Online Gaming Cos improvise Strategies to Reduce impact of 28% GST

To battle the Imposition of 28% Goods and Services Tax on online gaming, companies evolve strategies.
Online Gaming Cos improvise strategies - impact - GST - TAXSCAN

In response to dynamic changes in the Goods and Services Tax  – GST regime including imposition of 28% GST on Online Money Gaming, companies specializing in poker, rummy, and fantasy sports are strategically adjusting their approaches.

As reported by The Economic Times, these firms are proactively navigating complex tax structures to safeguard user funds within their ecosystems, ultimately fortifying their revenue streams.

To counter the impact of increasing indirect taxes, gaming platforms are implementing innovative measures. Specifically, in shorter-duration games like rummy and poker, companies are limiting withdrawal frequencies to minimize the repetitive GST charges incurred with each deposit. For fantasy sports, where engagement spans extended periods, adjustments in win percentages are being explored.

Previously, users habitually withdrew winnings daily, but platforms are now imposing restrictions to discourage excessive withdrawals. For example, companies like A23 have set daily withdrawal limits, and some platforms enforce restrictions during peak traffic to streamline transactions effectively.

Insiders reveal that these measures aim to capitalize on prolonged user engagement, encouraging users to retain funds and participate in multiple games, potentially boosting commission earnings.

Moreover, by reducing withdrawal frequencies, platforms aim to alleviate the burden of repetitive taxation on deposits, preserving their profitability. The introduction of a 28% GST on deposits has prompted a recalibration of revenue models within the real-money gaming sector, shifting from taxing earnings to taxing user deposits.

In response to regulatory changes, platforms are adjusting product-market fit strategies to align with user preferences. Rather than directly increasing commissions or passing on tax burdens to users, platforms are subtly adapting withdrawal policies to navigate the new tax landscape without alienating their user base.

Meanwhile, fantasy gaming platforms are exploring adjustments in minimum winnings brackets to counteract revenue declines from higher GST rates. These subtle alterations have the potential to significantly impact revenue streams, especially in large-scale gaming formats.

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