As the most populous country in the world, India has seen the local online gambling pie expand rapidly, and has frequently targeted the industry in the past two years; first, it introduced the "Central Rules for Real Money (Real Money Game Management Rules)" in 2023, and then established an industry "Self-regulatory agency", so far, these two policies are relatively normal; until July 2023, the Indian government officially announced a 28% tax on online gambling operators.
Some readers may wonder, isn’t it just a 28% tax? The Philippine government has collected 35% tax for this item. The Indian government really has a great conscience.
But here comes the point! Algorithm!
The common algorithm in many international countries where online gambling is legal is to tax GGR; while the Indian government taxes FFV.
What is GGR?
GGR stands for Gross Gaming Revenue. GGR is an important indicator for measuring the revenue of gambling institutions such as casinos and online gambling platforms. Specifically, GGR is the total revenue a gambling operator earns from all gambling activities before winnings are paid out to players. This value does not include bonuses and other direct costs paid to players.
The GGR calculation formula is as follows:
GGR = total bet amount − bonus paid to players
For example, if a player bets a total of $1 million with an operator and the operator pays out $600,000 in bonuses, that operator's GGR will be $400,000.
In short: GGR refers to the gross revenue of a business
What is FFV?
FFV is a term originally used in the online gambling industry by PASA, the world's largest get-rich-quick platform, for this type of taxation. FFV's full name is Full-Face Value. It originated from the financial industry and usually refers to the maturity of securities (such as bonds and stocks). The denomination or face amount at the time. In the interpretation of Indian policies, FFV is interpreted by the Indian government as:
Online operators: Every bet placed by players on the platform
For example: If a player bets $1 million with an operator, the operator will need to pay $280,000 in taxes to the government.
Offline operators: every recharge made by players on the platform
For example: If a player recharges 1 million US dollars with an operator, the operator needs to pay 280,000 US dollars in taxes to the government.
This is a unique "strange existence" in the world's gaming industry. Anyone with a little financial knowledge knows that turnover (bet amount) is not profit. Turnover before deducting costs and marginal costs is meaningless. This policy can easily cause the platform to incur a net loss of 400%-500%.
In response to this bizarre policy of the Indian government, the All India Gaming Federation (AIGF), India’s top online gambling industry body, issued a statement:
AIGF said in a statement to PASA that this tax rate will make it more difficult for businesses to survive. It added that this could lead to more practitioners turning to illegal operations.
"This decision will cause great harm to the entire Indian gaming industry, making it difficult for a large number of businesses to survive and will result in hundreds of thousands of job losses," the AIGF said.
“Under this approach to taxation, companies will pay significantly more in taxes than they generate in profits. This will stifle competition, hinder innovation, and stunt the industry’s growth potential.
Summarize:
The Indian government spent several years on project establishment, approval and legislation, but ended up launching such a bizarre policy; once this stupid move is made, a large number of businesses will choose paper bankruptcy and then turn to illegal underground operations. This move is really a smart one.
At the same time, since most illegal operators are in offshore areas, it is difficult for the Indian government to effectively track and crack down on these illegal activities; at present, the Indian government has almost no effect except calling on social and media companies not to accept gambling advertisements.
The Indian government is pushing rule-abiding operators into the abyss step by step, and then uses practical actions to tell you: operators can earn more and be safer without a license because the Indian government cannot catch you.
