4 min read.Updated: 20 Dec 2021, 10:24 PM ISTVivan Sharan,Akshat Agarwal
Imposing rules can be helpful so long as fine distinctions are made on what’s okay and what’s not
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During the winter session of Parliament, Bharatiya Janata Party member Sushil Kumar Modi urged the government to come up with a “comprehensive framework" to regulate online gaming. While this may seem progressive, he made the case for regulation by conflating legal online gaming with illegal betting and gambling. Unfortunately, online gaming is grossly misunderstood, even though India is home to over 275 gaming companies, more than 15,000 game developers, and around 300 million gamers. Even technology hubs like Karnataka and Telangana have inadvertently stymied their own industry on the back of calls for bans on betting and gambling. It’s time to delink the good, bad and the ugly.
Let’s start in reverse order, with the ugly. The Centre must first identify and target the real sites of illegal betting and gambling. For instance, illegal sports betting websites do swift business in India. In 2015, the International Centre for Sports Security estimated the illegal betting and gambling market in India to be worth $150 billion (in gross terms). Most of this is betting on cricket matches, done 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, the Tamil Nadu police busted an online betting racket in Kallakurichi, where the mastermind had taken commissions from the Russian owners of a betting platform called 1XBet to rope in more people to place bets on this mobile app. Earlier in June, the Delhi Police arrested a man for running an online betting racket online and seized around $400,000 in cash.
Offshore gambling websites 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, equal to about 5% of global output. In India, third-party wallets like Skrill and Neteller are used to funnel money into gambling sites. Users deposit money from their bank accounts into these prepaid wallets, which can be used to make payments anonymously. Accepting deposits in Indian rupees through various channels indicates an intent on the part of these sites to offer betting services in India despite their illegality. The Centre can take steps to block such sites under Section 69A of the Information Technology (IT) Act. Stringent measures are also required to prevent illegal services being advertised or promoted through direct or surrogate means online. Rule 3(1)(b) of the IT Rules, 2021 prohibits intermediaries from posting or hosting content that encourages gambling or money laundering, but rules to penalize such advertisements need to be extended to the entire online ecosystem.
Second, states have the power to tackle betting and gambling and they must enhance their law-enforcement capacity to do so. Since the blocking of illegal websites lies in the Centre’s jurisdiction, states may emulate the Maharashtra Police’s model to deal with digital piracy. The Maharashtra Cyber Digital Crime United (MCDCU), formed in 2017, works with media and entertainment businesses to identify and take down websites engaged in the dissemination of pirated content. The MCDCU has facilitated the suspension of over 350 such portals, in concert with the central government. States can undertake a similar exercise against illegal betting websites, with support from the gaming industry. Moreover, consumer interest groups should be roped into anti-gambling efforts, to spread awareness and provide forums to report illegal platforms.
Finally, the Centre should accelerate its work on an overarching regulatory framework for online games of skill. Various high courts have legitimized such game formats. Rulings like Varun Gumber vs Chandigarh (Punjab & Haryana High Court), Gurdeep Singh Sachar vs Union of India (Bombay High Court) and Avinash Mehrotra vs Rajasthan (Supreme Court) have found fantasy sports of a predominant format to be games of skill. In the Junglee Games case, the Madras High Court ruled that games like Poker and Rummy are games of skill. India must move beyond skill-versus-chance debates to keep up with the global gaming industry. Advanced jurisdictions have mostly taken a hands-off approach towards skill-based games. Beyond determining a game’s skill or chance-based nature, the UK exempts skill games from licensing requirements that apply to games of chance. Likewise, the US’s Unlawful Internet Gambling Enforcement Act carves out a safe harbour for fantasy sports.
A legal codification of judicial rulings, along with a nuanced classification of different types of online games, could enable targeted and risk-based rule-making. Such a framework will offer clarity and separate skill-based games from gambling. Hearteningly, there is some recognition of the value of skill-based gaming. Ashwini Vaishnav, Union minister of electronics and information technology, had signalled the Centre’s intent to impose uniform regulation for online gaming in a letter this year to Y.S. Jagan Mohan Reddy, chief minister of Andhra Pradesh. This is welcome appreciation of the fact that online games have come of age and represent the best of both Digital India and Make in India.