Our honourable Prime Minister has promised to revise the existing GST slabs and the GST council are likely to do away with the 28% slab, under which horse racing and betting are being presently slotted.

Should that happen, it will give a boost to the horse racing undustry currently reeling under the high 28% slab.

The following article highlights the woes of horse racing
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Racing for survival: How GST is bleeding Indian horse racing

Shailendra Awasthi / Mumbai Mirror / Dec 29, 2024, 14:27 IST

The imposition of a 28% GST on betting has significantly hampered the horse racing industry in India, driving punters to illegal bookies and causing a drastic drop in legal betting collections and government revenues. The industry, struggling to survive, faces

MUMBAI: On a bright Dec afternoon at Mumbai’s iconic Mahalaxmi Racecourse, Vijay (name changed) stands near the parade ring, carefully scanning the horses being showcased. The seasoned punter studies every hoof, gait, and mane — readying his pick for the upcoming race. But unlike yesteryears, his next move isn’t to head for the official betting system. Instead, he dials an illegal bookie operating from another corner of the city.

Vijay isn’t alone. Around him, dozens of punters do the same, bypassing the govt-backed betting system that once dominated the racecourse. A woman stationed at the legal betting kiosk waits for a customer — not many these days, thanks to the hefty 28% Goods and Services Tax (GST) on the betting amount, levied irrespective of the result.

Since its introduction in 2017, GST has plunged Indian horse racing — already reliant on the precarious betting ecosystem — into a financial crisis. Once a thriving cultural pastime and sporting tradition, horse racing now struggles to survive in Mumbai and beyond. At the Royal Western India Turf Club (RWITC), which operates racing at the Mumbai and Pune racecourses, annual betting collections have dropped from a pre-GST high of Rs 15 crore to a paltry Rs 2-3 crore in recent years.

Betting Slips into the Shadows

“It’s not that betting has disappeared. It’s gone grey,” says Sunil Jhangiani, a member of RWITC’s betting subcommittee. “Punters are losing interest due to poor or no returns, choosing instead to wager via illegal networks.”

For punters, it’s an irresistible alternative: They dodge the 28% tax and can settle balances later, with no immediate cash involved. The convenience and higher returns offered by bookies outweigh the risks of going underground.

“Why should I pay 28% on my betting value?” asks one punter. “Illegal bookies let me wager freely without the govt cutting into my pocket.”

Turf Clubs and Govt Revenue Take a Hit.

Horse racing in India is conducted at six major turf clubs — RWITC (Mumbai and Pune), Bangalore Turf Club, Hyderabad Race Club, Royal Calcutta Turf Club, Madras Race Club, and Mysore Race Club. Collectively, their finances are in freefall.

Annual govt revenues from horse racing, once as high as Rs 3,274 crore in 2014-15, dropped to Rs 1,438 crore by 2019-20, according to Turf Authorities of India (TAI), an umbrella body of turf clubs. TAI has repeatedly petitioned the GST Council to reduce the tax rate from 28% to a more realistic 12%, but its appeals have gone unheard.

“The govt assumes that everyone involved in racing is wealthy,” explains a TAI official, “but they overlook the thousands of workers — trainers, jockeys, stable hands — whose livelihoods depend on the sport. This tax regime threatens them all.”

Sport of Skill Meets a Tax Nightmare

In a landmark 1996 case (K R Lakshmanan versus state of Tamil Nadu), the Supreme Court recognised horse racing as a “game of skill,” noting the role of the jockey’s tactics, the horse’s fitness, and training in determining outcomes. Yet, this distinction is meaningless when betting — integral to the sport’s existence — faces a punitive tax regime.

The 28% GST treats horse racing like a luxury, levying tax on every rupee wagered, not just winnings. Compare this to pre-GST days when taxes varied across states: The Royal Western India Turf Club (RWITC) in Maharashtra bore a steep 20% tax, while racing hubs like Hyderabad, Karnataka, and Tamil Nadu charged far less—around 8%. This uniform 28% GST has wiped out such disparities, but instead of creating parity, it dealt a crippling blow.

Pandemic Woes and New TDS Rules

Covid-19 only worsened the situation. During lockdowns, races were held behind closed doors, and clubs introduced online betting. However, the 28% GST continued to weigh on dividends, making the legal route unappealing.

In April 2023, punters faced another blow with a new tax deducted at source (TDS) rule under Section 194BB of the Income Tax Act. It mandated a 30% tax on all winnings exceeding Rs 10,000 annually. The rule also required race clubs to collect Know Your Customer (KYC) details, further alienating punters, many of whom lack PAN cards or wish to remain anonymous given society's stigma around betting.

“Most of our patrons work in informal sectors and either don’t have PAN cards or don’t want the scrutiny,” says an insider. “This new rule has driven even more betting to illegal channels.”

Fading Glory

For old-timers like Aaba More, a regular at Mahalaxmi since 1962, the golden days of horse racing feel like a distant memory. “Back then, the racecourse was our gateway to fun and earning,” he recalls. A Rs 5 bet once guaranteed high stakes and vibrant crowds.

Today, with revenues dwindling, clubs are struggling to attract those crowds or invest in the sport. Yet, the issues plaguing racing aren’t new.. Manipulation and illegal betting have always loomed over the tracks, leading the govt in the past to delay announcing race Declarations (lineups, runners) to prevent manipulations. For More, however, those challenges felt manageable. The bigger problem today is the crushing tax that has robbed the sport of its vitality.