Indian Video Game Firms Seek Separation From Gambling Sector

More than 70 video game companies in India have launched a formal appeal to Prime Minister Narendra Modi and the Ministry of Information and Broadcasting. The coalition is demanding a clear regulatory separation between pure video game developers and the real-money gaming and fantasy sports sectors, which have long shared the same industry classification.

The Impact of Regulatory Overlap

The push for reclassification follows recent tax amendments that placed real-money games under a 28% tax bracket, while video games remain at 18%. According to the coalition, the lack of a distinct definition has caused significant operational friction for legitimate game developers. Firms such as GMonks, NewGen, Lila Games, Dot9 Games, and the Esports Federation of India signed the petition citing several consequences:

• Receipt of multiple show-cause notices and tax-related raids.
• Denial of services from payment gateways and banking institutions.
• Increased difficulty in securing international investment due to confusion over regulatory targets.
• Instances of local police raiding video game parlors under the misapprehension they were gambling venues.

Defining the Industry

The consortium argues that the current “online games” umbrella term fails to capture the nature of their work. They are proposing a formal policy distinction:

• Video Games: Digital entertainment products created exclusively for leisure or educational purposes, involving no monetary stakes.
• Real Money Games: Platforms where users stake funds to participate in contests with the potential for financial loss or gain.

Beyond legal definitions, the group is asking the Ministry of Information and Broadcasting to discourage media outlets from using imagery associated with video games when covering gambling or real-money gaming. They argue that public perception is vital for the growth of the entertainment medium.

Policy Proposals for Growth

Currently, the video game sector in India remains underdeveloped despite the country’s status as a major tech hub. To foster growth, the coalition has submitted a series of policy requests, including:

The group seeks to have the Ministry of Information and Broadcasting designated as their nodal agency, moving away from the regulatory purview that governs real-money gaming. Additionally, they are pushing for a reduction in the GST on video games from 18% to 12% and the implementation of corporate tax holidays to bolster industry sustainability.

Other measures requested include the creation of a “Catalyst Fund” to support micro, small, and medium enterprises, as well as initiatives that would allow banks to accept digital intellectual property as collateral for business loans. The coalition also advocates for improvements in higher education focused on game development to help bridge the current talent gap.