Government’s new tax policy spurs Super Group to exit India
Super Group, the parent company of renowned betting brands Betway and Spin, has officially announced the cessation of all its operations in India. This decision comes in response to the Indian government’s implementation of a new Goods and Services Tax (GST) that became effective on 1 October 2023.
This summer, India’s Parliament approved the formation of the Goods and Services Tax Council (GST) with the primary objective of amending tax rates applied to companies offering gambling services, regardless of their domicile. Under the newly ratified GST framework, a substantial 28 percent turnover tax will be levied on all services related to online gambling, land-based casinos and horse racing.
Indian market loses appeal
A statement issued by Super Group explained their decision, stating, “The newly effective tax rules make the Indian market no longer commercially viable for Super Group.” This abrupt exit from the Indian market has been deemed necessary due to the substantial tax burden imposed on the company.
The GST Council, a body comprised of the Union Finance Minister and delegates representing each state and union territory in India, holds the authority to determine tax rates, exemptions, and administrative processes related to the GST.
Despite the withdrawal from India, the management of Super Group remains optimistic about its financial projections for the entire year, as outlined in its Q2 trading update. Neal Menashe, the CEO of Super Group, (in photo above), conveyed the company’s commitment to adapt to evolving regulatory landscapes in the various markets they serve. He stated, “Informed by years of operating our geographically diverse business, we remain confident about the long-term growth opportunities in front of us.”
This decision to cease operations in India indicates the far-reaching implications of tax policies on multinational corporations operating in the country’s gambling and betting sector. The Super Group’s exit will undoubtedly leave a void in the Indian market. It also shows the importance of regulatory clarity and taxation policies for businesses in the industry.
Super Group Q2 highlights
Impressive Revenue: The company reported a robust revenue of €380.8 million during the quarter, showcasing its strong performance in generating income.
Profit and Non-Cash Charge: The profit for the period stood at €27.6 million. It’s important to note that this figure includes a non-cash charge of €6.1 million, stemming from the change in fair value of option liability, reflecting the company’s commitment to transparency and accurate accounting.
Operational EBITDA: Excluding the US operations, the company achieved an Operational EBITDA of €82.6 million, highlighting its operational strength. However, it incurred a loss of €12.6 million from its US operations, resulting in an overall €70.0 million, illustrating the company’s performance on a global scale.
Super Group combined revenues from betting brands Betway and Spin by percentage derived from various geographical regions for the six months ended 30 June 30, 2023. (Source: SiGMA)
Background on taxation of gambling companies in India
Taxation for gambling companies has transformed over time.
The most significant change came with the implementation of the Goods and Services Tax (GST). GST replaced the complex system of multiple indirect taxes and brought uniformity in taxation across the country. It subsumed taxes such as Service Tax and Value Added Tax (VAT) that were previously applicable to gambling and betting activities. Under the GST regime, gambling and betting services fall under the category of “Betting, Gambling or Lottery.”
In India, gambling and betting regulations largely fall under the purview of state governments. Each state has the authority to regulate and tax gambling activities within its jurisdiction. Consequently, the tax rates and policies related to gambling services may vary from state to state. Some states have their own tax structures for gambling and lottery activities, which can add an additional layer of taxation for gambling companies operating in those regions. With the growth of online gambling platforms, there has been increased attention on the taxation of online gambling services. The implementation of GST and the introduction of digital services taxes in some states led to many debates and discussions on the appropriate tax treatment for online gambling activities.
The taxation of gambling services is closely tied to regulatory changes and evolving public attitudes toward gambling. India has a complex legal framework regarding gambling, with many states prohibiting certain forms of gambling while others allow it under specific conditions. Taxation policies are usually aligned with the regulatory framework in each state.
