Government Approaches to Online Gaming Taxation in India and New Zealand
Gambling, in general, is a very profitable business. Based on this, it would be a mistake to miss the taxation aspect for this niche for some regions (where it is allowed). Some countries are obviously different and have different numbers and targets.
Using the example of two countries, New Zealand and India, we will analyse the main features and subtleties of taxation and online gaming.
New Zealand’s Government Objectives in Taxing Online Gaming
Gambling is one of New Zealanders' favourite pastimes. In New Zealand, there are diverse slots, and casinos with promotions, sports betting, etc. - not a way to earn money, but an opportunity to have a good time. Gambling sites with exclusive no deposit casino bonus for NZ players are extremely popular among New Zealand punters.
Based on this, the presence of casinos or betting operators (offshore) in the New Zealand market is a very promising solution.
The reason for this is that 70-80% of the population have tried gambling at least once and continue to do so. According to statistics, by 2023, the gambling market should bring the state approximately $1.1bn by the end of the year. This is a very high figure considering the population size of 4.9 million residents.
Regulatory Environments and Laws
The first laws related to gambling in New Zealand were developed using the British model of legal regulation of gambling activities. A special body controls this niche - the Department of Internal Affairs, whose main task is to ensure that all casinos operate legally, comply with the Gambling Laws (2003 with the New Amendments), and, of course, taxes.
Along with the DIA is the New Zealand Gambling Commission, a kind of analogue of foreign bodies (e.g., UKGC) and is responsible for monitoring and issuing licenses to foreign companies.
As a result, thanks to the practice and experience of the UK, the provocative gambling field in New Zealand is both strict, controlled, and, at the same time, promising for business.
Possible Taxation of Offshore Licenced Gaming Sites
Based on the New Zealand Gambling Act 2003, local companies cannot conduct business, that is, create online casinos, betting sites, etc. But there is no such prohibition for offshore companies, although for this they need to pay tax. At the moment, there are discussions about raising the tax rate to 15% so that casino operators can conduct legal and honest business in the country.
At the same time, a 0% gambling tax is set for gamblers. Based on this percentage, the expected amount is $1.1 billion, which was mentioned above, and may decrease slightly if the law changes.
Some economists believe that such an increase in fees will reduce the interest of casino operators, and they will look for a more promising field for business. For example India.
Indian Government Objectives in Taxing Online Gaming
The Indian state is probably one of the most loyal and interested in the prospects of entertainment in the form of online gambling. The reason for this is substantial cash flows, which in 2023 bring 2.72 billion dollars annually, and by 2027 the amount, according to experts, should increase by 1.5x. But this growth also has another reason, namely the lack of strict rules and regulations, such as in New Zealand.
Regulatory Landscapes and Frameworks
Although the niche is not strictly regulated, this does not mean that anyone can easily and quickly start a gambling business in India. The fact is that every pant in India has its own characteristics, position and laws regarding online gambling. For example, there is no online gambling in the following states:
- Nagaland
- Sikkim
- Meghalaya
- Andhra Pradesh
- Telangana
The reason for this position is that the laws in these states are outdated and have not been updated to modern (online) trends. But in fact, this is not a ban, as many may think: online casinos literally do not exist within the framework of the law, so residents can play or not.
But there are other things that can repel new offshore casino operators. After all, no one wants problems with the law. For example, one of the main conditions is the presence of the national currency (Indian rupee) on the casino or bookmaker’s website and the absence of aggressive and intrusive gambling advertising.
If with the first everything is more or less logical, then with the second there may be problems because if the local authority considers the advertisement aggressive or violating the law, the site will be blocked and inaccessible.
Gambling Taxation
The scary figure of 28% that GST set as taxes for gambling companies was not what many economists and analysts predicted.
“The appearance of such a tax will destroy the entire Indian gaming industry and result in job losses. The only ones who will benefit from it will be the anti-national illegal offshore platforms,” said Roland Landers, chief executive of the trade body All India Gaming Federation.
But fortunately, the situation reached a stable level and did not turn into what Roland Landers said. Why? The first reason is the large number of gamblers, especially mobile ones. There are approximately 670-680 million smartphone users in India, and almost half of them play online casinos or place online bets.
As a result, such a large number of active gamblers offsets the rather large (for some offshore companies) tax on running a gambling business. The second and main reason is updated laws and clearer regulation.
States like Nagaland, Sikkim, Meghalaya, Andhra Pradesh and Telangana will remain somewhere between a complete ban and accessibility to gambling. However, given the rapid growth, the local government will definitely want changes in favour of larger budgets and an influx of taxes.
The Final Word
New Zealand and Indy are two different countries with completely different approaches to gambling. On the one hand, NZ strictly regulates offshore companies and taxes them at 15%. On the other hand, in India, where the tax is much higher and at the same time the law is a little “chaotic” and can be repulsive for some foreign companies.
Indeed, New Zealand's gambling sector is akin to the Philippines, Nigeria and numerous other global gambling markets. But in any case, companies do not miss the opportunity to expand their presence in the gambling market and are ready to compromise and, sometimes, to negotiate.