Online Betting: The Impact and Legality of Online Gambling Industry

Currently, India is home to around 70 crore internet users. It’s expected to cross a whopping 97 crores by 2025. (Source: Statista) Majority of them are using it on mobile devices. This causes a snowball effect on the growth of web-based businesses. And one such emerging industry is the online betting or online gambling industry.

With more than 30 crore players using apps like PlayGames24x7, FanFight, Dream11 and Paytm First Games to gamble on rummy card games and ‘Fantasy’ Cricket, the numbers are anticipated to be doubled by the next year and the industry revenue is estimated to hit ₹25,000 crores by 2024. No wonder, you’re so curious to know more about the Industry dynamics, please sit tight as we discuss all there in the following sections.

The legal status of Gambling in India

Going back in 1867, Gambling was banned for the first time through The Public Gambling Act. It was updated every now and then. However, the funny part is that the law did not define what gambling was; forget about addressing, the elephant in the room: Online Gambling. Even more ironical is the fact that there have been no reforms in this sector ever since. If this was not confusing enough, do note that the legislation is primarily based on the state laws around the subject, for example, Goa allows gambling conditionally and in Sikkim, it’s even easier.

Further, the law differentiates gambling on games on the broader categories i.e. whether it’s a game of ‘chance’ or a game of ‘skill’, for example, gambling on a horse race is legal because the deciding factor is the skill of the horse and the Jockey; thank god, else imagine the world without Derby.

Although the lawmakers are yet to legislate on this subject, however, the Law Commission of India in its 276th report dated 5th July 2018 have recommended the legalisation and regulation of the industry citing examples from Vedic literature such as Mahabharata, Manusmriti and the Vedas. This sounds pertinent, especially the part about regulating the industry which is definitely the need of the hour. I really hope that these recommendations are actioned soon.

The marketing strategy and the required regulatory framework

Like in any industry, everyone wants a bigger share of the pie. And who can swing it for you better than the Cricketing icons in India? Virat Kohli bats for MPL (Mobile Premier League) and MS Dhoni is playing for Dream11. It is strange that something which is not governed by any proper legislation is roping in huge public figures to promote their business.

Recently, a Chennai based advocate has filed a petition seeking a ban on online gambling apps. He also sought the arrest of Virat Kohli and Tamannaah Bhatia for being the brand ambassadors of MPL, the matter is sub-judice. With the lack of legal clarity, it’s not prudent to arrest the public figures based on such accusations, however, cricketers are role models for a large part of the society, they serve the country, they’re skilful and they make good money. It’s natural for people to follow them and that’s why a huge responsibility lies on their shoulders.

Again, it’s a subjective area.

However, if you’ve seen any of their advertisements it’s not hard to understand that there are a lot of misrepresentations. They present these gaming portals as an alternative for employment. Here, young people can make good money from home without actually doing much work. Not sure if it offends you, but I am not a big fan of a society full of people earning money from home playing online games. Is it really such a fairy tale story, if everyone earns then who is losing, we need to ask such questions to ourselves before getting carried away by a few seconds long commercials. I still remember the days when Speakasia scammed 2.4 million Indians with seemingly harmless employment offers.

In this case, it’s more about making the prospective players aware of the risks involved in the whole thing. We need the regulators to add some warning along with such advertisements; such as the famous “Mutual fund investments are subject to market risks…..”. The rules have to be agile, pro-active and clearly defined. For example, the ads should not allow warning messages to play so fast that the viewers can’t even understand it.

Respecting the customers’ discretion

We can hope that the above recommendations around the legal and regulatory framework are implemented as soon as possible. However, “you can lead a horse to water, but you can’t make him drink”. Therefore, ultimately it is for the player to make a conscious decision, whether they want to put their hard-earned money at stake.

We must also acknowledge the fact that the majority of internet users in India are vulnerable. They can become victims of misrepresentations, at least the history supports this view. Therefore, the government should take all necessary steps in order to make people aware of the risks and rewards involved in online gaming and betting.

About the Author

CA Mohit Baheti

Mohit Baheti is a chartered accountant & a tech-enthusiast with 12 years' versatile experience. He started working in UK based fintech startups with Capium in 2015 & later co-founded Online Account Filing Limited in 2018 where he is the director of operations.

(Disclaimer: This is an authored article. The views expressed are the author's personal and does not necessarily reflect the official policy of CIOL.)