The issue of illegal online betting and gambling was raised in the Lok Sabha on July 19, during the ongoing monsoon session of Parliament. Thirteen MPs highlighted a range of issues, including the financial and socio-economic risks associated with illegal betting and gambling. Lately, offshore betting and gambling websites have gained prominence in the media via high profile events including cricket matches and movie award shows.
Most of these websites operate illegally, breaking the laws of the land and exposing people to significant physical, psychological and financial risk. According to a report published in July 2022, more than 5,000 complaints were received against online betting and gambling websites on the National Cybercrime Reporting Portal between August 2019 and December 2021. Additionally, the report shows that websites offshore operate in India with impunity.
While the illegal online betting and gambling business is flourishing in India, obstacles have prevented legitimate online gambling from realizing its true potential. Despite court rulings upholding their legality, they continue to face regulatory headwinds. Skill-based games that are played across the world are banned in several states, an unintended consequence of the ubiquity of illegal websites.
With the exception of states like Sikkim, Meghalaya, Nagaland and Goa, betting and gambling are prohibited in India. Even in states where they are legal, they are heavily regulated businesses. Only licensed operators are allowed to offer such services, and this also within the territorial limits of a particular state. Offshore websites, on the other hand, operate from countries like Malta and Curacao and allow people from all over India to engage in betting and gambling. As a result, they violate state-specific gambling and policing laws, and also violate a set of central laws. These include foreign exchange and money laundering regulations, consumer protection standards, and content standards.
The user night
Offshore betting and gambling websites also expose users to a wide range of real risks. These include financial distress, future unemployment, and a significantly elevated mortality risk. According to a 2021 study, people who bet as little as 3.6% of their monthly spending are more likely to suffer from financial problems like default. He also points out that higher levels of play increase the risk of death by 37%.
A risk of financial loss is compounded by the likelihood that users will be deceived by unscrupulous elements. The lack of a regulatory framework allows criminally motivated people to run elaborate scams and trick others with their money. In August 2020, Cybercrime Wing of Hyderabad Police uncovered an online gambling scam worth thousands of crore.
Gambling addiction is another danger posed by these websites. The WHO recognizes it as a behavioral disorder. Its characteristics include impaired control over gambling behavior, increasing priority given to gambling over other life interests and daily activities; and continuation or escalation of gambling behavior despite negative consequences. While only a small subset of gamers are drug addicts, their families also suffer from the impact of gambling disorders.
These risks are more pronounced in the case of minors. In the absence of any regulatory oversight, many websites allow minors to access their services and engage in gambling. In fact, underage gambling is a major public health problem worldwide. Exposing children’s vulnerable psyches to illegal and harmful activity can lead to delinquency, criminal behavior, depression and even suicide.
Absence of systemic action
There are piecemeal interventions against offshore gambling in India. In July 2021, the Enforcement Directorate issued notices to several people for breaching the Foreign Exchange Management Act 1999 by paying funds to foreign countries to place bets on European Cup matches. However, addressing the aforementioned concerns will require systemic action.
There are enough laws in place to act against offshore betting and gambling sites. However, jurisdictional ambiguity and the nature of the Internet hinder their application. State laws govern betting and gambling, but the lack of extraterritorial enforcement makes them untenable for regulating offshore activities. Additionally, states do not have the power to enforce regulatory measures against failing websites, as the regulation of digital platforms, including the power to block websites, rests with the center.
Conversely, the central government is better placed to act against offshore betting and gambling sites. In February 2022, MeitY clarified that all online games are intermediaries within the meaning of computer law, before Parliament. As an extension of this position, offshore betting and gaming websites should also be under the jurisdiction of the Information Technology Act. However, the lack of a nodal department to identify and report rogue offshore gambling websites impedes enforcement action. Different agencies administer the many central laws that offshore betting and gambling websites violate. The multiplicity of organizations involved results in a lack of coordination.
The need for systemic punitive action against offshore betting and gaming sites cannot be overstated. However, this will require structural changes, including legislative changes and changes in the allocation of trade rules. In the meantime, the central government can consider two parallel actions. As an immediate measure, it is imperative to deny public access to known offenders. This will ensure that they do not commit further damage. In the longer term, a centralized reporting framework allowing rapid identification and reporting of these websites could be considered. This will allow the government to tackle the larger problem of offshore gambling before it becomes an epidemic.
The opinions expressed above are those of the author.
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