Steep tax to shrink prize pool, dissuade players, feel cos

livemint.com:

GST) Council to impose a 28% tax on the entire entry fee rather than just the platform fee. Industry associations and companies argue that this move will not only restrict cash flow, but also diminish players’ motivation to participate on legitimate sites, driving them towards illegal offshore betting companies. An analysis by Mint reveals that while the tax on the entire entry fee may not directly impact the companies’ revenue from platform fees, it will lead to a smaller pool size and, subsequently, fewer players.

This is because players will lose money faster, resulting in a significant decrease in their ability to continue playing. To illustrate the impact, consider the previous scenario where two players entered a game with `100 each, and the platform charged a 10% fee. After deducting the platform fee, the pool size amounted to `180, and the winner’s net earnings (after tax deducted at source) were `55.

However, under the new regime with GST applied at face value, the pool size shrinks to `129.6, resulting in a net winning of just `20.4. In both scenarios, the net platform fee remains `14.4. In popular RMG games like rummy and poker, typically played between 4-8 people at a table, the winning amount is now approximately 60% of what it was under the previous regime if we apply the same calculations.

Even in fantasy sports, where a larger number of players simultaneously create their teams, the winnings are at best 70-72% of the previous regime, though the average ticket sizes are much smaller. “The motivation for the players will go down significantly as the GST on the entry fee will reduce their earning potential. Eventually, they will look at illegal offshore betting companies," said Mitesh Gangar, co-founder and