Gambling has long been a part of Indian tradition. Whether it is playing card games during Diwali to appease the goddess of wealth Lakshmi, or putting money into IPL online betting, the Indians have an appetite for gambling – sports and casino games – and gamblers enjoy it Cricket odds on sites like 10Cric
So big that even the obscure, murky laws surrounding gambling in India won't stop you from betting. Whether it is a game of luck or skill, whether it is cricket or football betting, or just online poker, the Indians have the means and they do it fully. And here's the kicker – all of this is largely unregulated.
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There are currently no specific laws or frameworks governing India's online gambling activities. It's largely unregulated and much of it is underground.
While this is definitely great for Indian gamblers who have the chance to make some cash and grow their wealth, what about the government and agencies that are lacking taxes? What about the subtle, indirect effects this massive financial betting bubble is having on Indian GDP? Let's take a look.
Incredible tax potential
If we are to follow a report on sports games in India published by KPMG in March 2019, then the Indian sports betting market is larger than $ 130 billion, and it was only a few years ago. By now the same number is expected to be above Rs. 15 lakh crore.
Some reports also estimate that India's betting and gambling revenue was around 7.5% of its GDP in 2016.
Let's pause for a second and assess what this could mean for taxation. A flat 30% tax on gambling winnings could potentially result in lakhs crore that the government can put to good use. Imagine such a fallback in times like Covid-19, when revenues have been falling on all fronts.
But that's not all – by legalizing and taxing sports betting and gambling, you are also taking people out of the illegal, unregulated markets and putting them into the structured fold where their interests and information are protected and respected. In addition, the regulation of these can also help to curb black money, money laundering and corruption in sport.
And not to mention the increased number of spectators at the sporting events once betting is legal. It will create a ripple effect that will benefit broadcasters, sports franchises and tournaments, and even viewers.
So what can be done?
There are currently tax laws for gambling winnings that provide a lump sum of 31.2% including the levy. However, in the absence of an appropriate legal framework for the activity itself, it can be difficult to achieve its full potential. India can definitely take its cue from countries like the UK, Australia and Italy where betting is inadvertently linked to their respective GDP.
A structured, well-planned legal framework for online gambling has helped these governments improve their tax revenues and protect consumer interest in the process. India is already halfway through the betting provider thanks to the strict KYC measures. It is now up to the authorities to pave the way forward.