The online gaming industry is in a situation where it seems to be paying the price on behalf of a few rogue elements. Not to mention, the industry is still reeling under the effects of the 28% goods and service tax (GST) on full value and the existence of offshore betting platforms. Meanwhile, the offshore betting platforms, albeit illegal in India, have continued to advertise on billboards, cabs, influencers and sports jerseys, among other avenues. This is despite the guidelines set by The Ministry of Information and Broadcasting (MIB) and Advertising Standards Council of India (ASCI) which demarcated that gambling platforms are illegal in India and shouldn’t be allowed to be advertised. “Betting has recently been a subject of regulatory scrutiny and many of these ads are in direct violation of the law. Ensuring compliance with established rules and regulations is particularly challenging due to the offshore nature of such companies and the lack of information about them in the public domain. ASCI identified 1311 betting ads and escalated them to the Ministry of Information and Broadcasting. We believe the ministry is working on suitable action to be taken against these organisations. The ministry has also issued a caution advisory for influencers against promoting betting and gambling platforms. A multi-pronged approach is needed to tackle this challenge,” Manisha Kapoor, CEO and Secretary-General, ASCI, told BrandWagon Online.
The online gaming sector in India has grown at a compound annual growth rate (CAGR) of 28% over the last three years to reach Rs 16,428 crore in FY23. Presently, real-money gaming revenues constitute a substantial 82.8% of online gaming. However, projections indicate a decline of or to 75.4% by FY28, owing to the recent GST amendments and accompanying notices, as per a report by EY.
‘Betting’ on the popularity of advertisements
The offshore betting platforms continue to stay rampant in terms of advertising and marketing in India as the nation continues to struggle to establish a clear demarcation between games of skill and games of chance. Industry players opine that the increase in the 28% GST has led to regulated entities halting their marketing activities to cut expenses. With the marketing activities of regulated entities subdued, offshore betting platforms have taken over the advertising market and marketing activities. According to industry experts, while advisories have contributed to a decrease in violative ads of illegal betting and gambling platforms on television and OTTs these companies have resorted to alternative means to promote and expand gambling activities including out-of-home (OOH) advertising and extensive promotion through influencers on social media platforms. “It’s harder to crack down on OOH advertising since it’s localised and more diversified. We have seen OOH primarily in the form of large-scale outdoor hoardings, and ads on cabs, buses, autos and metro trains. While MIB had written to Chief Secretaries of State to curb these, since most of these mediums are under state control, it’s harder to centralise and crack down on. There will have been a concentrated effort between various state agencies to curb this at the local level,” Roland Landers, CEO, All India Gaming Federation (AIGF), highlighted.
There have been multiple cases wherein these platforms have been openly advertised in a few newspapers as well despite it being illegal. Industry experts highlighted that while advertising these entities is illegal, these platforms pay approximately five times more than what the regulated entities pay and the payment is made in cash leaving no paper trail, making it harder to track the movement of these entities.
Betting platforms’ gamble
The existence of players like Parimatch, 1xBet, Betway, and Lotus365, among others has made it exceedingly difficult for the regulated entities to coexist as these platforms do not pay taxes since they are not registered in India. The Indian exchequer is losing approximately Rs 2.5 lakh crore as a result of gambling platforms operating in India, according to a report by Think Change Forum. Industry experts believe that these illegal betting and gambling platforms have substantial financial and socio-economic implications since they do not provide any user protections, or undertake any responsible gaming practices such as time or money-based limitations. Operating from outside the jurisdiction of Indian law enforcement, these platforms are not subjected to Indian regulations, and can also be used for money laundering, and other illicit activities. Offshore illegal betting and gambling entities are causing a loss of $2.5 billion as GST annually to the national exchequer by collecting deposits worth $12 billion, each year. “Illegal betting and gambling activities in India pose significant economic and consumer safety risks. Despite state legislation prohibiting these activities, except in Goa and Sikkim under certain regulations, these platforms continue to operate unchecked. This has resulted in an estimated loss of ₹2 lakh crore to the Indian exchequer and leaves consumers vulnerable to fraud with no legal recourse. The conflation of gaming with gambling has further stifled the legitimate gaming industry’s growth, leading to a decline in foreign direct investment. Urgent and comprehensive policy measures are needed to enforce regulations, protect consumers, and support the legitimate gaming sector,” a senior executive of the online gaming industry, stated, on the condition of anonymity.
Illegal offshore gambling platforms had approximately 1,311 ads reported to the Ministry of Information and Broadcasting, making it the second most violative sector with a 17% share, as per a recent ASCI report. “The Central Consumer Protection Authority (CCPA) has issued guidelines for the Prohibition of Advertising, Promotion, and Endorsement of unlawful activities prohibited under various laws. The Advertising Standards Council of India (ASCI) has intensified its efforts in monitoring misleading advertisements suo motu, finding that 17% of them pertain to illegal betting and gambling platforms. ASCI has also published numerous guidelines and advisories on this matter. Consumer awareness is essential to enable users to differentiate between legitimate and illegitimate platforms and to avoid being enticed by illegal platforms’ claims of ‘no GST, no TDS’,” Landers added.
Industry experts stated that betting platforms can be stopped from advertising their products in India by ensuring legitimate gaming companies are identified and listed with advertisers, OTT platforms, and the general public once the self-regulatory bodies under the 2023 amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 are notified by the authorities. They further added that when a certification from an identified self-regulatory body is made a necessity, ads of betting platforms, and the platforms themselves will be purged from the country. Since offshore entities do not have any official status in India, scrutiny by an SRB-like body can help all stakeholders differentiate between legitimate and illegitimate players.