Certain offshore online gambling companies involved in tax evasion: All India Gaming Federation

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Certain offshore online gambling companies involved in tax evasion: All India Gaming Federation
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Following the Ministry of Information and Broadcasting’s (I&B) advisory to print, electronic and digital media to refrain from advertising online betting platforms, the All India Gaming Federation (AIGF) said that certain offshore online gambling websites are not registered under the Central Goods and Services Tax Act, 2017 and do not pay applicable direct and indirect taxes that is required to be paid under Indian law even by companies that do not have their registered office in India and are based outside the country. 

“This blatant tax evasion by the gambling websites is resulting in loss of revenue of thousands of crores per annum to the government exchequer. Besides the threat to the economic stability of India, there are many instances where such websites indulge in obvious fraud and manipulation of their games and numerous complaints have been received wherein such websites take deposits from gullible players but refuse to give them any option of withdraw of their winnings or balances under various pretexts,” Roland Landers, CEO, AIGF said.

The government’s advisory comes in light of instances of a number of advertisements of online betting websites/platforms appearing in print, electronic, social and online media. Betting and gambling, illegal in most parts of the country, pose significant financial and socio-economic risk for the consumers, especially youth and children, the advisory states. 

“AIGF urges the Indian media platforms to adopt a robust mechanism and apply a stricter evaluation process when onboarding advertisements from such offshore gambling platforms,” Landers said.

According to Elara Capital, e-commerce vertical contributes 13 per cent of ad spends for traditional media (TV, print and radio) and grew 100 per cent year-on-year in CY21. 

“We believe almost 20 per cent of this would be from online betting platforms, which means there is a negative impact of 2-2.5 per cent on ad spends of traditional media. In terms of digital media, e commerce contributes 17 per cent of the digital ad spends and we believe online betting platform component would be higher here towards 30 per cent as it targets a lot of youth audience through digital, which means a negative impact of almost 5 per cent for digital ad spends,” Karan Taurani, senior vice president, Elara Capital, said.

He adds that Dream11 and My11 circle were both featured in the top 15 advertiser list as per Madison. 

“We believe this is a bigger negative for broadcasters with sports led properties like IPL and other cricket tournaments,  as a large portion (almost 60 per cent) of the advertising budgets of these platforms are during sport tournaments featured on TV and OTT. This announcement comes at a time wherein overall ad budgets have been subdued in the recent past due to negative impact of inflation across the board and lower ad spends by start-ups and digital companies, due to focus on profitability,” he said.

Experts also say that these platforms may adopt the route of surrogate advertising just as alcoholic companies do. 

“In terms of gaming companies, it’s a big negative as it will impact awareness campaigns negatively, which in turn will limit subscriber or user growth and also limit penetration opportunities,” Taurani adds.

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