Tax authorities in India swooped down the offices of MyTeam11 Fantasy Sports Pvt. Ltd. in Jaipur over allegations that the fantasy sports company has been evading its tax responsibilities, along with other irregularities.
According to local media reports, the Directorate General of Goods and Services Tax Intelligence (DGGI) “detected tax evasion worth crores” by the company, which operates online fantasy sports portal MyTeam11. The platform offers skill-based fantasy sports games, including cricket, which fall within the ambit of “betting” under Goods and Services Tax (GST) laws.
India’s new tax regime, introduced in July 2017, had gambling and race club betting grouped in the highest tax bracket—28%—along with other “luxury” services such as cinemas and five-star hotels. In the case of MyTeam11, DGGI officials said the operator “was not paying GST on the amount collected by them through games.”
During the raid last week, regional officers of the tax directorate seized records and documents from MyTeam11’s office. DGGI said the fantasy sports operator must pay the tax equivalent to “the entire amount deposited by the customers and not just on the rake or commission collected by the company.”
MyTeam11 reportedly owes the Indian taxman at least INR7 crore (US$1.03 million) in GST back taxes, although a DGGI official said the operator has already deposited INR1.53 crore ($225,598) “during the course of search.” The investigation is still ongoing.
Fantasy sports games in India has been enjoying a recent surge in popularity after the country’s top court recently signaled its acceptance of online fantasy sports betting. The court hasn’t specifically given the green light, but a justice opined that fantasy sports—daily fantasy sports in particular—requires a significant amount of skill because its participants have to continuously track player activity, sporting events, previous records, weather, among other factors, in order to properly wager their bets.
This ruling, backed by two justices of the Punjab and Haryana High Court, provides enough leverage to indicate that there is potential for DFS to be legalized in the country at some point, according to analysts.
