Online Gambling Industry in India

Prelims (GS - I) – Economic and social development

Mains (GS - II) – Issues relating to development and management of Human Resources.

Why in the News?

Recently, gambling addiction among youth is rising, driven by easy access to online platforms.

What is online gambling and gaming?

• Gambling – It refers to activities where the outcome is predominantly determined by chance or luck, with minimal influence from the player’s skill.

• Online gambling – It involves participating in gambling activities through the internet by placing bets or wagers on games and events to win money or prizes.
  • For example, casino games like slots, blackjack, and roulette, sports betting, poker, and lottery.
• Skill gaming – It Involves games where the outcome primarily depends on the player’s skill, knowledge, strategy, or expertise rather than chance.

Skill Gaming is legally recognized as a business activity under Article 19(1) (g) of the Indian Constitution, which protects the right to practice any profession or trade.

What are the causes for increasing addiction to gambling?

• Easier access – Betting now requires nothing more than a smartphone, making it dangerously convenient.
• Aggressive marketing – Platforms use deceptive ads and celebrity endorsements to attract users.
• Greed for money – The lure of fast money makes gambling seem like an easy solution.
• Instant gratification – It is due to the problem to a digital upbringing.
  • From birth, they have been exposed to quick rewards — games, social media, entertainment.
• Addictive medium – Gambling operates on the same principle of thrill, anticipation, and the rush of winning.
  • Their brains are wired to seek these highs, making addiction almost inevitable.
• Social expectations – Many chase the latest gadgets, social status or even family expectations to earn early.
• This pushes them toward quick money-making methods, and gambling becomes an easy escape.
• Lack of Awareness – Families and individuals often fail to recognize the signs of gaming addiction.

What are the red flags of addiction to gambling?

What are its ill impacts?

• Physical health issues – Severe physical health issues develop due to prolonged screen time and stress.
• They often neglect sleep and nutrition leading to deterioration of health.
• Mental health deterioration – It causes depression, anxiety, among the youth and some turning to nerve-calming drugs.
• Social isolation – They withdraw from social interactions, straining relationships with family and friends.
• Financial problems – They accumulate massive debts, often borrowing from instant loan apps or selling valuables.
• Economic loss – The illegal offshore betting market, worth $20-30 billion annually, costs India billions in tax evasion.
• Loss of life – The dangers of online gaming leads to suicides among youths.

What are challenges in regulating it?

• Weak enforcement – Ministry of Electronics and Information Technology amended intermediary rules in 2023 to regulate skill gaming but it lagged strict enforcements.
• October 2023 GST mandate requiring offshore betting platforms to register with Indian tax authorities has been ignored.
  • By December 2024, none had complied, prompting probe into 658 non-complaint entities for tax evasion.
• Offshore betting – Weak enforcement has made India a hotspot for offshore betting, costing the economy billions.
  • These operators run from like Curaçao, Malta, Cyprus, China and Dubai, making them nearly impossible to track.
• Misuse of rules – These platforms attract users with ‘No GST’ claims and higher payouts.
• They are exploiting the 28% tax on domestic gaming firms while evading regulations like KYC and responsible gaming.
• Blurred legal lines – Without clear regulations, users can’t tell the difference between legitimate skill-gaming apps and offshore betting sites.
• Money laundering – Illegal operators launder money through mule accounts with Rs2,500 crore in illicit transactions processed monthly.

A mule account is a bank account used by criminals to launder illicit funds, often set up by unsuspecting individuals lured by promises of easy money or coerced into participation.

• Decentralized digital advertising – User-generated content disguises gaming promotions, making tracking and removal challenging.

What are the measures taken by the Government to curb online gaming?

• Taxing online games – The Finance Act, 2023 introduced a 30% income tax on net winnings in online games from 2024-25.
• A 28% GST on online gaming was implemented from October 1, 2023, with mandatory registration under the Integrated Goods and Services Tax (IGST) Act.
• Statutory provisions – Online games are regulated by the Public Gambling Act 1867 and the Information Technology Act 2000, which govern online gaming activities in India.
• Integrated Goods and Services Tax Act also direct intermediaries to block unregistered online money gaming platforms.
• Regulation of platforms – Ministry of Electronics and Information Technology (MeitY) blocked 1,410 online betting, gaming, and gaming websites during 2022 - 2025.
• Intermediary Rules, 2023 were amended to regulate skill gaming.
• Punishments – Bharatiya Nyaya Sanhita, 2023 punishes unauthorized betting with 1–7 years of imprisonment and fines.
• Cybercrime enforcement – The Ministry of Home Affairs set up the Indian Cyber Crime Coordination Centre (I4C) to tackle cybercrimes including online gambling and scams.
• A National Cyber Crime Reporting Portal and helpline (1930) enable reporting of cyber financial frauds.
• Public awareness – The Ministry of Education issued an advisory for parents & teachers on “Overcoming online gaming downsides” and “Children's safe online gaming”.
• The Ministry of Information and Broadcasting mandates gaming ads to carry financial risk disclaimers per Advertising Standards Council of India guidelines.
• State-level legislation – Betting and gaming fall under entry 34 of the State List, empowering state to make laws banning it.
  • Telangana Gaming (Amendment) Act, 2017

What lies ahead?

• Government can introduce regulations to distinguish legal skill gaming from illegal gambling and close loopholes.
• Strengthening enforcement of digital regulations and hold celebrities accountable for endorsements.
• Promoting awareness campaigns to educate youth and families about the dangers of online gambling.
• Certain habits must be monitored from childhood.
• Parents can be encouraged to use site-blocking tools and Children must be taught the value of money and the dangers of easy wealth.

Reference

The Hindu| Debt, Despair and Online Gambling