India’s largest listed gaming operator, Delta Corp, is once again embroiled in a legal battle with the authorities over alleged goods and services tax (GST) shortfalls. This week, the company revealed it has received notices demanding a total of INR 17.52 billion (approximately US$188 million) in tax payments for the financial year 2022-23.

The demand stems from the Office of the Commissioner of Commercial Taxes in Goa, which claims Delta Corp and its subsidiary, Highstreet Cruises and Entertainment Pvt. Ltd., owe the money due to insufficient GST payments. According to the tax authorities, the payment calculation was based on the total gross bet value of all games played at the company’s casinos, rather than on gross gaming revenue.

In its official filing, Delta Corp acknowledged the receipt of the notices but expressed its intent to challenge the claims in court. The company further stressed that the method used to calculate the GST has been a long-standing industry issue, with several representations made to the Indian government in the past to address the matter.

Historical Context of Delta Corp’s Tax Disputes

This recent demand is not the first instance of Delta Corp facing significant tax-related issues. In 2023, the company was served with a notice from the Directorate General of GST Intelligence, alleging a massive shortfall of INR 11,400 crore (about US$1.34 billion). This figure, which is nearly three times the company’s total market capitalization, was based on the same method of estimating gross bet value rather than actual gaming revenue.

Delta Corp is currently contesting that earlier demand in court, with the matter still pending. The company has sought legal counsel, asserting that the tax claims against them are arbitrary and contrary to existing laws. Delta Corp has also pointed out that the Supreme Court of India has stayed proceedings on similar demands from the period between July 2017 and March 2022. The court’s intervention in those cases could potentially influence the outcome of the current GST dispute.

The company’s spokesperson confirmed that the legal team is working on strategies to address the latest claims, indicating that Delta Corp will pursue all legal remedies available.

Impact on Delta Corp’s Operations and Future Plans

While the legal challenges continue, Delta Corp has already paused construction on a major US$285 million integrated resort project in Goa. According to Inside Asian Gaming, the company is waiting for clarity regarding the GST charges related to bets placed at its casinos before proceeding with the development. Delta Corp operates some of India’s most prominent gaming establishments, including the Deltin Royale and Deltin JAQK casinos, both of which are located in Goa.

The company also operates a floating hotel with a casino, King Casino, and other properties like the Deltin Suites in Goa and Casino Deltin Denzong in Sikkim. Delta Corp recently added the “Deltin Zuri” casino in South Goa, marking its venture into the luxury land-based casino market.

Despite the setbacks, Delta Corp remains optimistic about its future. It noted in its filing that the company continues to be committed to maintaining world-class gaming experiences while navigating the complex regulatory landscape. The company’s actions suggest it plans to continue pushing for growth while contesting these claims in court.

The company’s ongoing struggle highlights the broader challenges faced by the Indian gaming industry in complying with complex tax laws. The issue of calculating GST based on gross bet value, rather than gross gaming revenue, remains a contentious topic in the sector. This method has led to numerous disputes and raised concerns about its fairness.

The gaming industry, which includes both land-based and online casinos, has seen growth in recent years. However, the increased regulatory scrutiny, especially related to taxes, has prompted calls for more clarity and reforms. Industry stakeholders have emphasized the need for a regulatory framework that aligns more closely with actual gaming revenue, rather than the estimated gross bets.