With the new taxation rules of 28% GST , wef October 1, 2023 on all categories of gaming, be it Fantasy, game of chance or simple online video gaming involving Real money, the sponsorship landscape in Indian Sports is likely to see a radical shift.
India’s fantasy sports market was valued at approximately $25.44B in 2022 is estimated to have invested $375M in real-world sports via sponsorships and partnerships with sporting leagues
Clearly the Government does not want to take a chance with an industry that takes money in from the common man, and spend its time and resources to check if it is a game of skill or a game of chance. The bottom line of measurement here is the high possibility of losing money with the thin discretion between skill and chance! To add to the woes of the industry, a 28% gst is now going to be levied on the total bet placed at entry level of each gaming session on RMG platforms. And if the Court were to rule in favour of a retrospective taxation of 28%, that would spell the death knell for the industry
But, will all of this affect the Sports ecosystem in India?
An in-depth analysis indicates that it should not. OTT platforms can now live stream all sports events of any magnitude at much lesser costs than a traditional satellite network used to do. Internet costs have reduced, helping in the overall technical billing costs of the OTT platform. So, practically speaking all that booty that came from the cash rich gaming sponsors perhaps acted like an icing on the cake for broadcasters.
Its time to get into a more realistic costing and profit margin ratio. Sectors like Fintech, Pharma, healthcare, Electric Vehicles who always perhaps looked for opportunities to enter the Sports sponsorship market could not compete or did not think it wise to compete with the fantasy world of sponsors, says Kanthi D Suresh, Editor-in-Chief, Power Sportz, Indias first flagship Live OTT sports channel
As the bubble seems to have burst, it may be the beginning of a certain freshness in Sports with brands albeit spending less may start looking at their marketing spend as value for money. The need of the hour is to have more OTT platforms specializing purely in Sports without mixing it up with a General Entertainment Segment, which will catapult small to mid sized Passion Sports leagues , the soon to be a $825 billion dollar industry.!