News of a new TDS (Tax Deducted at Source) ruling in Goa has shocked punters throughout India. The ruling now puts a 30% tax on all poker winnings. Therefore players are not just paying for table rakes and buy-ins but are now also being taxed if they win.
To explain this in a little more detail, if a player wants to enter a tournament they will pay a 'Buy-In'. This consists of two sums of money; the first going towards the total prize money and the second going towards the house. The latter is usually around 10% of the former. Therefore before players even start a tournament the casino has made a guaranteed 10% profit on all the money that has changed hands.
If players are playing for cash and are not in a tournament then every hand the casino takes something called 'the rake'. The rake is again between 5-10% of the total pot each hand. So players must win against the other players as well as against the rake to stand a chance of winning.
To then have a further 30% tax imposed on players' winnings after they have already paid a substantial sum to the casino ($10 for every $100 spent) makes it close to impossible for players to win.
The move has come via income tax legislation created in 1961 and we have come up with a potential method through which users could reclaim some of those losses made at the casino.
Firstly we should look at how this will hurt those involved in India's nascent gambling industry. Operators should expect to see a sharp decline in custom. With fierce competition from established casino networks in Nepal and Macao high rollers will be avoiding the Goa scene at all costs. Meanwhile local and smaller players will be attracted by illegal ventures which will charge them a fraction of what is charged on board the Mandovi River's floating casinos.
More importantly, the players themselves will be put at risk. Poker is a much slower game than it's traditional rivals such as roulette and blackjack. Those who play poker for fun once or twice a month and who might expect to spend $50-$100 in an evening will be forced off the poker tables. They will find themselves playing the more hardcore gambling games and this will open them to greater liabilities.
The more serious players will be forced to move to illegal enterprises which do not put taxes on winnings. This takes money away from operators and the government and helps grow the already large illegal gambling market in India. Illegal bookmakers offer players bets on credit and there will be a real danger of people racking up un-payable debts, resulting in immoral and criminal repayment methods (such as forced labour, beatings and even more sinister acts).
Finally, the above will result in the government receiving fewer taxes (as there will be significantly fewer people playing). The money they do not receive will be almost directly moved into the hands of the criminal fraternity. The government will then have to spend further funds cracking down on this criminality. More significantly it will affect tourism. If such policies continue to be enforced then ultimately tourists will go back to avoiding Panjim and decline will return to Goa's capital.
So much hard work has been put into building up the gambling industry in Goa and this latest piece of legislation is going to do severe damage to it. It is a highly competitive business and people can and will go elsewhere (be it to either the online or illegal sphere) if unrealistic taxes are placed on the punters.
As mentioned earlier, because the law has been introduced as an income tax law it makes the assumption that you are gambling as a professional and not for leisure. Therefore if you happen to lose, make sure you keep your receipt from the casino cashier. If the government of Goa believe that they can take your 'earnings' at the poker tables, then you have every right to reclaim your 'losses' in your tax return.
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