BS READS: Vague gambling law lets offshore betting sites prey on Indians

Topics BS Reads | gambling | betting

A simple online search would throw up dozens of such sites endorsing gambling through offshore entities. Photo: Shutterstock
While reading the news online, Ananth Kumar (name changed) chanced upon an article that redirected him to a gambling website — Leo Vegas. After checking if it looked legitimate, he deposited Rs 10,000, created his account on an online casino, and patiently waited for the promised Rs 30,000 to try his luck. Nothing happened.

Kumar then contacted the support team at Leo Vegas, which asked him to verify his bank account details by uploading a few documents. He did. But his claim was rejected because of “blurred pictures”.

This is not your vanilla ‘prince from Nigeria’ duping case. Kumar made the transaction after reading many promoted articles on betting on legitimate-looking news sites.

Given the ambiguity around gambling laws, offshore betting websites have found an easy inlet to operate in the Indian market. Gambling is illegal in most parts of India. But, it is still governed by British-era laws that recognise only land-based activities. How could they apply to an online casino then? The internet, without any boundaries, falls within a legal grey area that allows bookmakers and bettors to flourish. This has also led to a mushrooming of fronts in India that accept payments on behalf of these operators.

Concerted efforts to obscure the right and the wrong

In November 2019, a Maltese company called Nordanvind Investments Limited launched a cricket content website, Glaws.in.

Five months after acquisition, the two websites merged and took a new form. Cricketprediction.com became a cricket betting promotion website, providing guidance on how to place bets, calculating odds and predicting match results. The website also provides links to as many as 10 offshore betting and casino websites where one could log in and start placing bets.

Jay Sayta, the former owner of Business Standard.

Emailed queries to Nordanvind Investments had not elicited any response as of the time of publishing of this report.

A simple online search would throw up dozens of such sites endorsing gambling through offshore entities.

In the eyes of the law, games of skill are allowed, but games of chance would be classified as gambling. Gambling, though allowed in a highly regulated manner in some states like Sikkim, Nagaland and Goa, is illegal in the rest of the country.

That is why none of these gambling sites is based in India. Even as they are India-focused, they operate from places like Malta, Curacao, Gibraltar, and the Isle of Man. For instance, Jeetwin casino, owned by Skytech Infotech Limited, is registered in Belize and operates under a Curacao gaming licence, but it claims to be Mumbai-based on its LinkedIn page.

These jurisdictions are licensed to operate these online casinos and betting operations by gaming authorities of their respective countries — Malta Gaming Authority, Curacao Gaming Commission, Cyprus Gaming and Casino Supervision Commission, and even UK Gambling Commission.

These websites promote that it is safe to bet with them as they are based out of countries where gambling is legal. This happens through affiliate marketing programmes, where offshore websites pay commissions to an affiliate for leads generated from its referrals. Affiliates run various websites and blogs promoting content around online gambling and betting, and connecting people with international online bookmakers.

“The commissions start from 35 per cent and can go up to even 50 per cent, depending on how large your affiliate network is. The SEO (search engine optimisation) team would mostly target people in the age profile of 25-35 years,” says Nitin Kukreja, former employee of an affiliate marketing company that has handled the accounts of various offshore casinos. Nordanvind Investments, the owner of cricketprediction.com, is an example of a large affiliate network. The website provides links to as many as 10 offshore betting websites.

Affiliates also build a few websites disguised as news portals. On these, articles legitimising gambling are slipped in. “They post current affairs news on these portals so that they come up in google searches and look genuine. But the clickbait article will always be the first post on the homepage,” says Kukreja. This is how Kumar was fooled into spending on a seemingly “legal” casino.

Another such website is Online casino CEO fired after a 46 million Rupees mistake’ was posted again as a new article with the same headline on June 23, 2020. The only minor change: a different name for the casino.

Emailed queries sent to Todayposts.com did not elicit an immediate response.

Deep-rooted obscurity

Laws related to gambling in India were governed by a British-era law called the Public Gambling Act, 1867, which only allowed skill-based games and prohibited gambling. After Independence, gambling became a state subject and the Public Gambling Act, 1867, became redundant.

“While making its own legislation, every state re-enacted the Public Gambling Act, 1867, almost verbatim or with some minor cosmetic changes. Some took a different approach. Goa and Daman & Diu allowed operating casinos in five-star hotels or offshore vessels. Later, in 2008, Sikkim also made land-based casinos legal in the state,” says Siddhartha Iyer, advocate and expert in gaming laws.

Lotteries are legal in 13 Indian states. In 1996, the Supreme Court made betting on horse racing legal. This even brings crores of rupees in taxes every year to, say, the Telangana government.

In 2008, Sikkim Online Gaming (Regulation) Act said that card games like Bridge, Rummy, Poker and fantasy sports were games of skill. Nagaland, too, issued licences to online real money gaming platforms for Rummy and Poker.

