For more than a decade, real-money gaming companies and fantasy sports startups have identified themselves as video game companies. However, in the face of increasing regulatory scrutiny, a coalition of over 70 legitimate video game companies in India is urging the government to clearly differentiate between the two industries.
In a letter addressed to Prime Minister Narendra Modi and the Ministry of Information and Broadcasting, the coalition is advocating for the abandonment of the umbrella term “online games” in favor of distinct categories: “video games” and “real money games”. This request is part of a broader effort to enhance the digital entertainment sector in the country.
The recent tax amendments placing real money games in a 28% tax bracket while video games remain at 18% have underscored the necessity for clear distinctions. The lack of clarity has led to unintended consequences for video game companies, with many facing tax audits and service denials from banks and payment gateways.
The confusion between these two types of games has even led to local authorities mistaking video game parlors for gambling establishments, causing disruptions for legitimate video game companies. To resolve these issues, the coalition is advocating for clear definitions in Indian policy frameworks to distinguish between video games played for leisure or learning and real money games involving monetary stakes.
Moreover, the group is requesting media outlets to refrain from using images of video games when reporting on real money games or gambling to prevent public misconceptions. Aligning the Information & Broadcasting Ministry as the nodal agency for the video game industry, similar to other entertainment sectors, is also recommended.
As India solidifies its position as a startup hub, the underdeveloped video game industry poses challenges that need to be addressed urgently. The coalition is proposing initiatives such as establishing a Catalyst Fund, encouraging banks to recognize digital IP as collateral, and improving education in game development.
Additionally, the consortium is advocating for a reduction in GST on video games, corporate tax holidays, and other measures to attract investments and support the sustainability of the industry.
