Aayushi Gupta The consumer affairs ministry is seeking action against covert and surrogate advertisements promoting illegal betting and gambling apps during cricket and election seasons. These ads are in violation of CCPA guidelines, sources say.
These apps prey on vulnerable people and pose financial and social risks. Celebrities and influencers should avoid endorsing these apps, as they can face legal repercussions.
Legality
With a growing number of users becoming addicted to online gaming, many are concerned about the negative impact it has on their mental health. In addition, it can cause financial losses and social isolation. For this reason, it is vital that the government regulate these apps.
Gambling through betting apps allows users to purchase virtual coins and gamble with them throughout the match, while winning coins can be deposited into wallets facilitated by the app. These wallets can then be used to transfer actual money into registered bank accounts.
Despite being banned in India, illegal gambling has not stopped. In fact, celebrities like Zareen Khan and Mallika Sherawat have even been spotted sharing ads for betting websites on social media. This practice violates the government’s guidelines and should be stopped. The government should also enforce stricter penalties on these websites. It should also ensure that the process for these bans is transparent. This will help protect consumers and address their concerns.
Regulations
The government is reportedly investigating several offshore betting apps for their modus operandi in India. According to sources, these platforms are collecting UPI payments through proxy bank accounts and the money accumulated in them is then remitted via hawala, crypto and other illegal channels. The money remitted is known as proceeds of crime (PoC).
The ministry of electronics and information technology (MeitY) has already issued blocking orders against 22 illegitimate betting and loan apps, including Mahadev Book Online and Reddyannaprestopro. The move was made at the Enforcement Directorate’s request following investigations against a betting app syndicate and raids in Chhattisgarh, which revealed unlawful operations.
The Consumer Affairs Ministry has also urged for measures to be taken against covert and substitute ads that promote gambling, especially during cricket matches and election campaigns. This is in violation of the Central Consumer Protection Authority guidelines and the Public Gambling Act. It’s also against Google’s policy and may lead to legal liability.
Fraud
After a high profile case was filed against Mahadev Book Online betting website and its founders last year, many Indian cricket and football fans stopped gambling. However, that did not stop the apps from stealing money from their users. Several of these websites have Indian bank accounts and UPI, which allows them to launder millions of rupees daily. The ED is probing these sites, and it has found a novel method for laundering funds.
The ED has also identified illegal payment aggregators that channel payments for the sites, according to people familiar with the matter. These aggregators have arrangements with banks to process payments through escrow accounts, and they remit the funds through hawala and crypto. The legal ambiguity surrounding online gaming and betting has enabled these operators to flourish. They use shady advertising tactics to lure unsuspecting players. Moreover, these apps are able to collect user data that helps them target their promotions. This is why the consumer affairs ministry needs to take a strong stand on this issue.
Safety
Since June last year, the Indian government has issued advisories directing newspapers, entertainment channels, online news publishers, and other advertising intermediaries to refrain from promoting betting apps. Despite these directives, numerous celebrities continue to endorse these sites. For example, BJP leader and former WWE superstar Khali recently posted an ad for MagicWin India on his Instagram page.
The ministry of electronics and information technology has also issued an order blocking 22 illegal betting and loan apps, including Mahadev Book and Reddyannaprestopro. The government has accused these operators of running a money laundering syndicate and conducting scams that involve debt-trapping customers and increasing their interest rates by up to 3,000%.
The ED has investigated these websites and found that they used Indian payment instruments such as UPI and bank accounts to launder millions of rupees daily, according to people familiar with the investigation. They were allegedly backed by illegal payment aggregators and former bank officials to lend legitimacy to their transactions.
