Online money gaming gambling companies are examining different strategies to maintain player interest in the month following the implementation of the 28% goods and services tax (GST).
Most businesses in the sector are still content to wait and see. To counteract the impact of GST on players, some are considering different business models like subscriptions, coupons, and cashbacks, while larger companies are reportedly considering whether to absorb the tax for a few months.
It’s still early, and so far the 28% tax hasn’t had much of an impact. This is also a result of the majority of players’ continued ignorance of the new GST rate. According to an industry source, “most of them are just now beginning to understand the impact of the TDS on online gaming.” The source also mentioned that it usually takes four to five months for the tax impact to become apparent on a ground level.
The majority of internet gaming businesses have also been preparing for and implementing the GST change. “Aligning systems for the new GST norms has been a huge challenge from a tech point of view,” the source said.
On the other hand, online gaming companies are currently considering ways to offset the tax’s negative effects in order to keep players. Industry participants claim that while some businesses have already begun providing players with coupons or vouchers, others are launching subscription models that will not require players to pay a platform fee.
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It is believed that businesses like Dream11, Fantasy Dangal, and Mobile Premier League already offer these kinds of coupons and cashbacks.
According to a source, “The idea is that the company will provide the same in the form of a voucher or cashback if a player deposits Rs 100 in his wallet of which Rs 28 is deducted as GST,” though it’s unclear how long this can be sustained.
Uncertain of the effects of the 28% GST, online gaming companies have also reduced their advertising budgets in recent weeks. However, the industry is still holding out hope that the GST Council will review the tax six months after it is implemented.
Following the decision of the GST Council in July and August, a 28% GST on online gaming, horse racing and casinos came into effect from October 1 this year.
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