In 2015, a Supreme Court judgment also ruled in favour of Rummy as a game of skill. Online Rummy for money is permitted across India, whereas online Poker is now allowed in all Indian states except Gujarat, which does not consider poker as a game of skill. Odisha, Assam, Telangana and Sikkim allow neither games of skills nor chance to be played online for real money.

In March 2019, two public-interest suits were filed in the Delhi High court by lawyer Deepti Bhagat and social activist Avinash Mehrotra, seeking government sanctions against offshore online gambling websites operating in India.

In December 2019, the Delhi High Court dismissed the two PILs and passed the decision over to the central government. It also added that it could not act against gambling sites unless the sites were hosted within Delhi.

Meanwhile, the Ministry of Electronics and Information Technology submitted an affidavit stating that it would be impossible to enforce any law that blocked online gaming sites in India.

While laws regarding gambling fall within states’ ambit, the internet is part of the Union list. Any law related to online websites falls within the central government’s ambit. Hence, there has been no legislation on internet gambling and the existing state laws are only concerned with land activities — this discrepancy is exploited by offshore gambling entities.

Enablers in India

These offshore websites accept deposits in rupees, a clear violation of the Foreign Exchange Management Act (Fema) Act, 1999. The Act restricts remittance by Indian citizens for the purchase of lottery tickets, or any kind of sweepstakes. These restricted transactions are included within Schedule I of the Fema Act, which essentially means that all foreign exchange gambling transactions are prohibited. This should ideally restrict an offshore gambling operator from offering its services in India.

But these offshore companies bypass this law with the help of their Indian intermediaries. They have arrangements with various Indian firms which collect payments on their behalf and settle accounts later.

For instance, Dafabet, which claims to be based out of the Philippines, operates on a Curacao licence. When Business Standard tried to check the process of making a deposit on the website, it was redirected to the payment page showing account details of Bharti Eatables Private Limited. According to the Registrar of Companies, the company was incorporated in April 2017 and is based out of Noida, Uttar Pradesh. It is currently under the process of striking off.

Vikrant Vikram Singh, a former director of Bharti Eatables, is also a major shareholder and director in Delhi-based Bhartipay Services Ltd. Incorporated in October 2017, the company claims to be a payment gateway under the brand BhartiPay, according to its website. The RBI has issued no such licence to this company as on date.

Sakshi Chawla, chief executive and co-founder of BhartiPay, told Business Standard: “We are a legit payment gateway company. We used to provide payment support to Bharti Eatables earlier, but now we neither have any association with the company nor are we aware of its links with gambling websites.”

Text messages sent to Vikrant Vikram Singh did not elicit any immediate response.

Similarly, while depositing money on another such website, Malta-registered Betway, the payment was made to a Patna-based ICICI bank account in the name of SK Multiventures.

Various other websites showed banking details of Indian intermediaries helping them bypass the Fema Act. The account details of these intermediaries keep changing every time you try to make a deposit.

Clearing the air

Besides the Fema Act, we also have the Information Technology (IT) Act, 2000, which aims to stop these entities from operating in India. Under the Intermediary Rules, 2011, of the IT Act, gambling-related content is not permitted; there is a penalty of Rs 25,000 for each incident.

“It is their (the government's) job to block it, but they are not doing that. Some of these websites get the majority of their traffic from India. For instance, UK-based Bet365, a sports-betting website, gets 40 per cent of its traffic from India. When you can put a ban on pornography and even a list of Chinese apps, why not these websites," asks Iyer.

Real money card game operators are subjected to strict compliance and have to ensure that their platform isn’t used in states where it is not allowed, unlike offshore gambling sites.

“We do not entertain any users from the states where such activities are restricted. We use geo-location, KYC (know your customer) to keep a check, but these offshore websites do nothing,” says Nitesh Salvi, founder and chief executive of Pocket 52, an online poker platform in India.

Salvi also stresses on the need for a regulatory and licensing body for online gaming in India. In the absence of a regulatory body, these offshore websites are booming in India and people are losing their money, with no one to keep a check and audit them.

“Offshore gambling platforms are mostly into games of chance and Indian players are for games of skills. But there is an overlap in the target audience. So, if a player gets duped by an offshore casino, he may not ever go to legitimate platforms offering games of skill. It develops distrust towards the whole industry,” says Salvi.

“The government needs to intervene. You decide that games of chance are not to be played at all and take strict action against these offshore websites. If you think these are okay, regulate them and give opportunities to Indian players, too,” says Mohit Agarwal, former CEO and co-founder of online poker-playing platform Adda52.

“Letting these offshore websites operate in India makes it unfair on Indian companies offering only games of skill that follow laws and pay taxes. These offshore websites don't pay a single penny to the government but operate freely in India,” says an industry insider who does not wish to be named.

There should be a regulatory body for online gaming in India — to ensure strict execution of the Fema Act, completely ban these websites in India, just like pronography and the recent ban on Chinese apps. There are various solutions steps that the government needs to take for decisive action — the sooner, the better.



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