New DelhiReflecting the rising popularity of fantasy sports in India, the revenue of the industry is expected to grow at a compound annual growth rate (CAGR) of 33 per cent to reach Rs 25,300 crore in the 2026-27 financial year (FY27). 50 crore user base, according to a new report by financial advisory firm Deloitte and the Federation of Indian Fantasy Sports (FIFS) released on Tuesday.
However, the report titled ‘Fantasy Sports: A Catalyst for the Sports Economy’ states that regulatory and tax certainty are key elements that will determine continued growth for the sector.
The revenue earned by Indian fantasy sports (FS) platforms is estimated to be Rs 6,800 crore in FY22, almost three times the revenue in FY20, and is expected to grow to Rs 8,900 crore in FY23, in FY24 Rs 11,700 crore, Rs 15,200 crore in FY25 and Rs 19,700 crore in FY26
“This can be attributed to improvements in digital infrastructure, investments, introduction of new sports and leagues on existing FSPs and the rise of new platforms. The rapid improvement in platform revenue can also be attributed to the growing popularity of FS, which has a user base of around 180 million, a growth of 38 percent by FY21, and is projected to reach 500 million by FY27 , ”the report said.
It pointed out that India is the fastest growing FS market in the world, with a user base almost three times that of North America, which is a much more mature market and the market leader in terms of revenue.
Fantasy sports are team-selection competitions where users form virtual teams of real-life players in various sports. This team competes against other users’ online teams and the winners are decided on the basis of real-life performance of the players in officially sanctioned live and completed matches.
Established in 2017, FIFS is a self-regulatory industry body that aims to protect consumer interests and create standardized best practices for the fantasy sports industry in India.
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revenue to the exchequer
As per the report, between FY18 and FY22, a total of Rs 4,500 crore was generated by the FS industry as revenue to the exchequer. Of this, about Rs 2,800 crore was given as GST. As per the current tax regime, this is expected to rise to Rs 17,500 crore cumulatively between FY18 and FY27.
Additionally, Fantasy Sports Platforms (FSPs) also deduct Tax Deduction at Source (TDS) on winnings on their platforms and contribute to the economy through corporate taxes.
,[AS] As per industry estimates, a cumulative contribution of Rs 1,700 crore has been made in this way between FY18 and FY22. The revenue to the exchequer is expected to reach Rs 30,500 crore between FY18 and FY27, [as] per FIFS estimate,” the report said.
The sector attracted a cumulative investment of Rs 15,000 crore by FY22 from both foreign and domestic sources.
demographic profile
As per the report, Millennials and Gen Z make up 75 per cent of the FS user base in India, 25-34 age group make up 40 per cent of the user base, 18-24 age group comprises 35 per cent. user base and the remaining 20 per cent come from the age group of 35 and above.
Users are evenly divided between metros and non-metros and are predominantly male. “With increasing female participation and viewership in games, the participation of women in FS is on the rise, currently accounting for an estimated 30 percent of the user base,” the report said.
Interestingly, non-cricket FS is also catching the attention of the users. Sports such as handball, volleyball, futsal have started gaining traction, while there has been significant user growth for Kabaddi – from nine per cent in FY21 to 26 per cent in FY22 – due to leagues such as Pro Kabaddi and the Senior National Kabaddi Championship. Basketball and baseball have also seen jumps in their userbases, from four percent to seven percent and two percent to five percent, respectively.
On average, 65 percent of users participate in only one game on the FS app, 20 percent in two, and the remaining 15 percent in more than two games.
Furthermore, the report found that 80 percent of users on FSPs participate for free, compared to about 20 percent of paid users. However, the growing popularity of FSPs and interest among a younger demographic with relatively high disposable income is expected to increase.
need tax clarity
“As FSP seeks to chart a course for future growth, regulatory and tax related certainty will be key elements that will determine continued growth for the sector,” the report said.
The government’s recent notification of “Amendment to the IT (Intermediary Guidelines and Code of Conduct for Digital Media and Code of Conduct with respect to Online Gaming) Rules, 2021” on 6 April 2023 has been touted as “a much-awaited step that will bring order and orderly development.” Industry”, it said that the coming few months are also likely to see the resolution of the debate goods and services Tax (GST) Govt.
The current tax regime levies 18 per cent GST on gross gaming revenue (GGR), which is the revenue earned by platforms after distributing winnings to players.
“In June 2022, the Group of Ministers (GoM), constituted to examine GST on online gaming, proposed 28 per cent taxation on gross consideration, i.e. the total money that forms part of the prize pool for a particular competition. Reports suggest that the GoM has agreed to increase the rate from 18 to 28 per cent, however, a consensus on the value of supplies on which GST is to be levied is yet to be reached,” the report said. .
It added that if the value of supply of GST is converted into a net consideration, it will have a drastic impact on FSP margins, and the viability of the sector is likely to decline as a major consequence of this decision.
(Edited by Poulomi Banerjee)
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