Key Moments:
- The GST Council of India has increased the Goods and Services Tax from 28 percent to 40 percent for casinos, online money gaming, lotteries, betting, and race clubs.
- The tax hike coincides with the passage of the Promotion and Regulation of Online Gaming Act, 2025, which bans online real money gaming except for esports and recreational games.
- The Supreme Court is deliberating on a ₹2.5 lakh crore ($30.12 billion) retrospective tax case involving major online gaming companies and industry federations.
Major Tax Increase Hits Gaming Industry
India’s GST Council has raised the applicable tax rate on casinos, lotteries, betting, race clubs, and all online money gaming activities from 28 percent to 40 percent with input tax credit. The GST now categorizes these services as sin goods. Consequently, operating in the online real money gaming sector has become more challenging.
Recent Legislation Heightens Pressure
This increase closely follows Parliament’s approval of the Promotion and Regulation of Online Gaming Act, 2025 (PROGA), which prohibits online real money gaming but permits exemptions for esports and games meant for recreation. The higher taxes, combined with new legal restrictions, have tightened regulations for operators. This makes compliance more complex.
Ongoing Legal Disputes and Uncertainty
The timing of the GST hike is critical. The Supreme Court has reserved judgment on a ₹2.5 lakh crore ($30.12 billion) dispute over retrospective gaming taxes. Key players involved include Gameskraft, Delta Corp, and industry bodies such as the All India Gaming Federation (AIGF), the E-Gaming Federation (EGF), and the Federation of Indian Fantasy Sports (FIFS).
Several companies, including Head Digital Works, have challenged PROGA in court. They argue that the ban on real money gaming is too strict. According to industry representatives, the 40 percent GST could threaten the survival of the sector irrespective of the results in court.
Industry experts worry whether the GST will target customer deposits or Gross Gaming Revenue (GGR). This distinction could drastically affect business models. They warn that if the tax is assessed on deposits, many business models would collapse, prompting additional legal action.
Broader Economic Consequences for States and Casinos
The heightened GST applies to more than just online gaming, encompassing casinos, lotteries, and race clubs at the same 40 percent rate. This change will affect states such as Goa, Sikkim, and Nagaland. Gaming revenue forms a key part of their budgets.
It has been noted that the GST Council’s decision passed without objection from any state governments. As a result, activities such as casino entry, race club admissions, and prominent events like the Indian Premier League will now incur the 40 percent tax on admission fees and services, including bookmaker licensing.
Changes to Tax Definitions and Differential Taxation
The GST Council addressed definitional matters as well, classifying betting, gambling, horse racing, lottery, casinos, and online money gaming as goods, aligning them with other sin goods such as tobacco and pan masala.
Meanwhile, recreational and household games fall into a separate category. Games like chess, carom, ludo, and playing cards now carry a reduced GST of 5%, down from 12%. This adjustment reflects the government’s intent to differentiate between casual games and money-oriented gaming.
Background and Industry Fallout
Financial strain in the sector has been evident since October 2023 following the introduction of a uniform 28 percent GST on the complete face value of bets. Several operators have shuttered after the enforcement of PROGA in August 2025.
| Activity | GST Rate Before | GST Rate After |
|---|---|---|
| Casinos, Online Money Gaming, Lotteries, Betting, Race Clubs | 28% | 40% |
| Recreational/Household Games (Chess, Playing Cards, etc.) | 12% | 5% |
- Author
Daniel Williams
