Govt all set to tighten rules to check offshore gambling companies' illegal services

The government is likely to soon come up with new stricter rules for Unified Payments Interface (UPI) transfers to combat illegal offshore platforms offering gambling and betting services in India. Plus, it has identified 114 illegal betting and gambling platforms operating in India through domain farming, a newspaper report has said.

The proposed measures may include implementing tax collection at source (TCS) on UPI payments and enhancing verification processes to check illegal operations and ensure compliance, the Economic Times reported on October 16. More significantly, the move aligns with broader efforts to promote legal and responsible online activities while curbing illicit gambling and related activities, fostering a safer digital environment for users.

Moneycontrol could not verify the report independently.

The illicit gambling and betting platforms are utilising proxy bank accounts to collect UPI payments, making it difficult to trace the funds. Implementing TCS on UPI payments would establish a money trail that could aid investigations. These platforms accumulate funds in proxy accounts and then transfer them via illegal means such as hawala, cryptocurrency, and other illegal channels, the report mentioned.

Domestic online gaming companies have brought attention to several offshore betting and gambling platforms, outlining their unlawful operations in India in a presentation to the revenue department.

Starting October 1, offshore gaming companies are required to register. In July, the Ministry of Electronics and Information Technology (MeitY) passed an order blocking of 138 offshore betting sites involved in gambling based on a recommendation from the Directorate General of GST Intelligence (DGGI).

Several high-profile platforms such as Parimatch, Fairplay, 1XBET, Lotus365, Dafabet, and Betwaysatta are already on the banned list.

The illegal betting and gambling platforms employ various tactics, including the use of surrogate news websites and altering payment proxies associated with Indian bank accounts. For instance, platforms like Parimatch have altered their domain names to evade detection, transforming into "pari matchnews," while Lotus365 has changed from lotus365.com to lotus365.in, according to the report.

A comprehensive strategy, including stricter verification processes, continuous monitoring, and collaboration with international jurisdictions, is essential to tackle these issues and protect consumers from illegal gambling operations.

These platforms often register in jurisdictions like Cyprus, Malta, Curacao, Mauritius, and the Cayman Islands, where gambling and betting are permitted.

Many illegal gambling and betting sites that are not registered in India are still in operation. Industry representatives have informed that these sites employ various proxy websites to evade detection. Authorities are actively engaged in identifying and blocking these proxy sites to combat the illegal online gambling, the financial daily quoted a senior finance ministry official as saying.