India’s lottery potential hobbled by GST, legal issues

India’s lottery market has the potential to be at least four times its current size if more states were to legalize sales and the industry presented more appealing content, says Kamlesh Vijay, group CEO for Sugal & Damani, one of the country’s largest lottery companies.

Vijay told a seminar at ICE Totally Gaming in London that the lottery market is currently worth $3.5 billion, based on nine state legal states, which are home to about 400 million people, out of a total population of 1.3 billion people.

He says India is missing out on revenue of about $2 to $3 billion, compared with the $350 million it currently collects from the lottery industry, while a further half a million jobs could be created were lotteries legalized nationwide.

However, Vijay also pointed out that the product offering is “boring” and needs to be upgraded to create more excitement for players.

Private lottery operators in India have been hit hard by the introduction of a goods and services tax of 28 percent on sales. The tax applies to lotteries “authorized” by the state but sold by private distributors, while lotteries run by the states themselves are subject to a tax of just 12 percent.

In January, the All India Federation of Lotteries Trade and Allied Industries issued a public appeal through an advertisement in the Economic Times calling for the tax to be reduced, with operators saying it has cut revenue by at least half.

The GST “has completely eroded the viability of lotteries in India,” Vijay said, but added there may be “light at the end of the tunnel,” as the government has announced an ambitious healthcare plan and a target to improve sports through the Khelo India Project that will need substantial financing. He says it may be an opportunity for the industry to engage with governments on raising money through lottery sales.

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