Online betting should be included as scheduled offences under PMLA: Report

The report suggests MEITy should create nodal authority to register online real money games.

Online betting and gambling activities should be included as scheduled offences under the Prevention of Money Laundering Act (PMLA), 2002, to strengthen India's anti-money laundering framework, an institution under the Ministry of Home Affairs said in its report titled ‘Curbing betting and gambling in India—A national security imperative’.

PMLA equips authorities with robust tools to investigate and trace illicit proceeds from online betting and gambling empowering them to disrupt the financial networks supporting these activities effectively.

“Once online betting and gambling activities are classified as scheduled offence under PMLA or are prohibited under regulatory frameworks, necessary international cooperation agreements should be entered into with jurisdictions where the majority of these platforms operate, such as Cyprus and Malta. Additionally, enforcement authorities should collaborate with international law enforcement agencies to issue arrest warrants and take appropriate legal actions,” the Rashtriya Raksha University report said.

Rashtriya Raksha University under the Ministry of Home Affairs was established by the Parliament Act No. 31 in 2020. It aims to become an academic-research-training ecosystem for national security and police.

A centralised legal framework with clear definitions for games of skill and chance and robust consumer protection measures is crucial for creating a safe and thriving online gaming ecosystem in India. This framework should also balance the need for state governments’ autonomy with the requirement for national uniformity in the digital age, the report said.

Resolving the ongoing legal challenges and implementing these reforms are essential for the responsible development of the Indian online gaming industry.

Whitelist of online gaming platforms

The report suggested that the Ministry of Electronics and Information Technology should create a nodal authority to register and regulate online real-money games. This authority would be responsible for creating a whitelist of legitimate online real-money gaming platforms authorised to operate in India. A comprehensive registration mechanism for these platforms is central to the proposed framework.

“To be included in the whitelist, these platforms must meet specific criteria, including robust consumer grievance mechanisms and mandatory registration under the Central Goods and Services Act, 2017 (GST Act). Registration under the GST Act would require them to have physical presence in India, which would facilitate enforcement action against them in cases of non-compliance. A comprehensive database of legitimate online real money gaming operators would enable users to identify lawful operators, enhance regulatory oversight and ensure adequate consumer protection,” it said.

For registration, the online gaming platforms should need to disclose ownership structure, licensing details and the types of games offered. The regulatory body can flag noncompliant operators and enable prompt intervention and potential enforcement action. Regulators can compare this data against platform operations to identify potential violations, such as indulging in unlicensed gambling activities, money laundering, deficiency in services or fraudulent conduct by the operator, it added.

The report further suggested that the government may consider blocking platforms that do not register. This will enhance oversight and control over the online real-money gaming industry, ensuring regulatory compliance and consumer protection.

“Section 69A of the IT Act, 2000, empowers the government to block online intermediaries that violate the law, including illegal betting and gambling websites and applications. This involves identifying illegal platforms through collaboration between government agencies and issuing blocking orders to internet service providers (ISPs),” the report stated.

Action against advertisements

Taking a cue from the regulations on alcohol advertising, strict measures should be put in place to prohibit the direct or indirect promotion of illegal betting and gambling activities. Despite the Ministry of Information and Broadcasting and the Ministry of Consumer Affairs issuing various advisories to limit the advertisement and endorsement of online betting and gambling platforms, it is crucial to formalise these advisories into enforceable regulations and to take stringent, consistent action against such illicit platforms, the report said.