High GST to shut down over 120 companies, online skill gaming industry tells govt

On July 28, businesses involved in online casual skill gaming wrote to the Ministry of Finance and all members of the GST Council requesting special tax status that is unique from that given to the fantasy sports industry. Over 120 online skill game companies, they claim, will be forced to close due to the excessive taxation.

Users of online skill games, the firms argued, will turn to offshore platforms for entertainment since they will have no money left after paying taxes on their gains.

The sector emphasised that guaranteed prize pools in fantasy sports are taxed differently than online skill gaming around the world. The corporations justified their suggestion with references to UK taxation, where online casual games of skill incur a normal VAT (value added tax) of 20% (on GGR-gross gaming revenue) and fantasy sports incur a tax of 21%. The Australian goods and services tax (GST) on gross gaming revenue (GGR) for online casual games of skill is 10 percent, whereas the GST on GGR for online fantasy games is 15 to 20 percent.

The gaming businesses, who represent over 400 million users, asked that their submission not be categorised with games of chance. In addition, they emphasised that up to 75% of the deposit money is returned back by the user in the form of winnings, making price elasticity very low, such that all continuous game forms would be forced to shut down if GST were applied on deposits. The gaming firms also stated they forwarded the data to the Ministry of Finance.

On July 28, businesses involved in online casual skill gaming wrote to the Ministry of Finance and all members of the GST Council requesting special tax status that is unique from that given to the fantasy sports industry. Over 120 online skill game companies, they claim, will be forced to close due to the excessive taxation.

Users of online skill games, the firms argued, will turn to offshore platforms for entertainment since they will have no money left after paying taxes on their gains.

The sector emphasised that guaranteed prize pools in fantasy sports are taxed differently than online skill gaming around the world. The corporations justified their suggestion with references to UK taxation, where online casual games of skill incur a normal VAT (value added tax) of 20% (on GGR-gross gaming revenue) and fantasy sports incur a tax of 21%. The Australian goods and services tax (GST) on gross gaming revenue (GGR) for online casual games of skill is 10 percent, whereas the GST on GGR for online fantasy games is 15 to 20 percent.

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The gaming businesses, who represent over 400 million users, asked that their submission not be categorised with games of chance. In addition, they emphasised that up to 75% of the deposit money is returned back by the user in the form of winnings, making price elasticity very low, such that all continuous game forms would be forced to shut down if GST were applied on deposits. The gaming firms also stated they forwarded the data to the Ministry of Finance.