After ED raids, Probo says it is cooperating with law enforcement authorities

Probo allows users to make yes-or-no predictions for real-world events in sports, entertainment, current affairs, technology, the economy, and finance, and receive cash rewards for accurate predictions.

Opinion trading platform Probo said on July 10 that it is "cooperating with law enforcement authorities" after the Enforcement Directorate (ED) raided its premises as part of a money laundering probe linked to illegal online betting.

"We remain confident that our commitment to compliance and innovation will help us emerge stronger through this process. We have complete faith in India's robust regulatory framework and its vision for responsible tech innovation," a Probo spokesperson said in a statement.

The ED had earlier stated that it conducted search operations at four premises in Gurugram and Jind, linked to Probo and its promoters, Sachin Subhaschandra Gupta and Ashish Garg, under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, in connection with the company’s "illegal gambling and betting activities" across India.

What ED found in its investigation?

During the searches, the ED stated that it had found and seized various 'incriminating documents and digital data'. Additionally, investments in fixed deposits and shares amounting to Rs 284.5 crore, along with three bank lockers, were frozen.

ED mentioned that it began this investigation based on FIRs registered under various sections of Bharatiya Nyaya Sanhita (BNS), 2023 and the Public Gambling Act, 1867, against Probo and its directors and promoters in Gurugram and Palwal in Haryana, and Agra in Uttar Pradesh.

"The complainants in the FIRs had alleged that they were cheated and dishonestly presented a scheme of earning money through simple "yes or no" questions while the scheme in reality promotes gambling by luring players to invest more in the hope of earning higher returns," the agency said.

The investigation found that the app "defrauds its users by initially promoting a deceptive image of a legitimate skill-based platform, only to ultimately exploit them through a betting mechanism where success is governed entirely by chance and not by the user's abilities or insights,"

"The company claims its platform as ‘opinion trading’ and knowledge or skill is required to play the game. However, analysis of games shows that all the games can be answered with ‘Yes or No’ and hence, there are only two possible outcomes which makes it indistinguishable from gambling or betting resulting in loss of hard earned money of the users," the agency said.

The ED noted that it also found Probo lacks a mechanism to prevent minors from registering as users, does not carry out proper due diligence (KYC), induces new users through misleading advertisements while promoting opinion trading related to election results.

"Investigation also revealed that the company had received Rs 134.84 Crore against issue of Preference Shares from foreign entities based out of Mauritius, Cayman Island and others" it added.

Probo, however, reiterated that it adheres to all applicable laws and regulations, and “maintains the highest standards of compliance,” with user safety and trust being its top priorities.

"Probo is a skill-based platform. With over 4.2 crore users, Probo has ensured better access to wealth creation that traditional financial markets have not been able to provide to the general public," the spokesperson said.

Started in 2019 by Gupta and Garg, Probo has raised a total $28 million in funding from investors such as Peak XV Partners, Elevation Capital and Fundamentum Partnership.

The platform allows users to make yes-or-no predictions through poll-based questions covering real-world events in sports, entertainment, current affairs, technology, the economy, and finance, and receive cash rewards for accurate predictions.

Probo saw its revenue surge to Rs 459 crore in FY24, up from Rs 86 crore in FY23, while its profit jumped to Rs 92 crore from Rs 3.7 crore.

Legality under question

These developments come amid broader concerns over the legality of opinion trading platforms that has mushroomed over the past couple of years. The country currently lacks a uniform regulatory framework to regulate the real-money gaming sector.

In India, real-money games are generally classified as games of skill or games of chance. Games of chance are those where the winner is predominantly determined by luck and are considered gambling, while games of skill are those where the outcome is primarily determined by the player's skill and strategy.

Only games of skill are considered legal in India and fall under the purview of the union government, while gambling is a state subject in the country.

Opinion trading platforms like Probo claim they are skill-based gaming platforms since there is an element of skill that goes into winning money on these platforms. However, some industry experts argue that success on these platforms is largely dependent on luck and involves no skill, due to which they must be classified as games of chance.

That said, multiple public interest litigations (PIL) have been filed across various state High Courts, including Bombay High Court, Chhattisgarh High Court, and Gujarat High Court challenging the legality of these platforms.

The Supreme Court recently stayed the proceedings in Gujarat and Chhattisgarh High Courts, following a plea from Probo to transfer all PILs to the Bombay High Court. The apex court is set to hear the matter again in July.

Meanwhile, opinion trading platforms have suspended operations in states like Chhattisgarh, Haryana, and Tamil Nadu.