Draft Law on Online Real-Money Games (RMG)
The central government has finalized a draft law aimed at banning all forms of online real-money games (RMG) and plans to introduce it in Parliament. If enacted, this legislation could significantly impact the RMG industry, which attracts nearly 500 million players, substantial investments, and creates numerous jobs.
Definition of Online Real-Money Games
- Online Real-Money Gaming (RMG): Digital platforms where players pay to participate in games and can win cash rewards.
- The draft bill categorically bans games involving cash stakes and winnings.
Draft Bill Proposals
- Ban on offering, aiding, or promoting online money games.
- Classification of games with entry fees or deposits as “online money games.”
- Prohibition of advertisements for such games.
- Financial institutions barred from processing RMG transactions.
- Heavy penalties, including up to three years’ imprisonment and fines up to ₹1 crore for hosting such games.
Impact on Industry and Economy
- Potential closure of over 400 firms and loss of 200,000 jobs.
- The RMG sector contributes ₹20,000 crore in GST annually.
- Over ₹25,000 crore in foreign direct investment has been attracted by the sector.
Government Rationale
- Increase in gaming addiction and its associated financial and mental health issues.
- Several states have already imposed restrictions, necessitating a national law.
GST and Tax Implications
- A 28% GST is currently imposed on RMG, with considerations for an increase to 40%.
- No distinction in the GST framework between games of skill and chance.
- A clear distinction is introduced by the bill between RMG and e-sports.