Gambling in India is largely prohibited under the Public Gambling Act of 1867, but several states, such as Sikkim, Daman, and Goa, have legalised certain forms of gambling and betting within their borders. Because of this limited legalisation, India has rarely been part of the global gambling conversation. But ever since the government decided to impose a flat 30% tax on winnings from games of chance in the traditional and digital gaming spaces, India's gambling taxes have become a hot topic.
Yet that's not to say other countries, even where gambling is more widespread and regulated, don't have their own challenges and debates around gambling taxation. While some gamers and bettors might not have ever had to consider the reality of taxed winnings, those in certain regions are no strangers to them. So is India's new gambling tax structure too harsh, or is it actually not that shocking compared to global standards? Let's find out.
A Look at India's Gambling Tax Model
India's gambling tax framework is mainly governed by Section 115BB of the Income Tax Act, which concerns 'casual income.' That's income that comes from small, irregular sources but not steady revenue streams. Examples include sports betting, poker games, and even crossword puzzles done with the expectation of winning money. All of this income is subject to a 30% tax on the gross amount of winnings with no deductions or exemptions.
In 2023, the GST Council clarified a Goods and Services Tax (GST) of 28% on the entire value of bets placed on online gaming, horse racing, and casinos, no matter if they're classified as games of skill or chance. That decision standardises tax treatment for all kinds of gambling and betting, making the system more consistent across the board.
And according to the Central Board of Indirect Taxes and Customs (CBIC), there are no plans to reconsider the GST on gaming. Instead, the focus is on targeting offshore betting websites. After all, online gaming revenue in India has almost quadrupled, making regulation more important than appeasing the masses. These tax structures might sound like they only impact players, but platforms must also be diligent about collecting and relaying the GST on player bets. All these efforts are aimed at generating legal revenue from the gambling sector, but there are concerns about the burden on participants. Perhaps it's also a way to mitigate problem gambling.
How the UK Handles Gambling and Winnings
In stark contrast, the United Kingdom doesn't require players to pay any taxes on their gambling winnings, whether from sports betting, lotteries, or casinos. As a result, players don't have to worry about seeing their earnings as a form of income or reporting them on their tax returns. In that sense, the UK is much more accessible for casual and serious gamblers, with a much friendlier approach to gambling tax-essentially none for individuals.
But tax has to come from somewhere. Rather than place that responsibility on players-those who use these gambling services-the UK puts it on the operators. Licensed gambling operators are subject to a 21% point-of-consumption tax on gross gambling revenue. That extra phrase, 'point-of-consumption,' simply means that the tax is applied where the bet is placed, not where the company is headquartered. Many operators tend to serve UK customers while overseas, so this setup ensures they all need to pay tax on bets placed by UK players.
This model has several benefits, mainly encouraging responsible business practices to maintain a smoother player experience. It motivates companies to stay compliant while eliminating financial barriers that could deter users. That's one of the reasons why digital casinos and online betting platforms have become so widespread and appealing, as operators become more focused on creating standout experiences rather than making sure taxes are passed on. In turn, online sportsbooks and casinos absorb the taxation costs and stay competitive through the promotions and bonuses they offer players without tax implications.
The US's Patchwork Approach
The US's model has one thing in common with India, and that's that it operates on a state-by-state basis. Just like India, where there are not really any unified national rules, the US also has a similar fragmented approach to gambling taxes. Take a road trip across the United States and you'll see that each state is highly different from one another. The lifestyles, the slang, and the rules can feel like different countries entirely. The same is true for the gambling industry-tax rates, what's legal, and which games are allowed changes when you cross state lines.
For example, Nevada waives taxes on sports betting winnings, while New York, Rhode Island, and New Hampshire apply the highest tax rate to sportsbooks in the country at 51%. That's big business for the state of New York, where the state collected over $401 million in taxes in just the first quarter of 2025. On top of that, there's also a flat federal tax of 24% for larger gambling winnings, namely $5,000 or more from wagering or sweepstakes and when winnings surpass 300 times the amount wagered. However, for certain table games like blackjack, that rule doesn't apply. And in cases where winnings are withheld, the establishment must keep 24% of the winnings and report it to the IRS.
The good news is that players can deduct gambling losses, but only up to the amount of their winnings (not including the original stakes) and only if they make the effort to itemise their deductions. Because they have to include this information themselves during tax time, the entire process can feel tedious and complex.
Australia's Operator-Focused Model
Australia's model is similar to the UK in that players enjoy a tax-free experience, no matter where their money comes from. Gamblers can participate freely and don't have to worry about reporting their earnings anywhere. As we've learned, that means the taxation system is operator-focused, but this time (in contrast to the UK), each state and territory has its own taxation and licensing rules. Luckily, imposing either a flat rate or a percentage-based tax on the gross gambling revenue is most common, so nothing overly complicated.
These operator-focused models contrast most with India's player-punitive structure, where the entire burden is placed on the gambler. The US stands in a middle ground, depending on the state.
Bonuses and Gambling Taxes Through a Global Lens
If we overlook the taxes, bonuses seem like a win-win. The platform grows through bonus-based acquisition and gets more players on board, while the players get rewards and perks that allow them to keep playing. Regardless of location, top ranked casino bonuses are central to digital gaming. In the UK and Australia, for instance, these rewards are heightened in appeal because they're tax-free. Win anything by using these bonuses, and you'll get to keep all your earnings. Unfortunately, in places like India, which has hefty taxation, a player can win through a free bonus but still be subject to that 30%. That makes these bonuses a lot less appealing in general. In turn, players then look for offshore platforms and grey area markets with looser rules. Especially with no deduction benefits in the region, it's a losing game for Indian locals.
Places like the UK and Australia have built a smart framework for digital gaming compliance that prioritises fairness and natural growth for the gambling industry. On the other hand, India's hardcore tax model could actually dilute the value of casino bonuses and digital gaming in general and limit the market's potential.
Can We Expect Gambling Tax Reform for India?
The hot-button issue in India's gambling landscape today is on fair taxation for digital gaming. Considering the massive 30% tax on winnings plus the 28% GST on full bet value lingering in the shadows, many industry bodies are concerned. The current regime is considered excessive and counterproductive if the country wants to attract investment.
Change could be on the horizon, however. The Supreme Court of India is currently hearing a challenge from Gameskraft Technologies, arguing that games of skill like Rummy, whether played with stakes or not, shouldn't be classified as gambling or betting. Could this set a new legal precedent?
Should India consider other possible long-term policy options, there isn't a shortage of ideas. The country could adopt differentiated tax rates for games of skill versus chance, tiered tax rates, or even move toward an operator-focused model like other countries. Without reform, India risks losing players to platforms abroad and meddling with an otherwise lucrative revenue source.
So, what changes will India make to change this trajectory?
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