To tackle illegal offshore betting & gambling companies
With the Indian Premier League (IPL) season in full swing, offshore illegal betting and gambling platforms have increased advertisem*nts to lure users. Some have even gone to the extent of boldly advertising that there would be “no GST and no TDS” if they choose to play on their platforms. These platforms, with masters operating out of Ukraine, Russia and other regions, have just one purpose — to harm you financially.
This is why domestic gaming platforms such as Games24x7, First Games, Baazi, MPL, Gameskraft, Nazara, Head Digital Works, among others, want a whitelist and blacklist approach, as well as a self-regulatory organisation (SRO) kind of structure to certify the legitimate platforms.
While the blacklisting approach would mean that the gaming websites or platforms are clearly not allowed to operate and to advertise anywhere, whitelist would mean allowing only legitimate games after proper checks by either an SRO or government-approved structure, the gaming industry experts said.
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“Offshore illegal betting and gambling platforms on an average are collecting deposits worth $12 billion (around Rs 1 trillion) annually. This is causing about $2.5-billion (around Rs 21,000-crore) GST loss to the government,” said Roland Landers, CEO, All India Gaming Federation (AIGF).
AIGF represents companies such as First Games, MPL, A23, Zupee, WinZo, among others.
Landers says the seriousness of the problem lies in the fact that users today are unable to differentiate between a legitimate and an illegal platform.
In its recent report, Think Change Forum (TCF), a think tank, pegged the deposits of offshore sports betting platforms from India at Rs 8.2 trillion per annum.
Besides the user harm, the domestic real-money gaming companies are also prone to losing subscribers to these illegal platforms if they start passing the higher 28% goods and services tax (GST) burden to their users on the platform, experts said.
Post the new GST regime, such offshore gaming companies, who do not have a registered office in India and do not pay taxes here, have been luring consumers with “no GST, and no TDS” advertisem*nts.
Anuraag Saxena, CEO of E-Gaming Federation (EGF), said, “There is no other consumption category in India where a whitelist approach does not exist. When you buy a car you know that the platform is legitimate and there is a trust that it is checked for quality, when you buy tomato ketchup, its FSSAI marked. So, there is no reason that legal games should not have a certification or marking.”
EGF represents gaming companies such as Games24x7, Junglee Games and Head Digital Works, among others. “Seriousness of the issue should be realised across all the ministries and this must be seen from the prism of national security, consumer interest and tax leakage,” Saxena added.
Some of the offshore illegal betting platforms, which are operating in the country, are Parimatch, 1XBet, Fairplay, Betway, Betfair, Crickex and Lotus365, among others.
Even as the ministry of electronics and IT (MeitY) has blocked about 200 such illegal betting apps and websites under Section 69A of the IT Act, they have again resurfaced with different domain names, inudstry executives said. Recently, the consumer affairs ministry issued multiple advisories warning of stringent action against the advertisem*nt, promotion, and endorsem*nt of online betting and gambling by celebrities and influencers.
These illegal offshore platforms operate on three levels in the country, a legal expert explained. “Level one, they attract attention through illegal advertisem*nts in metro trains, hoardings, autos, cabs, etc. Second, they exist on the internet through thousands of mirror websites. The third level through which they operate is the dubious financial network,” the expert said.
Dubious financial network means not existing with proper bank account names or company names but through some agents operating within the country.
Landers said, “if users get duped by these offshore illegal platforms then his or her trust on the legitimate gaming companies go down. That is one of the biggest risks”.
Another area of concern according to the industry bodies is that with sports betting, these offshore platforms can also start offering other games such as rummy, fantasy, etc, and not pay taxes, which could affect the businesses of domestic players and promote tax leakages.
Saxena said, “A simple approach the government should follow is – wherever companies have been subjecting themselves to Indian laws, there should be an assumption of innocence, where companies are deliberately trying to escape Indian regulation, why should there be an assumption of innocence.”
In August last year, the government mandated offshore online gaming companies operating in the country to register the business locally or appoint a representative to pay tax on funds collected from customers.
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As per IT rules, online real money games need to be approved by a regulatory body. However, MeitY is yet to notify a structure for that.
