Advertising of Betting Websites in India

By AahnaMehrotra - Founder, AM Sports Law & Management Co and ARF Council member

Cricket is the most popular sport in India and in the build-up to two major competitions - the Indian Premier League which commenced at the end of March, and the final of the World Test Championship which was held in June - promotions for online betting have surged in the country.

Various companies used celebrities to popularize their product to the general public through social media, while others used print and television commercials, both directly and by way of ‘surrogate advertising’ (explained below).

This is despite the fact that betting is illegal in most parts of the country and the advertising of gambling is regulated in a complex manner. This complexity has in turn allowed betting and gambling websites to function and dodge enforcement.

This article explores the complex set of regulations with loopholes that have allowed betting websites to function, evade enforcement and led to a surge in such advertising.

First, one must understand the relationship between sports, mobile and internet usage in India. India has a sports consumer base of approximately 722 million^[1]people and a significant portion of which engages the sport beyond just watching the games. This has been fueled by the availability of inexpensive smartphones and affordable mobile data. There are more than 600 million smartphone users in India and 4G mobile internet data is available for as cheap as $1 per month.^[2] Also,India’s instant payment service, known as Unified Payments Interface (UPI), has seen significant growth and rise in mobile internet payments.^[3]‍

These factors allow for a large consumer base willing to interact with sports and spend money while doing so. Several fantasy sports applications and other gaming applications that offer paid games of skill (which are legal in most parts of the country) have become popular. Despite the complex legal structure, betting operators are now attempting to attract this fanbase – and have been successful to a large extent.

According to data from a leading web analytics platform, India was the second largest global source of traffic to websites in the category ‘Gambling > Sports Betting, and the fourth largest to the category ‘Gambling’ in the first five months of 2023, amounting to more than 2 billion visits in each category.^[4]‍

This is despite the fact that betting and gambling is largely illegal in India, with a few statutory exceptions at the State-level. This is established by the Public Gambling Act, 1867 (PGA), enacted before the promulgation of the Constitution of India (Constitution).

The PGA criminalizes gambling in any public forum in India, and the running of a ‘common gaming house’ but upon the promulgation of the Constitution, per the Seventh Schedule respective state governments can make their own laws on betting and gambling. Therefore, in states where a specific gambling legislation exists, it prevails over the PGA, so a uniform country-wide formula as to the legality of betting and gambling cannot be scoped out.

And of course, since the PGA predates the internet, there are no references to online betting. Modern gambling laws have been enacted by certain states which specifically include online betting and gambling, such as Sikkim and Meghalaya, which permit online betting and gambling under certain conditions to operators licensed by the state. while states like Telangana and Arunachal Pradesh have expressly prohibited online and offline betting.

1. Sports betting (largely unregulated except in a couple of states);
2. Lotteries (regulated by the Lotteries (Regulation) Act, 1998);
3. Horse racing betting (an exception created in the PGA and principles laid out in Dr KR Lakshmanan v. State of Tamil Nadu^[5]);
4. Prize competition (regulated by the Prize Competitions Act, 1955);
5. Games of Skill (fantasy gaming, card games such as rummy, poker, etc.);
6. Games of Chance (casinos, and card games such as flush, brag and local variants, etc.).

The first four categories are self-explanatory, for the last two, three landmark judgments^[6]made a distinction between games of skill and games of chance. Whether a game is a game of skill or chance is determined as per what is majorly responsible (skill or chance) for the player’s success. The PGA distinguishes between wagering on a “game of chance” and buying stakes into a “game of skill”, ostensibly to enable fair wagering on games of skill that were popular and prevalent amongst the British such as horse-racing. Bolstering this, the Indian judiciary has, in many cases,^[7] stipulated that games of skill are legitimate business activities and therefore protected under the Constitution.

But with the rise of online betting and gambling, the position has become complicated vis-à-vis the Centre and the State and all the more so because the constitutional framework gives the Central Government the power to regulate ‘means of communications’ – such as the internet.

This complexity has enabled Offshore under-regulated and unregulated betting operators without a physical presence in India to operate pan-India as they are not subject to the PGA or the respective State laws.

But offshore betting and gambling companies can be regulated under laws including: the Information Technology Act, 2000 (IT Act) which allows for blocking of websites; the Information Technology (Intermediaries Guidelines and Digital Media Ethics Code) Rules, 2021, which on its face prohibits advertising of online betting and gambling and places the responsibility on intermediaries, such as Facebook, Instagram etc., to ensure that users do not advertise gambling services; Section 69A of the IT Act further allows the Indian Computer Emergency Response Team (CERT-in) to block websites promoting:“hate content, slander or defamation of others, promoting gambling”.

There are other laws that regulate payment processors which can be used to facilitate gambling payments such as the Payment and Settlement Systems Act, 2007 which theoretically, protects users of betting websites if they are deemed “consumers” and Consumer Protection Act, 2019 which protects the interest of the end consumer.

Betting advertisements are further prohibited under the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022 (Guidelines) under the Consumer Protection Act, 2019; the Advertising Standards Council of India (ASCI) Code; and the Cable Television Network Rules, 1994 (Rules) which together prohibit any advertisement of harmful products and situations like – alcohol, tobacco and betting & gambling.

How then, can betting operators advertise their service?

In order to get around these prohibitions, operators have relied on indirect advertising or as it is known popularly, “surrogate advertising”. This involves using the brand and imagery associated with one product prohibited from advertising – an alcoholic drink for example – to advertise an ostensibly unrelated product like a music CD or a complementary product like soda.

