Addressing the Lack of Esports Betting Regulations in India

Introduction

The growing popularity of esports in the country, especially mobile gaming, has led to a parallel rise in esports betting among younger demographics. With revenues projected to reach over 100 million USD in 2025, India is a key region in the esports betting market. But the betting and gambling market is confusing and under-regulated in India, something that needs to be looked into immediately, to protect all stakeholders.

Current Landscape of Esports Betting in India

There are no direct rules or laws regulating esports betting in India.

Betting is a legal grey area. Horse racing is the only sport on which public betting is legal across the country, as the Supreme Court has adjudged it a game of skill. At the union level, the Public Gambling Act, of 1867, prohibits public gambling, “keeping of common gaming-houses” and visiting them, prescribing punishments for violations. Under the Indian Contract Act of 1872, no suit can be brought to enforce any winning from betting or gambling, except for horse racing, in a court of law.

The Constitution of India, under the Seventh Schedule, gives states the jurisdiction to make laws on betting and gambling within their respective boundaries. Thus, Sikkim, Goa, Daman and Diu have introduced legal provisions allowing casinos to operate.

As for online betting, there are no union laws regulating it, while state laws vary. Andhra Pradesh and Telangana have banned all forms of online gaming and gambling, contrastingly, Nagaland has an online gaming law. This law includes a licensing system for online games but explicitly prohibits online gambling.

There is a lack of specific laws addressing esports betting. In 2023, the union government introduced gaming amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, to control the unabated “negative impact” of online gaming activities on users, especially children and vulnerable sections. While these rules prohibit online gaming companies from engaging in betting on the outcome of their games, they do not address bookmaking apps.

Some Risks Associated with Unregulated Esports Betting

a. Addiction: Easy access to gamified betting exposes casual and professional players, often minors, to gambling early, increasing the risk of addiction. Losses can lead to negative health impacts and related long-term issues, especially for inexperienced young bettors.

b. Fraud and Money Laundering: Without standardized oversight, and the use of cryptocurrencies, unregulated betting platforms may engage in fraud and money- laundering activities through unlicensed offshore Internet sites or illegal bookmakers.

c. Tax Evasion: There has been a steady rise in offshore online gambling and gaming services for Indians. But offshore entities fall outside the regulatory ambit of the GST regime which causes revenue leakages to the exchequer.

d. Data Privacy and Cybersecurity Threats: Large betting pools in esports attract cybercriminals. Sharing personal and financial data on unlicensed platforms increases risks to bettors’ privacy and safety.

International Perspectives

The UK regulates esports betting through the Gambling Commission under the Gambling Act 2005, an independent non-departmental public body (NDPB) sponsored by the Department for Culture, Media and Sport (DCMS). It acknowledges the additional risks associated with such betting and mandates that entities offering bets to consumers in the UK are required to obtain a betting license depending on the type of betting offered and the medium.

In Malta, the Malta Gaming Authority regulates esports gaming and betting. It issues two kinds of gaming licences, Gaming Service Licences (B2C licences) and Critical Gaming Supply Licences (B2B licences) to tackle illegal operations emanating from a market that is not fully regulated. According to gaming laws and regulations, operators are obligated to report suspicious transactions from betting on esports.

The Way Forward for Esports Betting Regulations in India

To address esports betting regulations in India, the overall regulatory structure regarding gambling will have to be addressed considering the following key aspects :

a. Review of Gambling Laws: The Public Gambling Act, of 1867, is a colonial-era law deeply inadequate in addressing the nuances of online betting, while the Consumer Protection Act, of 2019, and Information Technology Act, of 2000, suffer from inconsistent enforcement in protecting from fraud and misleading ads. This fragmented regulatory landscape allows illegal operators and micro-betting apps/sites to proliferate.

b. Navigating State and Union Laws: While some states have varying gambling and betting laws, most states follow the outdated Public Gambling Act, of 1867. The union legislature could create a central framework that would act as a model law to guide states in addressing the cross-border nature of online betting, ensuring consistency while respecting state autonomy.

c. Clearer Definitions: With the continuously evolving conversation on what includes games of chance vs. games of skill continuing to dominate policy discourse, there is a need for updating the definitions of gambling, gaming, betting, and lotteries. This is to ensure that there are distinctions between esports gambling from traditional gambling.

d. Centralized Regulatory Bod: The government may consider establishing a centralized overseeing body with the powers of licensing, monitoring operators, ensuring adherence to data privacy and cybersecurity standards, protecting minors, monitoring advertising, etc. such as the UK’s Gambling Commission can be set up.

e. Involving Stakeholders: Game developers, betting platforms, civil society, educators, and parents, apart from gamers, should be integrated into transparent consultations, public hearings, and advisory committees to ensure that regulations are comprehensive and balanced.

Conclusion

Betting, whether regulated or not, is here to stay, and esports presents yet another lucrative opportunity. Keeping in mind the rising popularity of esports in the country, its market has the potential to become a major economic driver. India needs a holistic legal framework that reflects the modern realities of emerging technologies and protects its stakeholders from its social and economic risks. Addressing policy gaps in the overarching real money online betting framework is crucial to establishing a secure and sustainable esports betting ecosystem in the country.

References

● https://www.gamopo.com/countries/india/
● https://www.statista.com/outlook/amo/esports/esports-betting/india
● https://iclg.com/practice-areas/gambling-laws-and-regulations/india#:~:text=The%20states%20of%20Telangana%20and,prohibits%20real%2Dmoney%20online%20gambling.
● https://pib.gov.in/PressReleasePage.aspx?PRID=1918383
●https://www.meity.gov.in/writereaddata/files/Information%20Technology%20%28Intermediary%20Guidelines%20and%20Digital%20Media%20Ethics%20Code%29%20Rules%2C%202021%20%28updated%2006.04.2023%29-.pdf

● https://www.youtube.com/watch?v=DlMLfxxvKD8&ab_channel=DrewGooden
● https://www.gamblingcommission.gov.uk/licensees-and-businesses/page/offering-bets-on-esports
● https://gonzi.com.mt/gaming-it-telecoms/e-sports/