WinZO expands to Brazil post 28 percent GST announcement

The platform is investing close to $25 million in Brazil for the distribution of over 100 games. Image: Shutterstock

On Thursday, online gaming company WinZO announced the expansion of their operations to Brazil. The platform is investing close to $25 million in Brazil for the distribution of over 100 games. This announcement comes months after the GST Council’s announcement that online gaming, casinos and horse racing will be taxed at a uniform GST rate of 28 percent.

Finance Minister Nirmala Sitharaman stated that the tax will be applicable on the face value of bets placed (in case of online gaming and horse racing) and chips purchased (for casinos), with no distinction between games of skill and chance. Later it was clarified that this 28 percent was to be charged on the initial deposit, and not on the Contest Entry Amount (CEA) or every bet. During the GST Council meeting on Saturday, further discussions around the online gaming GST are expected.

The announcement, says WinZO, is expected to be a massive challenge for the Indian online gaming industry as it would mean a ‘400 percent hike of GST in India’. Hence, most gaming platforms, including WinZO, are going back to the drawing board and looking at new strategies.

Also read: 28 percent GST for online gaming will result in wholesale destruction of the sector: Investors write to PM Modi

This strategic move will mean the platform’s 100+ partner game developers will export games such as Carrom, Chess, Car Race etc, and gain free access to Brazil, the fourth-largest mobile gaming market with over 90 million users. “The realm of the online gaming industry extends far beyond entertainment; it plays a pivotal role in shaping the trajectory of emerging technologies,” says Paavan Nanda, co-founder of WinZO. “We have committed to developing a Made in Bharat consumer tech product that resonates with and caters to the interactive entertainment needs of young users worldwide,” he adds.

Why the expansion to Brazil?

The market has seen a significant surge in popularity of mobile gaming with about 4.6 billion mobile game downloads in 2022, claims the company. “Our strength is localised offerings and working in underserved markets, which aren’t English speaking territories—so Brazil fits right in,” says Saumya Singh Rathore, co-founder, WinZO. Rathore believes that Brazil is right where India was in terms of infrastructure when WinZO was launched in 2018. So this launch is also expected to contribute to the development of peripheral sectors such as payments, the gig economy, and the creator economy of Brazil while also creating significant employment opportunities.

Also read: Will 28 percent GST kill the online gaming industry?

Additionally, another major benefit is the tax structure. Brazil levies indirect taxes such as 2-5 percent as municipal tax, applicable to the commission earned by the company, claims the company.

This month, WinZO will also launch and represent the first-ever India Pavilion at the Brazil Game Show, the largest gaming show in Latin America. This will provide game developers from India a chance to represent themselves to the global gaming ecosystem and showcase their games to a global audience. “It may seem like this move has been triggered by the GST, but it was always in the works and has only been accelerated by the GST announcement,” says Rathore. While WinZO, like the rest of the industry, awaits further GST relief, it says Brazil is only the first on its list of global expansion plans.