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Indian tax hike rings alarm bells

The Financial Times took us to India this week, with an article shedding light on controversial plans to introduce a new online gaming tax in the country.

The proposal has prompted “a fierce backlash from companies and investors who warn it will kill the fast-growing multibillion-dollar industry for fantasy sports and other real-money games,” the piece says.

Strictly speaking, gambling is illegal across most of India, but real-money gaming companies have been able to win several court cases deeming their offerings “games of skill”, rather than actual betting.

Customers are therefore able to legally compete for cash prizes in games such as online rummy and fantasy sports, despite the lack of a gambling regulatory framework.

A recent surge in the popularity of such games has “alarmed authorities”, the FT said, who fear a rise in gaming addiction and are now proposing a significant hike in tax rates.

At present, real-money gaming companies collect commissions on the stakes placed by customers and pay a tax set at 18% on that revenue.

Under the proposed change, which is likely to take effect as soon as October, that tax rate will jump to 28%, “representing a huge disincentive for gamers.”

If the change comes in, it could spell big trouble for companies operating in the sector.

“The larger ones may scrape through, but the mid to smaller players would be finding it extremely difficult – in fact, they would be on the verge of shutting down,” said All India Gaming Federation CEO Roland Landers.

Saumya Singh Rathore, a co-founder of real-money game aggregator WinZo, added that under the proposal, “we are certain that 85% of these games would stand unviable, making WinZo as a platform also unviable.”

That reality could see a serious chunk of India’s economy grind to a halt.

A report published by gaming-focused fund Lumikai recently estimated the size of India’s real-money gaming market to be around $2.6bn in the year to March 2022.

A group of investors has already written to India’s prime minister Narendra Modi to ask the government to reconsider the tax.

If the plans go ahead as suggested, however, India may well find the growth of its gaming sector slowing to a snail’s pace.

Gambling is a religion

In the realm of the righteous and religious, Jason Gerald Shenk stands accused of pulling off an unholy heist of biblical proportions, reports the New York Times this week.

This supposed missionary was hailed in Amish and Mennonite communities across Ohio, North Carolina, and Pennsylvania as a devout distributor of bibles to China.

In a shocking twist, Shenk is said to have used more than $30m in pious donations to fund his own not-so-humble lifestyle, including a habit for high stakes sports gambling.

Diamonds, gold, shares in a private nuclear firm and a personal investment portfolio of properties in Santiago, Chile, were allegedly the fruits of this ecclesiastical embezzlement.

Now, with an arrest warrant pending for defrauding charities out of more than $30m, Shenk, 45, is nowhere to be found.

Federal prosecutors claim he renounced his US citizenship in 2016 as he became a globe-trotting fugitive of sorts.

While the folks of the Amish and Mennonite communities continue their uncomplicated lifestyles, Shenk is alleged to have orchestrated a complex money laundering scheme involving shell companies in the British Virgin Islands and the Samoan Islands.

If captured and convicted, Shenk will have lost his biggest gamble to date by looking at up to 20 years in prison, the repayment of funds and substantial financial penalties.

In a bit of a pickle

Clayton Larcombe – Sydney’s most boastful financier according to Australian Financial Review reporter Mark Di Stefano – has made quite the stir down under.

Larcombe’s latest adventure, through fund PAC Capital where he is chief investment officer, has invested in Pickle Bet, an online bookie based in Brisbane.

According to Di Stefano, Pickle Bet allows bettors to place hard-earned money on whether ‘Adriano’ can beat ‘Misterx’ at a game of FIFA, and all in the comfort of your own home.

Pickle Bet, which is seemingly a clone of Flutter-owned Sportsbet with the added twist of betting on esports, allows customers to place wagers on two guys battling it out on Halo.

Di Stefano suggests a lack of oversight on video game betting will provide a major incentive to criminals. “They can ask ‘Misterx’ to concede a few goals for $10,000,” he writes, predicting match fixers will soon eschew cricket and tennis in favour of esports.

The reporter asks who would be likely to invest in this upstart esports betting business; enter Peter Blunden, News Corp executive editor, who has made a personal investment.

Blunden, who has worked for Rupert Murdoch for 44 years, had a previous association with the flailing News Corp betting platform Betr, which was put up for sale in May.

If Pickle Bet sounds like a recipe for potential disaster, it may have something to do with its registration in Darwin, Northern Territory, described as a haven for online bookies.

Indeed, Larcombe’s vision of transforming the betting landscape from “men over 50 betting on horses” to “younger men betting on esports” appears to have overlooked the potential for major legal, ethical and financial issues, writes Di Stefano.

With no need to verify your age or identity to start gambling on Pickle Bet, what could possibly go wrong?

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