Tiger Global, DST Global, Peak XV, Steadview Capital, and Kotak Private Equity are among global and Indian investors who have asked the India’s Prime Minister Narendra Modi to reconsider the recently announced taxation on online gaming.
The Goods and Services Tax Council, which comprises top federal and state finance ministers, said earlier this month that it had agreed to levy a 28% indirect tax on online gaming, casinos and horse racing. The council said there should be no distinction between “game of skill” and “game of chance,” closing a loophole that has allowed fantasy sports companies to justify their offerings as skill-based.
“The decision of the 50th GST Council has the unintended consequence of equating the constitutionally protected legitimate online skill gaming industry with gambling, betting and other “games of chance,” a group of 30 investors wrote in a letter to Narendra Modi, the Prime Minister of India, on Friday.
“We invested in this sector with the vision to make India the gaming capital of the world, which would help in generating, among other things, high-skilled jobs, billions in foreign capital and make the country a net exporter of innovation in gaming and allied areas such as animation, artificial intelligence and visual effects,” said the letter, titled “urgent prayer.”
Online gaming is one of the fastest growing consumer internet businesses in India. Fantasy sports startups — including Dream Sports, backed by Tiger Global and Alpha Wave Global and valued at over $8 billion, and Sequoia India-backed Mobile Premier League — have altogether raised billions as a generation of internet users build a habit of making bets on real-world sporting events in hopes to make money.
More to follow.