Indian opportunity remains despite tax hike

When India’s Goods and Services Tax (GST) Council introduced a 28% turnover tax for online gambling last year, many predicted it would sound the death knell for a sector that had been growing rapidly in recent years.

In September, the GST Council confirmed that the new tax rate would remain, despite lobbying from industry groups for a reduction. Many pointed to the withdrawal of the Betway operator Super Group – which said the increased tax burden made India no longer commercially viable for its business – as evidence of the damage it would do.

Yet despite legitimate fears that the move would drive users offshore, the GST Council reported that online gambling revenue in the country was up more than 400% in the six months immediately following the introduction of the tax.

For us, that’s an extremely bullish signal. Even with taxation costs being passed onto players, the sheer scale of the Indian market means it remains one of the most appealing opportunities in our industry right now.

That many have been put off by the increased tax burden only expands that opportunity for those who take the time to properly invest in and understand India.

It’s not (just) cricket

Of course, that’s easier said than done.

We’ve been working as an affiliate in India for a few years now, alongside many of the most successful operators, and it’s an extremely complex market that’s quite unlike anything you’ll find elsewhere.

The first thing people tend to ask me when it comes to India is just how important is cricket to any product offering.

It’s a tough question to answer. On the one hand, first impressions don’t lie: cricket is far and away the biggest game in town. Much of our traffic is driven by cricket-focused assets, and most of the operators I speak to tell me cricket is clear when it comes to betting volumes. This means that April and May – the key months of the Indian Premier League  – can become make or break.

But there is a balance to all of this. India is very much still an emerging market when it comes to online gaming, but it has made a lot of progress in a short space of time.

Central to that is a diversification of product offering and changing player preferences. Virtual sports, particularly ecricket, are serving as a great way to cross-sell players from sports betting into other verticals. Skill games have always performed well in India, but traditional online casino products are beginning to catch up.

As players expand their tastes, their value tends to increase as well. The sheer size of the country means there’s obviously many chances to acquire an impressive number of players. The flip side of that, at least historically, is that these players wouldn’t be worth much.

That’s starting to change as the market takes its first steps towards greater maturity. We’re seeing lifetime values (LTVs) in the range of around $30 right now. Sure, it doesn’t compete with more established European markets, but the lower LTVs can be more than compensated for by the volume of first-time depositors that are possible.

Social crackdown

What comes next for India? The signs are there that the government is serious about nurturing a thriving sector, even if it will insist upon taking a hefty share of the revenues in tax receipts.

Licensed operators do receive a degree of protection in return. For instance, the country’s Ministry of Information and Broadcasting is now cracking down on social media influencers promoting offshore operators. It will also urge platforms themselves to remove content for unlicensed brands.

This is a positive step, as it should create more favourable conditions for those operators who are paying their tax bill in India. 

We’re still very early in India’s online gaming journey. But we’re already seeing that a willingness to adapt and take the time to understand the direction of travel in this vast market, can bring rewards.

Despite the concerns, we see India emerging as a true online gaming powerhouse over the coming years.

Alina Famenok is CEO of tech-driven affiliate business Already Media.