E-Gaming cost to reduce ad spends during cricket World Cup

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The online gaming industry, which typically thrives during major sports events, is currently facing a lack of enthusiasm. Even in anticipation of the ICC Men’s Cricket World Cup, the online gaming industry is facing challenges, due to the significant burden of a 28% tax imposition. Let’s understand the issues in detail.

Impact of Increased GST on Advertising Spending by Online Gaming Companies

  • The 2023 ODI Cricket World Cup is coming up, but online gaming companies may not spend as much on advertising as they have in the past.
  • This is because the Indian government recently raised the GST (Goods and Services Tax) rate for online real money gaming companies, which hurt their revenue.
  • Fantasy gaming platforms were major advertisers during cricket events in India, and they spent over Rs 5,000 crore on advertising in the 2022 financial year.
  • Dream11, one of the biggest fantasy gaming companies, even became the title sponsor of the Indian national cricket team.
  • Despite the industry’s pleas, the GST council decided to keep the GST rate at 28% for online gaming startups.
  • This is likely to result in job losses and the closure of smaller gaming startups.
  • However, the council decided that the rate will be charged only on the initial deposit, and that the tax rates will be reassessed after six months.

28% Tax on Online Gaming Companies

Under the recently enacted legislation, commencing on October 1, online real money gaming companies will face a 28% tax on the total value of bets made, leading many of these firms to implement cost-cutting measures.

Learn more about in depth at: GST on online gaming sector

Broadcasters’ Challenges in the Streaming Era

  • It’s not only businesses that are encountering challenges; broadcasters are also feeling the pressure.
  • In response to JioCinema acquiring streaming rights for India’s home games, Disney+ Hotstar, their competitor, has taken a proactive approach by offering free streaming for the upcoming ICC Cricket World Cup.
  • Given the potential reduction in advertising spending from online gaming companies, streaming platforms could also see a decline in their returns.
Take a call from Expert

50th GST Council Meeting on July 11 to resolve online gaming taxation

Moreover, If you want any other guidance relating to E-Gaming cost  to reduce ad spends during cricket World Cup, please feel free to talk to our business advisors at 8881-069-069.

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