While the online gaming sector as a whole continues to grow,, the RMG segment has seen a marked slowdown. Previously growing at a robust CAGR of 25%, the RMG sector is now projected to grow at just 8% CAGR between 2025 and 2028 at a lower base, with a degrowth of revenues from 2023 to 2025. The steep increase in operational costs, attributed to a 300-400% rise in the GST burden, has pushed gaming platforms into a challenging position. Companies have had to absorb these costs to retain customers, leading to a 50% drop in margins and significant constraints on innovation, user acquisition, and sustainability.
The implications of these financial burdens are far-reaching. According to industry sources, the industry has already seen over 25% shutdown rate among start-ups within a year of the GST hike, accompanied by layoffs and stifled investments. Once a magnet for capital, attracting over ₹22,000 crores since FY19, the sector has struggled to secure funding post-GST due to the double impact of increased GST and retrospective taxation.
A worrying trend has also emerged as users migrate to offshore betting platforms, which operate outside India’s legal and regulatory framework. According to some reports, these platforms reportedly receive deposits worth ₹8,20,000 crores annually, resulting in a GST loss of ₹2,29,600 crores per year. This migration not only undermines the domestic industry’s growth but also exposes users to unregulated risks, compounding concerns about frauds and responsible gaming.
Despite the challenges faced by the real money gaming platforms, the government has recorded a 340% increase in monthly GST revenues from the industry, rising from ₹250 crores to ₹1,100 crores. However, the long-term sustainability of this revenue growth depends on industry receiving regulatory clarity and resolution of the retrospective tax demands. ,. While the industry has sought a review of the tax, the GST council has decided to not make any amendments in the 54th GST council meeting.
India now faces a pivotal moment in defining the future of its online gaming ecosystem. The RMG segment, the largest segment of India’s online gaming industry, will play a key role in India’s ambitions to become a global leader.
Note: This is a partnered post. No CNBC-TV18 journalist has been involved in publishing this story.
First Published: Dec 4, 2024 11:43 AM IST
