India Reportedly Forms Ministerial Group To Assess Online Gaming

November 27, 2023
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India’s government has scheduled a first-ever Group of Ministers (GoM) meeting for next month to formally address online gaming regulation, hinting that certainty around enforcement, taxation and self-regulation is now a cabinet priority.
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India’s government has scheduled a first-ever Group of Ministers (GoM) meeting for next month to formally address online gaming regulation, hinting that certainty around enforcement, taxation and self-regulation is now a cabinet priority.

An ad hoc GoM consisting of the ministers for home affairs, finance, electronics and information technology, and information and broadcasting are “likely” to meet on December 15, the Economic Times daily reported on Saturday (November 25).

The first official meeting follows a small number of informal meetings and will “set the tone for the process of regulating online gaming”, the report said, citing unnamed sources close to the process.

The focus of the gathering will be taxation and combatting “illegal gambling or betting, especially from offshore players”, one source told the Times.

The convening of a special GoM meeting on online gaming follows months of growing policy disarray, amid crackdowns on foreign and domestic online operations and money laundering, corporate panic over punishing goods and services tax (GST) obligations, as well as cold feet among government officials over industry self-regulation.

The core of any policy shift will be gaming industry rules gazetted in April that granted considerable autonomy to online skill game operators in forming approved self-regulatory bodies.

“Certain government officials felt that the gaming rules, introduced by MeitY [the Ministry of Electronics and Information Technology] lacked the legal teeth to ensure enforcement, especially in cases where the gaming companies operate from outside India,” the Times quoted an unnamed government official as saying.

Some government officials, meanwhile, have expressed concern over the effectiveness of self-regulation.

A slew of media reports on illegal betting app popularity, most notoriously the appeal of the Mahadev live casino gaming and sports-betting syndicate of platforms, has also prompted a crackdown on the electronic space, with the government banning 122 apps and websites earlier this month.

“The illegalities uncovered so far in the Mahadev betting app will not be an isolated case,” the government official said.

“Some of the ministries participating in the GoM raised this issue and wanted it to be one of the focal points of what gaming rules should be able to enforce in future.”

While the prevailing tone of the GoM initiative is punitive and conservative, the irregular meetings may allow an additional forum for industry delegates to resolve or ease the threat of massive GST obligations, including back payments that are so large that affected companies would be forced to close or greatly curtail operations.

The GoM meeting also falls in the middle of a crucial Supreme Court of India hearing next month, that will assess the validity of the massive GST charges for online skill games with stakes, as well as a hearing into the broader question of constitutional protections for industry when confronted by state government bans.

India Litigation Timeline, November-December 2023

November 29

Delta Corp subsidiary Deltatech Gaming's writ petition to be heard in the Calcutta High Court over massive GST notice that increased the parent company’s tax liability to almost $3bn.

December 7

Final Supreme Court hearing for Karnataka and Tamil Nadu state government appeals against respective state High Court decisions that overturned bans on online gaming with stakes. A revised Tamil Nadu law banning online gaming was again overturned by the Madras High Court earlier this month, but its appeal status is unclear.

December 15

Tentative Supreme Court date for hearing the Directorate General of GST Intelligence’s appeal against the Karnataka High Court’s quashing of a $2.6bn GST bill issued to Gameskraft Technologies.

 

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