How GST is Effecting Real Money Gaming in India?

The online gaming industry in India has been facing a tremulous time with the government levying 28 percent GST on such startups and businesses. The aftereffects of the tax have been detrimental to the gaming industry as per the industry stakeholders. However, there is a fine line between online gaming, esports, and fantasy gaming in India where real money is involved. In an exclusive interview with Soham Thacker, the founder of Gamerji draws out the difference between online gaming, esports, and fantasy gaming. 

The online gaming industry has witnessed remarkable growth in recent years. With millions of players and a plethora of gaming platforms, it has become a thriving ecosystem. Soham Thacker, the driving force behind Gamerji, shared his perspective on the industry's current state and the challenges it faces.

Impact of GST on Online Gaming

One of the pivotal topics discussed during the interview was the introduction of a 28% Goods and Services Tax (GST) on online gaming platforms, including esports. Soham expressed his thoughts on this matter.

The GST imposition has had a more detrimental effect on the real money gaming segment of the online gaming industry. This segment heavily relies on real money transactions, making it more susceptible to the impact of GST. However, for the broader gaming industry, such as video games, the effect is less severe since it does not involve real money cash-ins and cash-outs.

"When we talk about the impact of 28% GST, ideally on esports it is very negligible because the 28% GST is not being levied upon in-app purchases on games for example. If you are unlocking a new level or a new avatar within a game, the GST impact is not there or ideally speaking not determined. But when you talk about the largest game impact on either the casino games or even the fantasy sports platform, obviously it has created a huge ambush especially because not only of the 28% GST but also the GST being implied on the actual deposit amount rather than the platform fee segment of the deposits. So obviously it has created a huge havoc. We have seen a lot of organizations obviously approach the government because it is something that does not help the business sustain," Soham mentioned. 

The Dichotomy: Esports vs. Fantasy Gaming 

Soham highlighted the distinction between online gaming and esports, shedding light on the nuances of these terms, which can often be misunderstood.

Esports, globally recognized, refers to competitive video gaming where players and teams compete in popular titles like FIFA, Call of Duty, and PUBG. However, in India, there is a misconception that fantasy apps, poker, and Rummy fall under the esports category. In reality, they have their own segments, such as fantasy gaming or card-based gaming. The lack of a governing body in India further adds to this confusion, calling for a need for clarity and differentiation. 

"Whether you look at it in the West or in Southeast Asia or the Middle East or Europe. So wherever you go, esports is always defined as competitive video gaming or ideally where players, and teams, come together, they compete in games like FIFA, games like Call of Duty, PUBG, etc. That is the term esports which the world knows. In India, it has always been jump-ed with the fact that you know even fantasy cricket is esports, even poker platforms are esports, and even Rummy platforms are esports. They have their own segment. Like fantasy cricket is considered fantasy gaming. So that's where the differentiation is very high, you know when a global standpoint. Unfortunately, the awareness factor in India is not that deeply penetrated for it to be differentiated yet. And obviously, you know it's the awareness is taking its own time but a lack of an authoritative body that governs these channels is something that is creating this confusion even deeper down. So that is something that we have to have built in this space," the founder of Gamerji said. 

The Future of Esports in India

Esports has garnered significant attention and is evolving into a professional career choice for many individuals. Soham discussed the growth potential of esports in India.

Esports has flourished in foreign countries for over a decade before gaining traction in India. The nation's vast gaming community, with over 300 million gamers, presents immense opportunities for future gaming startups. With improving infrastructure and growing accessibility, esports is attracting the younger generation, offering them a path to pursue gaming professionally.

Starting an Online Gaming Venture

Entrepreneurs looking to enter the online gaming industry might wonder about the required skill set and how to secure funding for their ventures. Soham shared his insights.

Starting an online gaming startup doesn't necessarily demand extensive prior experience in the gaming industry. What matters most is the ability to build robust technology that enhances user experience, connects with the audience, and addresses specific needs within the gaming community. A keen understanding of the target audience's preferences and gaps in the market is crucial for success.

The Journey of Gamerji

Soham's journey as an entrepreneur in the online gaming sector sheds light on the challenges and triumphs faced in building Gamerji.

The idea behind Gamerji stemmed from Soham's passion for gaming and the realization that there was a gap in the market for competitive gaming platforms. With limited resources, he and his team launched the platform in 2019, facing the challenges posed by the COVID-19 pandemic and the ban on premium titles like PUBG in India.

Despite these obstacles, Gamerji persevered, benefitting from the growing gaming community and support from organizations incubating esports teams. Today, it stands as a testament to the potential of the online gaming industry in India.