Fantasy sports in India may be equated with gambling: tax to rise to 28%
The Indian authorities have proposed to the Supreme Court to treat fantasy sports as gambling for taxation purposes. They insist that fantasy sports, like betting, are based on outcomes beyond players’ control.
Why fantasy sports are being equated with gambling
The government argues that regardless of whether a game is based on skill or luck, any bets on the outcome are considered gambling. This applies even in states where games of skill have separate legal regulation, such as Nagaland.
The authorities emphasize that:
- Creating virtual teams and participating in fantasy games is similar to sports betting;
- Players cannot predict or influence the real outcome, which determines the result of the game;
- Regardless of the nature of the game itself — a bet on the outcome makes it gambling;
- Fantasy game platforms incentivize participation with rewards, which may provoke addiction.
Government’s arguments
For illustration, the Centre compared fantasy sports to international football. For example, one can bet on how many goals Lionel Messi will score. However, the outcome cannot be controlled. Similarly, according to the authorities, in fantasy sports participants create teams and earn points based on real players’ actions, but do not influence the result.
Thus, according to the authorities, fantasy games are a regular form of betting and therefore fall under the definition of gambling.
Changes in taxation
Currently, fantasy game operators are subject to Goods and Services Tax (GST) at a rate of 18%. However, the government insists on raising it to 28% — the same tax as for gambling operators.
| Type of activity | Current GST rate | Proposed GST rate |
|---|---|---|
| Fantasy sports | 18% | 28% |
| Gambling | 28% | 28% |
What’s next?
The issue of classification and taxation of online games is under review by the Supreme Court. The hearing will continue on Tuesday, May 5.
If the court accepts the government’s position, it will set a precedent under which any online games involving betting elements will be taxed at the maximum GST rate. This could significantly impact the fantasy gaming industry in India.