Business News/ Sports / Cricket News/  Get, set, bet: Inside the high-stakes battle against gambling apps
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New Delhi: “I’d like to believe I am very good at calculating the odds," says a 52-year-old technology consultant from Chennai, who did not want to reveal his identity. Sports, he says, always interested him. Not for the mere pleasure of watching, but for the thrill of betting. He is currently invested in the ongoing Indian Premier League (IPL), the popular Twenty20 cricket league.

He is limiting himself to “exotic bets", though, which are placed on outcomes of low probability and high reward. For instance, if Kolkata Knight Riders (KKR) needs 36 runs to win in the last over against Lucknow Super Giants, the tech consultant would bet on KKR to make it to the other side.

He has played it all: casino, slots, roulette, horse wagering, you name it. In the last one year alone, he has put in a principal sum of about 10 lakh on various online betting apps, including Parimatch, Betway and Fairplay. “My investments doubled in the last one year," he claims.

Graphic: Mint
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Graphic: Mint

Well, it’s not that simple either. Half of his earnings are still stuck. He has had his share of trouble with “cash agents"—people employed by the betting companies to collect money, without the need for any documents or identity proof.

Why is he still doing it? Self admittedly, he is an addict—of online gambling.

‘The more one loses, the more one wants to play’ is the maxim behind the success of these apps. Further, these companies don’t pay out the entire winning amount; they don’t let users withdraw most of their money to keep them reeled in. Based on one’s odds, they decide how much one gets and how long to hold one’s winnings.

This practice, for sure, sounds predatory, but the tech consultant has no recourse against his exploiters. The betting apps don’t operate from India.

He is not alone. Thousands, perhaps millions, of internet users across India have wagered their hard-earned money on these predatory apps and are trapped. Hundreds of apps have been banned by the Indian government. For instance, in February, the government started a process to ban 138 Chinese betting apps including Parimatch, Lotus365, Betway, Anubis Treasure, Megapari, and Betkwiff.

But that has hardly put a damper on online betting—many remain active. Often, when an app with one domain (for instance .com) is banned, it resurfaces with another domain (like .in). Such apps can also tweak their names.

It’s a game where the odds are heavily stacked against the government.

Chance or skill?

Gambling and betting are state subjects, so every state is free to decide how it wants to deal with them. Only a handful of states and union territories—Goa, Sikkim, Daman and Diu—allow casinos. The rest of India prohibits running or overseeing a public gambling house under the Public Gambling Act of 1867. Most states in India have traditionally banned gambling, public or otherwise, as an activity altogether.

Nonetheless, various judgements of the Supreme Court have distinguished between games of skill and games of chance, holding the former to be constitutionally valid. A game of chance is where the participant has no say in the outcome and is entirely luck based, and the house mostly wins. Examples of such games are slots, blackjack, roulette, Andar Bahar, Teen Patti, Jhandi Munda, and so on. In a game of skill, on the other hand, like creating a fantasy cricket team, users can oversee, to an extent, the outcome of the players they select.

The surge of online gaming has only added to the confusion in the gambling space, as the location of the participant becomes irrelevant. Interestingly, the Information and Technology (IT) Act 2000 has no mention of gambling or betting. In 2021, Tamil Nadu passed an amendment to declare online gambling illegal, but it was later struck down by the Madras high court.

Meanwhile, many apps claim to be legal, often posing themselves as games of skill. In the absence of a clear legal framework, it’s getting increasingly difficult for users such as the tech consultant from Chennai to differentiate between the legitimate and illegitimate apps.

Things may change with the new amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 that were notified last month. Social media platforms and app stores will have an obligation to make “reasonable" effort to not host, publish or share any online game that causes user harm, or which has not been verified as a permissible online game by an online gaming self-regulatory body (SRB) designated by the Union government. The rules also disallow hosting and publishing of advertisements or surrogate advertisements of online games that are not permissible.

How they work

A 34-year-old man recently became a member of Fairplay.

Once he was ready to make a small bet, he was directed to an Indian payment gateway which looked legitimate. But a closer examination revealed that the payment was not going to any registered entity owned by the betting firm. Instead, it was being redirected to the united payments interface (UPI) accounts of either individuals in and around the country or small businesses.

Mint has learnt that several small businesses—for instance, clothes retailers in tier-2 cities such as Ludhiana and Indore—are helping these transactions to pass through, possibly for a small kickback.

If the amount he wanted to bet was larger than a few thousand rupees, cash collection agents were put to the task. These agents can land up at one’s home or at a decided location. If a large sum is won, he could receive cash at a preferred location for a small fee—0.5% to 1% of the winning amount.

These offshore betting companies are potentially swindling away billions of rupees from India. They are likely hand-in-glove with several hawala operators and bookies or bookmakers around the country who are making the trade for them. In the recent past, the directorate of enforcement (ED) has carried out several raids regarding money laundering by betting apps. Last month, the ED froze various bank accounts related to the betting website www.wolf777.com.

