regulatory, tax regime stunting e-gaming industry's growth: Report