The Indian Finance Ministry has scheduled a meeting with stakeholders from the real-money gaming (RMG) industry on Friday to address concerns related to money laundering in online gaming. The discussion will also cover challenges such as the Goods and Services Tax (GST) implications and the proliferation of offshore gambling platforms operating within India.

Key Discussion Points:
Combating Money Laundering: The meeting aims to develop strategies to prevent money laundering activities facilitated through online gaming platforms. There is a particular focus on unregulated offshore gambling entities that operate illegally in India, posing threats not only to legitimate businesses but also potentially engaging in terror financing.

GST Challenges: The RMG industry has expressed concerns over the current GST framework. In July 2023, the GST Council imposed a 28% tax on the full face value of online gaming, aligning it with the taxation of casinos and horse racing. This move has led to significant financial strain on the industry, with reports indicating that 20% of early-stage startups have shut down, 40% have halted hiring, and 20% have laid off employees.

Impact of Offshore Gambling Companies: The infiltration of offshore gambling firms that operate without paying taxes in India is a significant concern. These entities not only undermine the revenue of legitimate businesses but are also implicated in serious issues such as money laundering and terror financing.

The Finance Ministry is expected to outline its position on the online gaming industry during the meeting. Officials from the Financial Action Task Force (FATF), an intergovernmental organization that sets international standards to prevent money laundering and terrorist financing, will also be present to provide insights and seek feedback on curbing illicit activities in online gaming.

In September 2024, Finance Minister Nirmala Sitharaman announced a 412% increase in revenue from online gaming, reaching ₹6,909 crore within six months. Despite this growth, the industry faces significant challenges under the new tax regime, including a sharp decline in projected job creation and a near halt in Foreign Direct Investment (FDI).

An RMG operator emphasized the need for a swift crackdown on offshore gambling platforms operating illegally in India. These unregulated entities not only affect the revenue of legitimate businesses but are also involved in serious concerns like terror financing and money laundering.

Key Highlights:

• The Finance Ministry is set to meet with real-money gaming operators to discuss strategies against money laundering in online gaming.
• Discussions will also address challenges related to the 28% GST and the presence of offshore gambling companies in India.
• The industry has faced significant impacts under the new tax regime, including startup closures, halted hiring, and reduced FDI.
• The government aims to collaborate with stakeholders to develop effective solutions to these challenges.