With the so-called online fantasy sports scam making headlines, the spotlight has turned on the prevalence of online gambling in India and regulatory systems in place to control it. In the US, online gaming is regulated by the Internet Gambling Enforcement Act of 2006, which prohibits online poker and sports betting. However, a new type of Internet gambling, ‘fantasy sports’ is attracting millions of players now.
The integrity of sports cannot be preserved just by prohibiting online payments for illegal betting; as increasingly the payments are made on ‘shadow banking system’. Now, many offshore websites operate with content coming from servers in the US or though portals directly transmitting bets to clients living outside.
The Public Gambling Act of 1867 forms the basis of most State laws on gambling. The Sikkim Online Gaming (Regulation) Act, 2008, and the Rules 2009provide a legal framework for online gaming by granting provisional and regular licenses. Goa had enacted its casino laws taking into account money laundering, black money and tax evasion issues.
The legality of the issue centres around the interpretation: Where application of skill is required and the role of chance is minimal, the activity could be a game and not gambling.
Besides, online gaming and gambling attract tax laws, anti-money laundering laws, and legal requirements to start an e-commerce website in India. Under the Information Technology Act, 2000, and the Information Technology Rules, 2011, ‘due diligence’ is to be observed by the intermediary while discharging his duties.
The intermediary must ‘publish the rules and regulations, privacy policy and user agreement for access-or usage of the intermediary’s computer resource by any person’; inform the users not to host, display, upload, modify, publish, transmit, update or share any information that inter alia is ‘relating or encouraging money laundering or gambling, or otherwise unlawful in any manner whatever; ‘harm minors in any way’; and ‘violates any law for the time being in force’.
Under the Companies Act, 2013, the Serious Frauds Investigation Office was set up to deal with corporate frauds, economic offences and white collar crimes.
Online gambling has become complex using different payment methods including bitcoins and physical transfer of cash by devious methods. The law needs to prevent any linkage between gambling and crime. Strict rules can check exploitation.
Internet usage has become ubiquitous to bet on sporting events. The new breed of gamblers are computer savvy, increasingly comfortable using their smart mobile phones for products and services including mobile gaming and gambling. Mobile gaming empowers bookies and punters to provide opportunities for betting at an event while watching a game.
As of now, gaming legislations in India do not have adequate provisions to deal with online gaming and gambling. This legal vacuum has opened up enormous opportunities for unscrupulous activities which can lead to money laundering, cyber crimes and terrorism.
The writer is former DG, CAG of India