Separate the good, the bad and the ugly from online gambling for proper regulation


During the winter session of parliament, Sushil Kumar Modi, member of the Bharatiya Janata party, urged the government to come up with a “comprehensive framework” to regulate online gambling. Although it may seem gradual, he argued for regulation by amalgamating legal online gambling with betting and gambling. Unfortunately, online games are very poorly understood, even though India is home to over 275 game companies, over 15,000 game developers and around 300 million gamers. Even tech hubs like Karnataka and Telangana have inadvertently hampered their own industry over returning calls for banning and gambling. It’s time to untie the good, the bad, and the ugly.

Let’s start in reverse order, with the ugly. The Center must first identify and target actual betting and illegal gambling sites. For example, illegal sports betting sites are doing business fast in India. In 2015, the International Center for Sports Security estimated that the illegal betting and gambling market in India was at $ 150 billion (in gross terms). Most of these bets are on cricket matches, made through websites like Betaway, Bet365 and DafaBet, which are headquartered in tax havens like Malta, Cyprus and Gibraltar but are accessible to Indian users. In October, Tamil Nadu police dismantled an online betting racket in Kallakurichi, where the mastermind had taken commissions from Russian owners of a betting platform called 1XBet to entice more people to place bets on it. mobile app. Earlier in June, Delhi police arrested a man for organizing an online betting racket and seized approximately $ 400,000 in cash.

Offshore gambling sites have also often been used for money laundering. In a 2021 report, the United Nations Office on Drugs and Crime estimated that up to $ 2 trillion is laundered globally through these portals each year, or roughly 5% of global production. In India, third-party wallets like Skrill and Neteller are used to channel money to gambling sites. Users deposit money from their bank accounts into these prepaid wallets, which can be used to make payments anonymously. Accepting Indian Rupee deposits through various channels indicates an intention on the part of these sites to offer betting services in India despite their illegality. The Center may take measures to block these sites under section 69A of the Information Technology (IT) Act. Strict measures are also needed to prevent the advertising or promotion of illegal services through direct or substitute means online. Rule 3 (1) (b) of the IT Rules of 2021 prohibits intermediaries from posting or hosting content that encourages gambling or money laundering, but the rules to sanction such advertising must be extended to the entire online ecosystem.

Second, states have the power to combat betting and gambling, and they must strengthen their law enforcement capacity to do so. Since blocking illegal websites falls under the jurisdiction of the Center, states can emulate the Maharashtra police model in combating digital piracy. Maharashtra Cyber ​​Digital Crime United (MCDCU), formed in 2017, works with media and entertainment companies to identify and remove websites involved in the dissemination of pirated content. The MCDCU facilitated the suspension of more than 350 such portals, in concert with the central government. States can undertake a similar exercise against illegal betting sites, with the support of the gaming industry. Additionally, consumer interest groups should be involved in anti-gambling efforts, to raise awareness and provide forums to report illegal platforms.

Finally, the Center should speed up its work on a comprehensive regulatory framework for online skill games. Various high courts have legitimized such game formats. Decisions like Varun Gumber v Chandigarh (High Court of Punjab and Haryana), Gurdeep Singh Sachar v Union of India (High Court of Bombay) and Avinash Mehrotra v Rajasthan (Supreme Court) have found that the predominantly format fantasy sports were games of skill. In the Junglee Games case, the Madras High Court ruled that games like poker and rummy are games of skill. India needs to move beyond the skills-versus-chance debates to keep pace with the global gaming industry. Advanced jurisdictions have mostly taken a hands-off approach to skill-based gambling. Beyond determining the skill or random nature of a game, the UK exempts games of skill from the licensing requirements that apply to games of chance. Likewise, the Unlawful Internet Gambling Enforcement Act of the United States creates a haven for fantasy sports.

A legal codification of judicial decisions, as well as a nuanced classification of the different types of online games, could allow targeted and risk-based rule making. Such a framework will provide clarity and separate games of skill from gambling. Encouragingly, there is some recognition of the value of skill-based play. Ashwini Vaishnav, Union Minister for Electronics and Information Technology, had signaled the Centre’s intention to impose uniform regulations for online games in a letter this year to YS Jagan Mohan Reddy, Minister chief of Andhra Pradesh. It is a welcome appreciation that online games have come of age and represent the best of Digital India and Make in India.

Vivan Sharan and Akshat Agarwal are technology policy experts at the Koan Advisory Group, New Delhi. These are the personal opinions of the authors

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