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Senator Sushil Kumar Modi spoke on the issue of online gambling, urging the Center to come up with a regulatory framework for the industry. With state efforts to control pay-to-play games having largely failed, he fears authorities will lose (offshore) revenue. Above all, lawmakers must find a way to protect India’s youth.
Manage online games nationwide
In an iconic intervention during Zero Hour, Sushil Kumar Modi, an MP from Rajya Sabha, raised some questions about the need to regulate and tax online gambling. He pointed to the failure of state governments to pass sensible legislation, above all, as the reason the Center was stepping in and setting national standards.
Online gambling is a widespread phenomenon among over 430 million Indians, facilitated by mobile phones and internet coverage. The number of gamers is expected to reach over 650 million by 2025, the MP noted. Also, while the average desi consumer spent around 2.5 hours playing mobile games every week, post-Covid that figure jumped to over 4 hours.
The rise of the online gambling industry may also be problematic for other reasons. Children and young adults have virtually unlimited access to online gambling for money, and many fail to tell the difference between games of skill and games of chance. Sushil Modi drew a comparison with the crypto industry which also has notable gaps in central regulation and legislation to date.
While people can enjoy their favorite online roulette for real money, play Ludo, Rummy, Poker or Fantasy sports or even buy a lottery ticket online, Modi insisted that companies and players must pay a uniform tax for these activities, and ultimately the government must provide a “comprehensive framework” of regulation for the business.
High Court lawyers agree that issuing a blanket ban is easy. However, compliance is the hard part, as most top gaming companies are based overseas. This is exactly what lawmakers in Telangana, Andhra Pradesh and Kerala did, by banning all online gambling, but it was struck down by the regional High Courts as unconstitutional and disproportionate.
Legal scrutiny would allow for better oversight of responsible gambling policies, collection of more government tax revenue, and oversight of offshore operations. The President of Rajya Sabha has requested the Ministry of Communications, Electronics and Information Technology to take note and act accordingly.
Missing out on economic potential
Industry experts have long been sounding the alarm about the huge gaming revenue and business potential being lost in gray markets and offshore operations. Regulation can bring transparency to the market, increase government revenue, and spur new investment in desi gaming startups.
In fact, annual tax forms require earnings from gambling and online gambling investments to be reported. However, the Anti-Money Laundering Act (PMLA of 2002) states that foreign entities are non-reporting and therefore exempt from tax. The amount of revenue sent overseas is comparable to the total online gaming market, estimated at Rs 29,000 crore in 2025. Taking into account a flat tax rate of 30% plus tax, this represents up to to Rs 10,000 crore (over $1.3 billion) in annual tax. lost revenue.
Naturally, these numbers don’t take into account all the other related and supporting industries – such as animation, testing and other development studios and tech startups. They also do not count towards the players’ personal and professional income, which are also taxed at the same rate. If playing games of skill for money is a legitimate occupation, paying taxes adds the real moral dimension of responsible gambling.
In that sense, Sushil Modi’s point about the totally unregulated online gaming market needs careful consideration and a lot of work from lawmakers.
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