Indian Online Poker Growth Could Fall Due To Policies

indiaThe sharp rise of online poker in India has caught the eye of industry observers. The market is estimated to be currently at around $120 million and is expected to grow at a fast pace in the coming years, especially if the government decided to encourage the industry.

According a local media report that extensively examined the current state of the poker industry in the country, around 50,000 regularly play poker online on sites like Adda52.com.

India has a total population of 1.25 billion and the average internet penetration in the country is at roughly 35 percent.

Despite the current low penetration, poker operators in the country are expecting rapid growth. According to Rajat Agarwal of Spartan Poker the online poker operating model is a profitable one in India. He estimates the market size to be in the range of $110 million and $120 million and he notes that this could rise with further investments into the sector. However the report pointed out that lack of supportive policies could harm further growth of the industry. All local start-ups function under stringent local laws that prohibit foreign investment, do not allow partnership with foreign entities and insist on use of India-specific technology.

Spartan Poker

Additionally operators are required to pay a service tax of 15 percent on their revenue, while all players winning over $150 must pay tax of 30.3 percent. Since this tax on winnings is deductible at source, operators currently pay it for the players, but this may prove to be a hindrance over years as the player base grows.

Anuj Gupta co-founder of Adda52 highlighted that presently high rollers account for 20 percent of total player base for them but contribute to 80 percent of the revenue.

Operators like Adda52.com are primarily focusing on attracting new players who prefer low stakes. They are aware that having too many high stakes players on the site could drive away recreational players. While operators are working to ensure this doesn’t occur the report points out that sustained growth in player base is essential for future growth and also to attract investment from foreign companies.

Since poker is becoming a popular sport throughout the country, the government may chart out a formal regulatory framework for the sector. However having too much of regulation can have a dampening effect on industry growth trends as observed in other countries. France for instance has seen a sharp drop in revenue after it was regulated in 2010 and the market is in fact contracting.