Some offshore online gaming companies implicated in tax evasion: All India Gaming Federation

Following the Ministry of Information and Broadcasting (I&B) advisory to print, electronic and digital media to refrain from advertising online betting platforms, the All India Gaming Federation ( AIGF) said that some offshore online gambling websites are not registered under the Central Goods and Services. Tax Act, 2017 and do not pay applicable direct and indirect taxes which must be paid under Indian law, even by companies which are not headquartered in India and are based outside the country.

“This blatant tax evasion by gambling websites results in lost revenue of thousands of crores per year for the public treasury. Apart from the threat to the economic stability of India, there are many instances where these websites engage in obvious fraud and manipulation of their games and many complaints have been received in which these websites accept deposits of gullible players but refuse to give them the opportunity to withdraw from their winnings or balances under various pretexts,” said Roland Landers, CEO of AIGF.

The Government’s advice comes in the light of examples of a number of advertisements from online betting sites/platforms appearing in print, electronic, social and online media. Betting and gambling, illegal in most parts of the country, poses a significant financial and socio-economic risk to consumers, especially young people and children, the notice states.

“AIGF urges Indian media platforms to adopt a robust mechanism and apply a stricter evaluation process when onboarding advertisements from these offshore gaming platforms,” Landers said.

According to Elara Capital, vertical e-commerce accounts for 13% of ad spend for traditional media (TV, print and radio) and grew 100% year over year in year 21.

“We believe around 20% of this would come from online betting platforms, meaning there is a 2-2.5% negative impact on traditional media ad spend. In terms of digital media, e-commerce accounts for 17% of digital ad spend and we believe the online betting platform component would be higher here around 30% as it targets a large number of young people via digital, meaning a nearly 5% negative impact for digital ad spend,” said Karan Taurani, Senior Vice President, Elara Capital.

He adds that Dream11 and My11 circle were both on Madison’s top 15 advertisers list.

“We believe this is a greater disadvantage for broadcasters with sports properties like IPL and other cricket tournaments, as a large portion (nearly 60%) of these platforms’ advertising budgets are for sports tournaments. broadcast on TV and OTT.The announcement comes at a time when overall advertising budgets have been subdued in recent years due to the negative impact of inflation across the board and declining advertising spend by start-ups. ups and digital businesses, because of the focus on profitability,” he said.

Experts also say these platforms can take the surrogate advertising route, much like booze companies are doing.

“As far as gaming companies are concerned, this is a big negative because it will negatively impact awareness campaigns, which will limit subscriber or user growth and also limit penetration opportunities,” Taurani adds. .

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