Missing Billions: India’s Reluctance to Regulate Online Gambling

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online gambling

India, a state with a stable economy, a constantly growing middle class and great quality internet service provision which is continuously improving, has all the ingredients for a sizeable and, more importantly, very profitable online gambling community. And, as expected, online gambling is doing very well and growing exponentially still in India.

Indians love to gamble. The gambling industry both land-based and online, takes full advantage of this and year after year makes so much revenue off of this fact. But somehow, the government has not made any moves towards regulating and taxing this very profitable industry due to very archaic laws and that is both questionable and ill-advised. 

Estimating an exact size of the gambling industry is made nigh impossible by the lack of government regulation but it was projected that as a whole, the market value was at least above $60 billion dollars. 

The Online Gambling Industry and the Potential to Provide a Constantly Increasing Revenue Tax

Gambling is seen primarily as a middle-class engagement, an attempt to use “loose” funds to make extra money that might be large enough to serve a cash-intensive purpose. That’s why lots of Indian players engage in reputed online casino sites like Cashmio

In 2010, Playwin, the lottery owned by Sikkim, researched and inferred that, if well regulated, the gambling industry would have been worth $5 billion, at that time. Directly relating to the rate of growth of the middle class (expected to comprise over 583 million people by 2025), the improving internet provision (over 100 million users in 2010 estimated to have reached 300 million in 2015) and tech knowhow, this value is expected to at least triple by 2025. 

Assuming that gross tax rates are set between 15% and 30%, based on Playwin’s projections, it can be said that the Indian government could have received between $0.75 billion and $1.5 billion in taxes. Added to this would be the annual revenue for licensing for foreign online gambling operators 

What is Holding the government back? How does it cost India? 

government relased the gambling money

The biggest problem with regulation in India is the ambiguity of the law surrounding gambling. Only games of “skill” are regulated, not games of “chance”, because of a law that dates as far back as 1867. So rummy and horse racing are seen as skill centered while other card games and most sports are “based on chance”. 

As a result of the state of the industry, over 150,000 gamblers travel to gambling hotspots like Macau and Singapore and for those who stay in their homes and gamble online, their investments move to whatever foreign company runs the site they gamble on. Either way, India is losing money to other countries. 

Regulation would also provide employment and foreign investment. Both of which will obviously add to the growth of the Indian economy. Regulations protect the gamblers as well so that they are assured of reaping benefits where there are. 

Sikkim’s Example and What India Can Learn

The Indian State of Sikkim has made significant efforts to regulate gambling within their borders. They own a lottery of their own, started collecting gambling licenses in 2009 and international players have shown interest in these. However, once again, archaic legislation is preventing these moves from being as profitable as they should. 

If anything, the government should see this as a good enough example to learn from and work to have regulations set up nationwide and work towards the growth of the economy as well as the protection of the gambler.