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The Law Committee of the Central GST Council has sought clarity on the categorization of “games of chance” and “games of skill.” The Committee has advised the Group of Ministers (GoM) tasked with deciding GST on online gaming, casinos, and horse racing to make the crucial classification to avoid future litigation on the matter once the final proposal is enforced.
Online gaming platform Games24x7 has launched Games24x7 Ventures. The company has announced that it is setting aside ₹400 Crores as a corpus to invest in Indian startups in the interactive gaming space over the next five years.
The non-profit, self-regulatory body E-Gaming Federation (EGF) has roped in the former secretary of the Ministry of Electronics and IT, Aruna Sharma, and Satish Mathur, the former Director General of Police (DGP) Tamil Nadu, as members of its advisory board. They will advise the federation on responsible gaming and international best practices for player protection.
GST Law Committee Seeks Clarity on Differentiation Between ‘Games of Chance’ and ‘Games of Skill’ For GST Assessment
The Law Committee under the Central GST Council wants a clear definition and distinction between “games of chance” and “games of skill.”
In its response to the Group of Ministers (GoM) tasked to affix the GST on online gaming, casinos, and horse racing, the Committee has recommended that the GoM needs to first outline a clear definition of games of skills and games of chance.
According to an Economic Times report, the Committee said that the GoM should take this crucial step before deciding on GST percentage or valuation methodology for the three gaming sectors. ET quoted a reliable source – “The committee has suggested that there is no clear definition between the game of skill and game of chance, and the GoM has to first rework the report with clear definition and classification.”
Are online games like poker and rummy games of skill or chance? In recent years, the question has been a bone of contention for several state governments and gaming operators. While Karnataka and Tamil Nadu governments have rolled out legislation banning the games and are fighting appeals overturning these bans in the Supreme Court, the Ministry of Electronics and Information Technology (MeitY) is reportedly working to create a framework for regulating the gaming sector.
The GST Council had in June-end deferred a decision on GoM’s recommended 28% uniform GST slab for all three gaming segments. After several postponements, the GoM decided to take a legal opinion. The GST Council yet again delayed its scheduled 48th meeting to mid-November to grant the GoM on gaming more time to submit its recommendations.
In September-end, the Directorate General of GST Intelligence (DGGI) issued a record ₹21,000 Crores show-cause notice to GamesKraft for alleged GST evasion. According to DGGI, the GST is computed at 28%, presuming that rummy and poker are games of chance. GamesKraft, in its appeal before the High Court, has underlined that the skill gaming industry pays 18% GST on the commission or gross revenue (rake) collected by the platform.
In this context, the Law Committee has judiciously recommended clearing the air on the skill and chance aspect of online games like poker and rummy before deciding on the GST to be levied on the sector.
Games24x7 to Invest ₹400 Crores in Indian Startups
Gaming platform Games24x7, which owns and operates gaming platforms like Mycircle11 and Rummycircle, has announced that it will invest ₹400 Crores in Indian startups in the interactive gaming space over the next five years.
On Tuesday, the company said it has launched Games24x7 Ventures for the purpose and has set aside the funds as a corpus to partner with and invest in startups that have synergies with the company’s core business areas.
Games24x7 Ventures will also invest in gaming startups working in the country’s technology development and interactive entertainment space. The key focus will be to encourage entrepreneurs who aspire to innovate and build disruptive ventures in categories like online gaming, digital marketing and content, sports tech, esports, and blockchain technology.
Games24x7 Co-Founder and Co-CEO Trivikraman Thampy said there’s a massive spurt in entrepreneurial action in the Indian consumer internet space, adding – “We believe that we are very well positioned to support early-stage companies beyond just capital.”
The company CFO, Rahul Tewari, said that GamesKraft would fund the new investment from its own balance sheet. He explained, “This is a long-term commitment over the next five years to partner with emerging companies and entrepreneurs and supports them not only with capital but also bring in our operating expertise and a unique way of scaling up our operations in a very disciplined manner while maintaining unit economics, which we think is the mantra for investing in today’s times.”
Talking about the need to urgently regulate the sector, Tewari added, “We are hoping for more clarity, but there are a lot of progressive steps that the government is taking. There is a lot of noise, but we are hoping that through deliberations with different arms of the government, we will be able to set in motion a regulatory regime that is eventually going to attract more investment and promote more entrepreneurship in the space.”
E-Gaming Federation Appoints Satish Mathur and Aruna Sharma on Advisory Board
E-Gaming Federation (EGF), a self-regulatory gaming sector body, has appointed the former Secretary of the Ministry of Electronics and IT, Aruna Sharma, and Satish Mathur, the former Director General of Police (DGP) Tamil Nadu, as members of its advisory board. The duo will offer inputs and advice to EGF on responsible gaming and international best practices for player protection while also providing regulatory clarification in the e-gaming segment.
Sameer Barde, the EGF CEO, said, “The Indian online gaming industry is going through an exciting phase, and there could not have been better timing to add two of the brightest minds to our team. Both Sharma and Mathur come with complementary skills and deep expertise in policy-making and consumer protection. We are confident that their addition will bring immense value to the organization and burgeoning online gaming industry in India.”
The move becomes significant in light of how aggressive EGF has been in representing gaming operators in two crucial legal cases for the sector. It joined the GamesKraft vs. DGGI GST evasion case as an intervenor and has confirmed that it will challenge the Tamil Nadu government’s new online gaming bill.
Mathur has years of experience in dealing with Cyber Crime and will help EGF set up a security framework and code of conduct. On the other hand, Sharma will lend her expertise in formulating policies to create strong policy frameworks for the EGF.
Speaking on joining the EGF advisory panel, Sharma said, “Their concerted efforts to bolster the online gaming sector in India are noteworthy and inspiring. I look forward to taking on this new role and synergizing our efforts to work towards a common goal of regulating and facilitating growth in the sector.”
Mathur added, “The Indian online gaming sector is entering the next chapter of its growth journey, and there is a huge opportunity for us to make a difference. I am impressed by the efforts it is taking to develop operating standards for the smooth functioning of the online gaming ecosystem while promoting responsible gaming. I look forward to strengthening the overall strategy with my experience and supporting the sunrise sector in moving towards robust regulation with effective, responsible gaming elements.”