Specific examples of surrogate advertisements in the context of offshore betting would be when an offshore under-regulated betting operator promotes a  so-called sports news website with deceptively similar logos and names resembling  their betting websites, for example ‘Dafanews’ and ‘1xBat’  associated with the betting websites Dafabet and 1xbet. Local celebrities have been signed as brand ambassadors for such ‘news portals’ as shown in the images below.

While these so-called news portals tread a thin line legally, this line was crossed by many such companies who have blatantly advertised their betting portals. including DafaBet placing a banner on Economic Times (online) and Betway taking out a half page advertisement (in March, 2022) in the Times of India.

This led to the Central Consumer Protection Authority (CCPA) updating its Guidelines in June 2022 to prohibit surrogate advertisements to a large extent,^[8]while the Advertising Council of India’s Code for Self-Regulation made similar recommendations. While the CCPA Guidelines are slightly vague, both bodies’ codes have several exceptions which in effect provide loopholes for such advertisements, as long as the prohibited products are not directly or indirectly mentioned.

The Ministry of Information & Broadcasting has on several occasions, in the last couple of years, issued advisories on the subject. In December 2020 it issued an advisory to TV Channels to adhere to the ASCI Code and in June 2022 it warned media (print, electronic and digital) to refrain from promoting online betting platforms. In October 2022 another advisory was issued to television channels and most recently, in April 2023 print mediums have been warned again for publishing advertisements pertaining to betting operators. It is pertinent to note that these advisories are directed to the media channels, TV channels and newspaper companies and don’t impact the betting and gambling companies themselves directly.

These regulations seem to not deter the betting and gaming platforms but instead, these platforms see such regulations as a challenge to come up with ideas more creative than the next to simultaneously enable advertisements and defer taxes.

The current regulations and guidelines are not stringent or cohesive enough considering the fact that the online betting and gaming space is relatively new enabling such evasiveness. Indian laws need to take a stand, which the Government is now attempting to do, in some way, through the new tax regime. They must either completely prohibit online betting and gaming activities or regulate the same in a strict fashion to be able to profit from the tax generated through such transactions.

Given the massive scale of the Indian betting market standing strong at approximately 1.4 billion people, many of whom are huge sports lovers – offshore under-regulated and unregulated betting operators continue to aggressively promote their product and are getting increasingly creative to evade prohibitions and find new loopholes.

For example, ‘Parimatch Sports’ purports to be “a sportswear brand, inspired by the world’s top athletes” and has signed up leading Indian athletes as brand ambassadors to market its clothes. There is also a betting operator founded in Ukraine in the year 2000 with the exact same name and logo which, although not licensed in India, is quite candid about the fact it takes bets from India and actively targets the Indian market.^[9]It is not known how much sporting apparel Parimatch sells – but its primary India betting URL had more than 500 million hits from India in the first five months of 2023 alone, amounting to an increase of >5,000% year over year. ^[10]‍

Although there are penalties, which has been introduced on account of online gaming being included under OIDAR transactions, for offshore betting operators advertising in India and notices are being issued to such entities for payment of taxes, it seems that the potential profits outweigh potential risk. The profits such operators will be making from Indian customers has almost zero benefit to India’s economy in the form of tax or other duties, and some operators (not named in this article) will be directly funding other criminalities. There are also major implications for the integrity of cricket, racing and other sports in India from the huge betting turnover which will be flooding into these opaque platforms out of view of the sports themselves.

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‍^{[1]PTI, ‘TV Sports Market To Reach Rs 9,830 Crore By FY26 As Cricket DominatesViewership: Report’ (16 November 2022)<https://news.abplive.com/business/tv-sports-market-to-reach-rs-9-830-crore-by-fy26-as-cricket-dominates-viewership-report-1563762>accessed 31 May 2023.
[2]PTI, ‘TV Sports Market To Reach Rs 9,830 Crore By FY26 As Cricket DominatesViewership: Report’ (16 November 2022)<https://news.abplive.com/business/tv-sports-market-to-reach-rs-9-830-crore-by-fy26-as-cricket-dominates-viewership-report-1563762>accessed 31 May 2023.}

^{[3]‘UPI Transactions Expected to Account for 90% of Retail Digital Payments by2026-27: Report - BusinessToday’<https://www.businesstoday.in/technology/news/story/upi-transactions-expected-to-account-for-90-of-retail-digital-payments-by-2026-27-report-383167-2023-05-28>accessed 31 May 2023.}

^{[4] Source: SimilarWeb}

^{[5]1996 SCC (2) 226}

^{[6]Dr. KR Lakshmanan v. State of Tamil Nadu; State of Andhra Pradesh v. K. Satyanarayana, AIR 1968 SC825; and State of Bombay v. RMD Chamarbaugwala 1957 AIR 699}

^{[7]For example Varun Gumber v. UT of Chandigarh & Ors  CWP No.7559 of 2017}

^{[8] Detailed in Section 6 of the  Guidelines}

^{[9] ‘Anton Rublievskyi, CEO  Parimatch International speaks about the Indian Market and iGaming Industry’,  The Week, November 17 2022 (https://www.theweek.in/news/sci-tech/2022/11/17/anton-rublievskyi-ceo-parimatch-international-speaks-about-the-indian-market-and-igaming-industry.html accessed 21 June 2023)}

^{[10] Source: SimilarWeb analysis of  parimatch-in.com}