Several betting companies are offshore entities with no presence in India. However, they aggressively market in the country. While they say they do not operate in India, these games can be played from any phone, computer, or device here. They exploit the laws of countries such as Curaçao, Russia, Philippines, and the UK—gaming authorities in these countries grant them the rights.

Lotus365, for instance is a ‘Limited Liability Company’ incorporated in Curaçao, a notorious tax haven. It describes itself as India’s first “legal and fastest sports exchange". It was among the 138 China-affiliated betting platforms banned by the government in February 2023, but that did not put a stop to its activity in India. It changed its domain address multiple times. From lotus.com, it morphed into lotus365.com. Now, it can be accessed at lotus365.in and lotusbook365.com.

How they attract

How do such apps and websites reach their target consumers? Their ingenuity will surprise you.

Some have set up sports news websites, often using the same logo as that of the betting app. These websites are nothing but an example of surrogate advertising (indirectly promoting a banned product through another product of the company) for betting. Fairplay, for instance, runs Fairplay News; Parimatch runs Parimatch News and so on.

Manisha Kapoor, the CEO of the Advertising Standards Council of India (ASCI) talks about the battle ASCI has been fighting against such ads. “In the last two years, ASCI has taken up 14 cases against offshore betting platforms that were advertising to Indian consumers," she says.

Her argument is straightforward: since the sale of a certain category is banned, its advertising is also automatically prohibited.

In October last year, the ministry of information and broadcasting (I&B) issued advisories for private television channels and digital news publishers and over-the-top (OTT) platforms, asking them to refrain from showing advertisements, including surrogate ads, of online betting sites. It even called out Fairplay, Parimatch, Betway, Wolf 777, and 1xBet for promoting betting and gambling under the garb of news.

But advisories do not guarantee adherence. “We will be sending another advisory before the ICC World Cup (scheduled for later this year). Wherever we see any channel or publication flouting the ban, we reprimand them," says a senior official at the I&B ministry and argues that the instances of violation are only few.

Ads exist, mostly in below-the-line activations (such as direct messages, targeted search engine marketing) as well as in the form of hoardings, in outdoor spaces and on digital media. Betting platforms, meanwhile, have roped in celebrities for ads to lend credibility and legitimacy to their product—an old trick in the book.

“It is certainly a big concern to see prominent celebrities promoting products that are banned in India. Such ads are in potential violation of the Indian government’s laws. Influencers engaging in brand endorsements are also accountable for their communication," says Kapoor.

In April, actors Nawazuddin Siddiqui and Urvashi Rautela reportedly received notices from the Central Consumer Protection Authority for endorsing a “misleading advertisement" by Lotus365.

After its advisory regarding television and digital media, the I&B ministry, on 2 May, also issued an advisory to different states to take down hoardings, posters, banners, auto rickshaw branding of such platforms.

Two sides

Anton Rublievskyi, CEO of Parimatch International, had earlier told Mint that the size of this market is anywhere between $50-100 billion per annum in India. He said that the top four of five companies, including his, put together, are amassing deposits worth $1 billion from India. Rublievskyi’s view has been that it is the lobby of the legal fantasy skill-based gaming companies that are trying to get the rules made in their own favour.

Parimatch International says that it is aware that it’s illegal to advertise betting in India. “The company does not operate in India, but as the Indian diaspora in the world is huge, it can certainly be familiar with the brand. Our group and its affiliates run advertising campaigns, collaborate with ambassadors and influencers in different countries," it adds.

Currently, the company operates based on the Curaçao licensing service in the global market.

“We always support and advocate for the need to regulate the gambling industry around the globe. Once the industry is regulated in India, we will be ready to license, invest, generate employment, and pay taxes in India," the company states.

The regulated part of the gaming industry feels that the betting firms are queering their pitch. Often, even the legitimate apps are clubbed together with the illegal betting companies and many states confuse skill-based games with chance-based ones, Dhruv Garg, a Delhi-based lawyer associated with the All India Gaming Federation, says.

According to the recent amendments to IT rules 2021, skill-based gaming companies will carry a visible mark given by an SRB, making it clear to the public what is allowed and what is not.

Will this rein in the betting firms? As of now, we can’t really tell, given the circumvention we have seen.

(With inputs from Gaurav Laghate)

ABOUT THE AUTHOR
Varuni Khosla
Varuni Khosla is a journalist with close to 14 years of experience in writing business news stories for mainstream newspaper companies like Mint and The Economic Times. She reports and writes on luxury and lifestyle brands, hospitality and tourism news, the business of sports, the business of advertising and marketing and alcohol brands.
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Updated: 05 Jun 2023, 10:14 PM IST
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