Need Clear Distinction Between Video Games & Real-Money Gaming: Gaming Studios To Govt

A group of 45 gaming studios has written to the Prime Minister’s Office, the Ministry of Electronics and Information Technology and the Ministry of Information and Broadcasting, seeking a clear distinction between video games and real-money gaming (RMG) after the GST Council’s recent decision to levy a 28% tax on the online real-money gaming sector.

The gaming studios have also requested an audience with the government to discuss the issue and arrive at a distinction. Nodding Heads Games, Hitwicket, 99Games, Newgen Gaming, SuperGaming, Hypernova Interactive and Gameon Studios Studios are among the studios which signed the letter.

The gaming studios raised concerns about the lack of clarity around the definition of real-money gaming. They said many information campaigns mistakenly associate real-money gaming and fantasy sports with video games and esports, which projects a ‘horrendous’ image and suggests that the entire gaming industry of India is impacted by the GST Council’s decision.

“The negative sentiments and social stigma towards games involving monetary wagering are unfairly linked to video games in Indian society, leading to misconceptions about our industry’s products and services,” the letter, accessed by Inc42, read. 

The gaming studios added that real-money gaming, or the so-called ‘online gaming’, is called iGaming in the international markets, while the games without wagering are called ‘video games’.

The studios said that international game corporations, publishers and investors are under the impression that the Indian regulatory system does not differentiate between video games and RMG/fantasy sports (iGaming) and applies blanket regulations to both industries. 

According to the gaming studios, this perception has resulted in hesitation in investing in Indian video game companies, discouraging potential investments, co-productions, and strategic partnerships.

The gaming studios also noted that the 28% GST rate would put Indian gaming companies at a competitive disadvantage against their overseas counterparts, who are not subject to such high taxes.

Earlier, global investors and venture capital (VC) firms wrote to the Prime Minister’s Office, saying the move to levy 28% GST on real-money gaming was a ‘$2.5 Bn write-off’. They urged the government to reconsider the new tax slab for real-money gaming.

The letter was signed by investors including Kalaari Capital, Peak XV Partners, Orios Venture Partners, Tiger Global Management, Alpha Wave Global and Steadview Capital, among others.

The GST Council’s decision to tax real-money gaming at 28% has received widespread criticism from the gaming industry. Besides investors and gaming studios, several industry bodies and startups have also urged the government to reconsider the proposal. 

According to a report by KPMG, the Indian gaming industry is expected to grow to a size of $3.9 Bn by 2025. The sector is expected to create over 1 Mn jobs by 2023.