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The report, Illegal Gambling and Betting Market in India: The Scale and Enablers, suggests that India has emerged as a significant hotspot for unlicensed offshore operators.

This has raised concerns in the country about money laundering, tax evasion, and cyber-enabled financial crimes, something online gambling opponents have criticised for more than a decade.

Despite stringent laws prohibiting most forms of betting, the rapid digitalisation of financial transactions and widespread internet penetration have provided fertile ground for unregulated gambling platforms to thrive.

A recent study by India’s Parliamentary Standing Committee on Finance underscores the scale of these activities, revealing that illicit deposits in the sector surpass $100bn annually and continue to grow at a rate of 30% per year.

This multi-billion-dollar industry, largely controlled by offshore entities operating from territories such as Curaçao, Malta, and Cyprus, exploits India’s regulatory loopholes.

Authorities have made several attempts to curb these activities, primarily through website blocking and advisories.

However, as enforcement measures remain fragmented and inconsistent, illegal gambling networks persist, adapting to evade regulatory scrutiny.

The involvement of cryptocurrencies, social media promotions, and an extensive network of mule accounts has further complicated enforcement efforts.

The rise of offshore gambling operators

The DIF report highlights how unlicensed online gambling platforms have capitalised on digital advancements to establish a stronghold in India.

Among the offending sites the DIF singled out were pari-match-in.com, stake.bet, and 1xbetind.in.

By leveraging payment technologies such as cryptocurrencies and social media platforms, these operators have found ways to bypass legal barriers and reach millions of Indian users.

The report suggested the platforms, often registered in jurisdictions with minimal regulatory oversight, funnel funds through complex networks before channeling them into cryptocurrency transactions.

One of the most concerning trends is the use of Indian mule accounts by overseas betting operators.

The DIF report states that, according to data from the Reserve Bank of India (RBI), mule accounts process more than around $300m in illicit funds every month, with only 10% of these funds being recovered by law enforcement agencies.

These accounts act as conduits for illegal transactions, allowing offshore platforms to move money undetected.

Investigations have also uncovered a disturbing pattern where individuals, often lured through job offers or monetary incentives, provide their bank account details to criminal syndicates.

These accounts are then used to process large sums of money before being shut down or repurposed.

A tax evasion crisis

Despite new tax laws requiring offshore gambling platforms to register with India’s Goods and Services Tax (GST) department, not a single foreign operator has complied since the mandate took effect on 1 October 2023.

According to the Directorate General of GST Intelligence (DGGI), investigations into 658 offshore gambling companies have revealed widespread tax evasion, prompting calls for stronger enforcement mechanisms.

The tax evasion crisis also extends beyond operators, to financial intermediaries that facilitate transactions. Payment gateways, shell companies, and digital wallets play a crucial role in processing and obscuring unlicensed gambling revenues.

The government has flagged several such entities for investigation, but the sheer scale of operations presents an enormous enforcement challenge.

Aggressive advertising fuels user acquisition

Unlicensed gambling platforms have adopted aggressive marketing strategies to lure Indian users, capitalising on digital advertising networks and influencer partnerships.

According to the Advertising Standards Council of India (ASCI), there has been a sharp rise in gambling-related advertisements across social media platforms such as Instagram, YouTube, and Telegram.

In its latest report, ASCI flagged 890 illegal gambling ads, with 831 of them appearing on Instagram alone.

The advertising tactics employed by these platforms often involve deceptive practices, including fake endorsements, misleading promotional offers, and targeted campaigns during major sporting events such as the Indian Premier League (IPL).

The use of “betting tickers” on social media fan pages has become particularly widespread, with page owners reportedly earning ₹2,000 to ₹3,000 per day for displaying gambling-related content.

Influencer marketing has also played a critical role in the expansion of these platforms. Many online personalities with large followings openly promote gambling apps, offering referral bonuses and discount codes to encourage sign-ups.

