It would take for someone living under a rock in India to not notice the recent waves in online casino production being made and aimed at the county’s markets. Gambling itself is no easy subject to discuss, taboo still, but confusing laws and a headache when it comes to banking regulation. For many, the headache isn’t worth the time and the confusion isn’t worth the questioning.
So, why does it continue to become a point of interest? Why does gambling seem to provide answers and more questions? The bigger question that we need to look at this time, is can legalised gambling help boost the Indian economy after the nightmares of the past 24-months?
The economic growth of gambling in India
The growth of online casinos in India in the past two years alone have made India the hottest market out there. No one knows for sure why it became the seemingly last outpost to conjure business, but here we are and here they are with a problem on their hands.
Now, the issue is not so much to do with the fact that the rate of online operators is growing more by the day; the concern is the missed costs.
In fact, to be more clear, it’s the missed costs from a government perspective.
The keyword here is TAX, yes, we hate it, but it can also be used for the greater good. So, when you have a population of 1.6 billion people, it would go some ways to help public spending if gambling were to be legalised and for taxes to be recouped from business licensing and winnings.
The casino industry is one of the leading financial markets out there. As many as 40% of Indians actively take part in gambling, be it sports betting, lottery, or through frequenting one of the land-based sites around Goa or Sikkim.
Millions of people would be able to contribute some form of tax that would clearly be of huge benefit to the economy. And it could all start with the online casino market.
The laws of gambling
The gambling laws in India are somewhat stale at best. In 1867 under the rule of the British Empire, the country’s Gambling Act was drafted and since only a few updates have been made for it to fit into modern times.
Land-based sites are licensed and governed by the state rather than the central government. The state drive to make casinos legal again was down to tourism interest. This is why all of India’s casinos are in the tourist hotspots.
Central-run lotteries and sport betting options are available, the country isn’t completely void of choice. However, games like poker are still banned as it is seen as a game of skill, rather than one of luck.
With online casinos, they cannot be made by remote businesses. However, foreign offshore casinos registered in Europe are accessible to Indian players because there is no law in the Gambling Act of 1867 to stop them from access such services. It’s a huge loophole that makes gambling legal in India, but only if that casino is registered outside of India.
The opportunities here are clear as day. At one level you have a window for businesses to provide services from within India.
At another level, there is no taxation on the foreign casinos that are able to accept players from India.
All this Act does, by the way, is ban foreign sites from advertising within India i.e., TV, billboards, radio, and so forth. These are media platforms of yesteryear, everything is online, and the success and boom of the market is evidence enough that the laws limiting advertisement failed.
So, why go after India and its people? Well, the figure of 1.6 billion people is all there is to it. You have a society with already pre-existing casinos within their major states. 40% of adults confess to gambling. And you have wealth and poverty, people can afford to play and there are those that are willing to play despite their desperation.
India is like any other country but seen through a microscope because of its size, the difference in social standing appears more glaringly obvious.
Do not mistake the drive of online gambling to be the fault of foreign casinos alone. For a number of years now, there has been a push from within by India’s celebrity stars.
Nawazuddin Siddiqui, Sunny Leone, Arjun Rampal, and Anita Hassanandani are the top 4 stars that have become brand ambassadors for online casinos targeting the Indian market.
Pokerstars India, Poker Raj, Poker High, and Jeetwin are making it into the media because of the celebrity, which by a stroke of genius, gets the advertising out there despite the laws.
Governments missing the payoff
So, let’s start number crunching, what are the financial possibilities with all of this?
So, we have 40% of those over 21-years confessing to gamble. Now, interestingly within India’s Act on Income Tax under section 115BB. Those that gamble within land-based casinos are required to submit records of this on their yearly report. If you win, there is a taxation rate of 30%. With the added net rate of a cess, which is a tax upon the tax, this amounts to 31.2%. It is incumbent of the player to declare this. 4% of the cess taxation goes towards public health and education spending.
The greater the winnings the greater the tax, which can increase to 34.32%.
This taxation has not been made eligible for online casinos because its financial profit made from outside the country and bypasses any Income Tax laws.
If it were to adopt a similar approach, well, the government has a lot to gain, in terms of revenues.
Taxing casino players in India
There have been other Indian income taxes that have helped the economy to try and recover from the past 24 months. There is a current reform in India that is privatising two public banks, the national carrier Air India, insurers, and many more is a 23 billion overhaul that can have an annual impact of 6.8 per cent on the national economy.
The betting market grew 7 per cent in 5 years in India. Its value escalated into the billions; under USD it was estimated to be 130 billion. Regulation of this can massively help to bring in the much-needed revenue to help India’s economy and it can begin with a CIT which is a Corporate Income Tax.