Recently in GST council meeting it was decided and passed to tax online betting apps at 28%. This tax will be levied on bets placed.
Founders of online casino apps are urging that GST should be rolled back. The reason they give to not consider these so called gaming apps as casino are:
- These are skilled based games.
- They have to shut their casino
- Many will lose job
- Investors will not invest in India
- 28% on betting money will kill their margins
- Tax should have been proposed earlier, at this stage lot of investment is done and it will be complete write off
Crickpe founder Ashneer Grover is most vocal on opposing the new tax rates.
I will present my views on this matter.
Online betting apps are not gaming apps but online casinos
First, these apps are not gaming apps as claimed but these are betting apps. No skill is required to play on these apps. Only skills you need are Luck, probability theory and alogirthams. You do not have any control on outcomes, your actions do not decide outcome. Where your actions do not have any impact on outcomes, how can you say its skilled based game?
Consider cricket fantasy gaming apps where you select your team and based on performance you win or lose. Now, do match results change based on your selections? Can you guide players during match? Result of match and your team completely depends on individual players.
Many will lose jobs
These are just APPS, which do not employ lakhs of people. In fact people working in these companies are highly qualified and skilled and they will be employed elsewhere. The betting apps are neither innovative nor productive. These betting apps have ruined many families.
Can any company operating these apps share a detailed report on:
- How many people actively use their apps?
- During what time of day they use apps?
- How many people actually made money and cash positive and actually withdrawn their profits?
- What social or economical benefit they provide to country or society?
- 20,000 people are expected to lose jobs, against these how many people will be saved from financial crises?
28% will kill their margins and investors will not invest in India
100% tax on tobacco and alcohol products have not killed these industries. Casinos are taxed heavily everywhere and are still thriving. If these are really skilled based gaming apps, people will not mind paying 28%, if winning amounts are high.
Investors will keep investing in innovative startapps. Investors will take it positively and invest considering:
- Whether startup is doing some thing innovative or simply bringing offline business to online platform.
- These gaming apps just launched offline casinos online.
- Investors will understand "Bad things are bad, no matter what you name them"
- Innovate or die
Startups in India have seen crazy valuations but no true innovation came out. We are still copying USA apps or bringing offline business to online platforms.