What Should Be Done With Online Gaming?

Following a multi-party initiative in the Lok Sabha, where a group of 13 MPs signed a written question to the MIB asking what the Central Government is doing to curb the risks from illegal wagering, Priyesh Mishra, a lawyer practising in New Delhi and a former content writer at the National Social Entrepreneurship Forum, is urging for action against offshore-based online gambling and betting arguing that this can solve all related problems.

Mishra points out that the only gambling and offline or online betting in India is limited to a few states like Goa, Nagaland, Sikkim and Meghalaya. Operators that wish to offer such services in these states need to obtain a license and conform to strict regulations, and their activities cannot reach outside the boundaries of the corresponding state.

On the other hand, many online gambling and betting platforms based outside India can freely operate across the whole country without being subject to any rules, restrictions or regulations.

The Union Constitution has granted the authority to legislate over gambling and betting to the states, but their legislative power does not have extraterritorial action, i.e. laws adopted by states cannot affect individuals and entities outside the country. In this way, India’s state-centered arrangement over who and how controls gambling is outdated and inadequate in the age of the internet.

According to Priyesh Mishra, it is exactly offshore gambling and betting websites that expose Indian users to a variety of risks such as financial troubles, unemployment, higher mortality, gambling addictions, gaming by minors, or being subjected to fraud or scams.

In the “absence of a regulatory framework” or “of any regulatory oversight”, Mishra writes, people with criminal intentions can gain easy access to Indian online space where they can deploy their scams and schemes. Websites are also free to offer gambling services to underage citizens, who are more vulnerable, exposing them to “an illegal and harmful activity can lead to delinquency, criminal behaviour, depression and even suicides”.

Mishra also points out that gambling addictions have been recognized as a behavioural disorder by the World Health Organisation (WHO). “Its characteristics include impaired control over gambling behaviour, increasing priority given to gambling over other life interests and daily activities; and continuation or escalation of gambling behaviour despite negative consequences.” Even though only a small portion of gamblers develop an addiction, their whole families suffer from it, he says.

It is because of the proliferation of offshore gambling and betting sites that Indian skill gaming platforms have been banned in many states despite various court decisions confirming their legitimacy, Mishra argues and proposes “systematic punitive action” against such platforms. The suggested measures include banning access to known violators and developing a centralized reporting framework.

Is Curbing Offshore Activity Going to Solve the Problem?

The gambling- and betting-related risks that lawyer Mishra is talking about are real and serious enough to require centralized action as states are not equipped to tackle the issue. Nevertheless, while he mentions the actual problem in the “absence of a regulatory framework”, Mishra keeps to a one-sided point of view against offshore websites and argues that curbing their activities, instead of implementing rules for all real money gaming in India, is the needed solution.

Real money gaming, regardless if skill- or chance-based, carries all the dangers Mishra is mentioning, including the risks of financial ruin, addictions, inducing minors, or being offered by fraudsters. For this reason, the need of the hour is to have rules, including responsible gaming requirements, age verification protocols, spending limits, restrictions on gaming on credit, advertising guidelines, anti money laundering measures, and many more.

A robust regulatory framework can not only ensure a safe gaming environment for Indians and an enabling business climate for homegrown operators, but it can also make eligible offshore platforms obtain a license and start working and paying taxes in India. Then the government can proceed to block access to all Indian and foreign sites that don’t conform to the law, making sure desi gamers use only safe products.

What is the Current State of the Indian Online Betting Market?

If we look at the current state of affairs, we see that young sports lovers are driving India's betting market leading to the spread of new gaming genres and ways of playing, as well as to a decrease in black market and hawala operations and a general positive shift in public perception towards betting.

The size of the Indian sports betting market is estimated at around $150 billion (roughly ₹10 lakh crore) with the participation of 40 crore bettors. The biggest part of this market is cash-based or hawala, happening offline and illegally.

On the other hand, aggregate sportsbook traffic data on the activity of 70 thousand users from India on one gaming platform shows that the youngest age group of 18-24-year-olds is responsible for 41.7 percent of all visits. Combined with the next age group between 25 and 34 years of age, young Indians generate a total of 72.6 percent of all traffic.

The youngest group coincides with Generation Z or the “digital natives”, who take online to be the only option to wager, and one that makes it possible to bet on every sports star or event around the whole world. Their thirst for sports coverage often takes them beyond real sports to betting on fantasy sports, eSports, and simulated virtual leagues, and they appreciate the addition of Augmented Reality and other technology to their gaming experience.

Fantasy sports have been officially recognized as skill-based in India, and the ability to legitimately bet on the performance of favourite athletes and teams has gone a long way toward changing the perspectives on such activities. Many users see a direct connection between the skilful nature of sports itself and the ability to use one’s extensive sports knowledge to their advantage.

All of this makes the legalization and regulation of gambling and betting a much more sensible option than prohibitions, as a way to ensure economic progress and a safe gaming environment while curbing the black market.