The 'Unfair Play Award' Goes to Illegal Betting Platforms

Effectively curbing these hinges on the ability to differentiate them from the legitimate domestic gaming industry.

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While the excitement of IPL 2024 captivates cricket enthusiasts, a shadowy menace looms large on the horizon. The spectre of illegal betting threatens to spoil the party for devoted fans, the burgeoning legal online gaming industry, and even the government itself. With every major cricket tournament, illegal betting platforms spring into action, ramping up their promotions in anticipation of a surge in gambling activity. The advertisement of illegal betting platforms has become insidious and is a recurring concern, as such advertisements were also present during previous editions of the IPL tournament. It is imperative to take decisive action to permanently dislodge not only such advertisements but also illegal betting.

Effectively curbing illegal betting platforms hinges on the ability to differentiate them from the legitimate domestic gaming industry. This distinction is pivotal in comprehending the seriousness of the issue. Legal online gaming platforms have been permitted by the Supreme Court as a “game of skill." They operate within government regulations and tax laws, whereas illegal betting platforms have been prohibited by the Supreme Court as a “game of chance” and operate outside regulatory frameworks and evade taxes.

Another notable difference lies in the level of expertise required on legal online gaming platforms compared to online betting platforms. Legal platforms often demand intricate knowledge of the game, placing a higher emphasis on skill and strategy and following consumer protection practices.

From a legal perspective, it is essential to note that betting and gambling are strictly prohibited under the Public Gambling Act, 1867, making them illegal in most regions across the country. Despite the presence of such laws, these illegal online betting platforms persist in promoting and advertising betting and gambling activities, often disguised as legitimate domestic gaming entities. As a consequence of such false perceptions, the domestic gaming industry has been suffering and is being victimized as it is seen as being part of such illicit operations.

Recognising the profound financial and socio-economic ramifications, especially among the youth, arising from the proliferation of illegal betting platforms, the Ministry of Information and Broadcasting (MIB) has been taking proactive measures. Multiple advisories have been issued urging different media channels to refrain from airing advertisements that contravene various statutes, such as the Consumer Protection Act 2019, the Press Council Act 1978, and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. These advisories attempt to curb the adverse effects of such advertisements, which often feature well-known personalities, including cricketers and Bollywood stars, promoting illegal betting platforms like 1XBet, DafaBet, Parimatch, and Betway, among others.

Despite the government's efforts to curb the promotion of illegal betting platforms, their advertising tactics have evolved to bypass restrictions and continue to lure Indian cricket fans through alternative channels.

While advertisements have disappeared from traditional mediums like print and TV, they have found new avenues, such as advertising on taxis and cabs, billboards, social media influencers, digital channels, and even messaging apps like WhatsApp or Telegram. Additionally, these platforms have resorted to sponsoring sporting events to reach their target audience. In March 2024, the government issued another advisory cautioning social media influencers against endorsing offshore online betting and gambling platforms.

Big Money at Stake

According to figures shared by the advertising industry, it will lose anywhere between Rs. 3,700 crores and Rs. 5,810 crores if the government is successful in curbing all illegal betting promotions in the country. Imagine the kind of money these illegal platforms would be making if this staggering advertising expenditure is any indication.

As per a Think Change Forum report titled ‘State of the Betting and Gambling Industry in India’ released in October 2023, the offshore illegal sports betting market receives an estimated Rs. 8,20,000 crore ($100 billion) per annum in deposits from India. This sector has experienced a growth rate of 20% per annum over the last three years after the pandemic. At the current GST rate of 28%, the Indian government is losing out on a GST collection of Rs. 2,29,600 crores per annum. Another aspect of the issue is unless measures are implemented to stem these illegal platforms, there is a risk of a mass migration of Indian users to these platforms, potentially jeopardising the legal gaming industry and resulting in more significant losses for the government.

As it is, the legitimate gaming sector faces considerable strain due to the imposition of a 28% GST rate, deterring consumers and driving them towards illegal platforms. These illicit operators often tout themselves as tax-free alternatives, attracting users away from legal avenues. Consequently, supporting the legal gaming industry becomes imperative while illegal betting platforms are to be eradicated with concerted efforts.

The government has been resolute in its efforts to combat illegal betting platforms and apps. In November 2023, the Ministry of Electronics and Information Technology (MeitY) issued blocking orders against 22 illegal betting apps and websites. These platforms offered a variety of live games, including various sports such as cricket, football, badminton, and tennis.

In addition to blocking orders, the government is considering stricter rules for Unified Payments Interface (UPI) transfers, which these entities exploit to receive payments through proxy bank accounts. While these actions may curtail the growth of illegal betting platforms to some extent, only with decisive measures can illegal betting be checked. At this crucial moment, India’s online gaming sector requires a transformative approach to regulation. Effective governance is essential to differentiate between games of skill and games of chance, enabling stakeholders to make informed and responsible decisions.

A robust regulatory framework will not just track the illegitimate betting platforms better and reduce their operations, but also provide a fillip to the legitimate operators who operate within the realms of the law, employ lakhs of skilled individuals, and have the potential to make India the gaming capital of the world.

(Dr Ramakrishnan T S is a Public Policy Expert. He can be reached at [e-mail]. This is an opinion piece and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)