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Understanding the Impact of 28% GST on iGaming and its Irrelevance to the Indian Esports Industry

The Goods and Service Tax (GST) Council recently convened its 50th meet in New Delhi, announcing the implementation of 28% GST on various activities, including iGaming, horse racing, and casinos. However, amidst this announcement, there have been concerns and confusion about its potential impact on the Indian Esports industry and its massive community of 400 million video gamers. Let’s delve into the details and clarify the misconceptions surrounding the applicability of GST to iGaming and its irrelevance to the thriving Esports ecosystem.

Understanding iGaming and Its Taxation

The 28% GST, as declared by the GST Council, is specifically applicable to the iGaming sector, encompassing activities such as Real Money Gaming (RMG), fantasy sports, teen patti, rummy, and poker. These activities are often categorized as forms of gambling or betting in various parts of the world. It is essential to note that the GST in question does not extend to the ‘Video Games’ or the Esports industry.

Esports Distinction from iGaming

The Esports Federation of India (ESFI) and other reputable authorities have officially recognized Esports as a sport, setting it apart from activities like iGaming, betting, gambling, etc. Hence, Esports continues to be taxed as it has been before, unaffected by the recent GST announcement. The distinction between “game of skill” and “game of chance,” which may apply to other forms of gaming, is irrelevant within the Esports ecosystem.

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Clarifying the Umbrella Term

In April this year, the government introduced amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, establishing a comprehensive framework for the Online Gaming Eco-system. To avoid confusion, it is suggested that the GST council should have used more specific terms like “iGaming” or “online real money game,” as defined in these rules, rather than the broad term “online gaming.”

Esports: Purely Entertainment

It is crucial to acknowledge that the primary objective of the 400 million Indian video gamers, and billions worldwide, is pure entertainment. The Esports industry is not primarily driven by financial gains or making money. Unfortunately, in India, the Esports industry is sometimes unjustifiably associated with activities like iGaming, betting, and gambling, leading to unnecessary misconceptions.

Differentiating Esports from iGaming

Esports is characterized by strict policies from video game publishers against implementing entry fees for any Esports events organized using their video games. This practice further distinguishes Esports from iGaming, where financial bets and transactions are common.

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Esports’ Ascension on the Global Stage

The rapid growth and increasing popularity of Esports have led to its inclusion as a demonstration title in the 2018 Asian Games. Going forward, Esports will make its full-fledged debut as an official medal sport at the 19th Asian Games, featuring titles like League of Legends, FIFA Online 4, Street Fighter V: Champion Edition, and DOTA 2. Moreover, Esports has recently been designated as one of the medal sports in the 20th Asian Games Aichi-Nagoya 2026, cementing its position as a mainstream sport on the international stage.

The recent GST announcement of 28% on iGaming activities, including Real Money Gaming, fantasy sports, teen patti, rummy, and poker, has raised concerns about its impact on the Indian Esports industry. However, it is essential to understand that Esports is distinct from iGaming and will not be affected by the GST levied on the latter. As Esports continues to gain recognition and grow globally, it is crucial to dispel misconceptions and acknowledge the entertainment-driven nature of the industry. Esports is poised to leave an indelible mark on the world of sports and gaming, and India’s 400 million video gamers stand united in their pursuit of excellence in the digital arena.

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