The lack of stringent regulations governing influencer promotions has made it difficult to curb such activities.

Payment ecosystem: a loophole for money laundering

Illegal gambling operators have seamlessly integrated themselves into India’s digital payments ecosystem, exploiting loopholes in financial regulations. The report identifies multiple methods used to facilitate transactions, including:

– Unified Payments Interface (UPI) transactions: Many platforms accept UPI payments through major providers like Paytm, Google Pay, and PhonePe. Funds are initially routed through legitimate business accounts before being transferred to offshore entities.

– Cryptocurrency transactions: The anonymity offered by cryptocurrencies makes them a preferred choice for money laundering. Offshore operators frequently convert gambling proceeds into digital assets, making it difficult for authorities to track the movement of funds.

– Shell companies and payment gateways: A vast network of shell companies and unregulated payment gateways facilitates gambling transactions. These entities act as intermediaries, processing payments without raising immediate red flags.

A case study highlighted in the report details how investigators traced transactions from Indian gamblers to offshore accounts via digital wallets.

In one instance, funds were collected through a network of 56 shell companies, all controlled by a foreign national.

By layering transactions across multiple accounts, the perpetrators were able to obscure the origin of funds before converting them into cryptocurrency.

Enforcement and regulatory gaps

While the Indian government has issued multiple advisories and blocked several gambling websites, these efforts have had limited success.

The adaptability of offshore operators allows them to circumvent restrictions by launching mirror websites and using Virtual Private Networks (VPNs) to remain accessible to users.

Regulatory bodies have also struggled to enforce digital advertising restrictions effectively. Despite platform policies prohibiting gambling-related ads, illegal promotions continue to thrive due to lax enforcement.

A recent investigation found over 1,040 gambling-related ads running on Meta’s platforms, including Facebook and Instagram, in direct violation of company policies.

Moreover, while the RBI has the authority to implement stricter controls under the Payment and Settlement Systems Act, enforcement against gambling payment processors has been inconsistent.

Experts argue that a more proactive approach is needed, including direct coordination with payment service providers to blacklist suspicious transactions.

Renewing the call for a comprehensive regulatory framework

The report concludes that tackling illegal gambling requires a holistic, ecosystem-based strategy rather than isolated enforcement actions. Some of the key recommendations include:

– Stronger digital advertising regulations: Collaboration between government agencies and digital platforms is essential to curb gambling promotions. Search engines and social media companies should be mandated to downgrade gambling-related search results and flag unauthorised ads.

– Payment blocking measures: Financial institutions should implement stricter due diligence mechanisms to detect and block transactions linked to illegal gambling.

– Blacklisting and whitelisting mechanisms: Establishing a public blacklist of illegal operators and a whitelist of licensed platforms could help consumers differentiate between legitimate and illicit services.

– Stricter influencer marketing guidelines: Influencers found promoting illegal gambling platforms should face penalties.

– International cooperation: Given the cross-border nature of illegal gambling operations, India should collaborate with global financial regulators and law enforcement agencies.

In an effort to promote safer gaming practices, the All India Gaming Federation (AIGF), the Federation of Indian Fantasy Sports (FIFS), and the E-Gaming Federation (EGF) have collaboratively introduced a Code of Ethics (CoE).

It aims to establish uniform standards across the industry while reinforcing responsible gambling and ethical advertising.

A key requirement of the CoE is the implementation of annual third-party audits and structured reporting mechanisms to enhance transparency and accountability within the sector. 

The CoE is reportedly modelled on internationally recognised best practices, with an emphasis on fostering responsible gambling habits.

Its guidelines include essential measures such as age verification, Know Your Customer (KYC) procedures, and user-controlled features that allow players to set spending limits or opt for self-exclusion.

The CoE is applicable to all online gaming operators affiliated with these federations and engaged in skill-based real-money gaming, a sector that currently serves over 500 million Indian users.