A recent report by the Digital India Foundation (DIF) has raised concerns over the increasing risk of money laundering within India’s booming online gaming sector. The report calls for immediate regulatory measures to protect the country’s digital economy from illegal activities tied to online gambling and betting platforms.
India’s real money gaming (RMG) sector is expanding rapidly, with revenues projected to reach $7.5 billion over the next five years. The industry has generated employment opportunities in areas like fintech, cloud services, and cybersecurity. However, the DIF report highlights how the sector’s rapid growth has also opened doors to illegal activities, including the use of offshore betting sites and in-game currencies for money laundering and terror financing.
The illegal gambling market in India is estimated to handle over $100 billion annually. Despite efforts to block these platforms, many operators evade restrictions by using VPNs and mirror sites. Misleading advertisements by influencers promoting illegal gambling sites, along with the use of cryptocurrencies and cash for payments, make it difficult to trace transactions.
Stronger Oversight and Task Force Recommended
The report recommends the formation of a specialized task force to combat illegal operators in the gaming sector. This task force would be responsible for ensuring compliance with KYC (Know Your Customer) regulations, promoting digital payments, and maintaining financial discipline.
Additionally, the report calls for the creation of a whitelist of legal operators, requiring both domestic and offshore gaming platforms to register under the GST Act. This would enable payment gateways and service providers to distinguish between legal and illegal platforms. The government is also urged to block transactions with known illegal operators and work with international partners to address cross-border gambling issues.
Need for Better Regulation
The DIF report emphasizes the lack of consistent regulations and a dedicated authority governing the online gaming sector, leaving it vulnerable to fraud. It calls for the Ministry of Electronics and Information Technology (MeitY) to implement a clear regulatory framework. The report also proposes stronger financial integrity measures, such as regular audits and robust KYC mechanisms, to reduce risks.
The foundation stresses the importance of cooperation between ministries, financial institutions, and gaming platforms to curb illegal activities. Public awareness campaigns and better enforcement strategies are essential for protecting users and promoting a safer gaming environment.
With the sector expected to create over 250,000 jobs by 2025, the report warns that immediate action is critical to safeguarding its future.
