India To Block Payments For Illegal Online Gaming

April 18, 2023
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India is preparing to order payments companies and other financial institutions to block payments to illegal domestic and foreign gaming websites, a Cabinet official told the Economic Times on Monday.

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India is preparing to order payments companies and other financial institutions to block payments to illegal domestic and foreign gaming websites, a Cabinet official told the Economic Times on Monday (April 17).

An unnamed senior official with the Ministry of Electronics and Information Technology (MeitY) told the newspaper that the order will focus on foreign websites.

“There will be a notification or an order that a non-permissible game should not be given the ability to gateway through a financial payment gateway,” the official said.

“If you are not permissible on the Indian internet, it is not just for the users to not access it, but also for [any] gateway into any other application into India.”

The official’s comments come within a week of amended information technology rules coming into force, as the government moves to close lucrative regulatory and legal loopholes. The changes formally bring online gaming under central government regulatory scrutiny.

The official said the order will be issued after the gaming industry’s self-regulatory organisations (SROs) commence operation.

SROs and their jurisdictional heft are an essential cog in the government’s new regulatory framework, with much of the amended text dedicated to their rights and responsibilities.

The official’s comments also come within a week of a leading national tax enforcement organ announcing the arrest of a suspect allegedly linked to Cyprus-based Ukrainian corporate bookmaker Parimatch, amid a tax-evasion probe into 38 India-facing portals based in three countries and their local networks.

Meanwhile, the Economic Times reported that banks and financial technology companies have been “proactively” blocking payment channels linking to operations in “regulatory grey areas”, including online gaming and cryptocurrency transactions.

Although the government’s accelerating regulatory efforts have won praise from the All India Gaming Federation and other industry lobby groups, doubts remain on the scope of regulation and what the government intends to enforce.

Minister of state for electronics and information technology Rajeev Chandrasekhar said on Friday that the new rules will extend to advertising material emanating from overseas.

“If something is not permitted on the internet, we cannot have platforms based in the British Virgin Islands or the Cayman Islands advertise in India on the internet,” he said in a Twitter Q&A event.

“In the rules, we have prescribed that no advertising — surrogate or otherwise — of these online gaming services that contravene the provisions on wagering, addictive behaviour or harm should be permitted.”

The problem for the government and the industry is that the new rules forbid online wagering without defining it, allowing Chandrasekhar to now dismiss the Supreme Court-upheld distinction between games of skill and chance as irrelevant to regulation.

This ambiguity is expected to be addressed in a forthcoming “frequently asked questions” document relating to the rules.

In the meantime, however, industry observers have expressed concern that the government’s tilt toward liberalisation and regulation may not be as clear-cut as they hoped.

On Saturday, responding on Twitter to lawyer and gaming writer Jay Sayta’s claim of “confusion … in the rules”, Chandrasekhar said there is “no ambiguity on what is wagering”.

Chandrasekhar did not pursue Sayta’s follow-up comment that “your tweet does not clarify the meaning of wagering”, and did not reply to his question on whether skill games with stakes now constitute an offence.

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