Dark Side of Digital Gambling in India

Syllabus: GS1/ Social Issue

In Context (A Case Study)

• Online gambling is claiming young lives across India, with devastating stories like that of 21-year-old Sai Kiran, who died by suicide after being overwhelmed by debts incurred through online gambling.

Rise in Online Gambling: Alarming Trends

• India’s online skill-gaming market is estimated at $3 billion, but the illegal offshore betting market ranges between $20–30 billion annually. Some estimates even peg it at $100 billion.
• UNICEF reports that children in India spend over $1,000 daily on online gambling.
  • A study in South India found that 19.5% of college students gamble, with 7.4% showing signs of addiction.
• During popular sporting events like the IPL, illegal betting surges dramatically, with multiple suicide cases linked to rising debts and gambling losses.

Major Reasons for the Rise in Online Gambling

• Smartphone Penetration & Digital Payments: Over 600 million Indians use smartphones, and with seamless UPI transactions, access to gambling platforms has become incredibly easy.
• Aggressive Digital Marketing: Betting apps spend up to 50% of their revenue on influencer promotions and digital ads. Celebrities and influencers endorse these apps, often disguised as fantasy sports or game reviews, luring unsuspecting users.
• Instant Loans with No Checks: Platforms and associated loan apps offer no-documentation, instant credit, encouraging users to borrow and bet without understanding the consequences.
• Psychological Triggers: Online gambling taps into reward-seeking behavior. It offers quick gratification, near-miss illusions, and an adrenaline rush, making it highly addictive, especially for youth raised in a fast-reward digital culture.
• Weak Enforcement & Offshore Operations: Most illegal betting platforms operate from offshore jurisdictions like Curaçao, Cyprus, China, and Dubai. They exploit tax loopholes, avoid KYC norms, and are almost impossible to track.

Implications of Online Gambling

• Mental Health Crisis: Gambling addiction leads to anxiety, depression, suicidal ideation, and substance abuse. Many victims suffer in silence, and some, like Sai Kiran in Telangana, tragically end their lives due to mounting debts.
• Financial Destruction: Users often borrow from family or loan sharks, sell valuables, or default on digital loans. Families lose life savings, and intergenerational debt becomes a real threat.
• Cybercrime & Money Laundering: Illegal platforms use UPI, crypto wallets, and mule accounts to process over ₹2,500 crore in illicit transactions monthly, according to RBI data.
• Youth Vulnerability: The illusion of “quick money” appeals strongly to young adults under pressure to earn, maintain social status, or purchase gadgets — making them ideal targets.

Current Regulations

• The Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 were amended in 2023 to regulate online gaming.
• 28% GST is now levied on gaming firms, but offshore platforms bypass this tax.
• The Telangana Gaming (Amendment) Act, 2017 banned online gambling in the state.
• The GST Council in 2023 mandated that offshore betting companies should be registered with Indian tax authorities — most have ignored it.

Why is Regulation Difficult?

• Offshore operations make jurisdictional control hard.
• Lack of clear legal distinction between “games of skill” (legal) and “games of chance” (illegal) creates a regulatory grey zone.
• Digital advertising is fragmented and decentralized, allowing disguised promotions to flourish.
• Influencer marketing loopholes mean even banned content is repackaged as “sports blogs” or “gaming reviews.”

Way Ahead

• Clear and Unified Legislation: There is a pressing need for a centralised legal framework that clearly distinguishes legal skill gaming from illegal gambling, with stringent penalties for violations.
• Strengthening Enforcement: Empower agencies like I4C (Indian Cyber Crime Coordination Centre) to monitor, investigate, and take swift action against rogue apps and influencers.
• International Collaboration: Coordinate with global agencies and governments to block illegal offshore operators and crack down on cross-border financial crimes.
• Tighter Digital Ad and Influencer Oversight: Mandate strict KYC for digital advertisers, enforce real-time takedowns, and penalise celebrities and influencers endorsing illegal betting platforms.

Source: TH