A leading tax enforcement organ in India has launched a probe into India-facing online gambling operators in Cyprus, Mauritius and the Cayman Islands, leading to the arrest of one man allegedly linked to Ukrainian operator Parimatch.
The Directorate General of Goods and Services Tax Intelligence (DGGI), a unit of the finance ministry, is investigating 38 portals in the three countries that have paid no goods and services tax (GST), despite taking bets from gamblers in India, the Economic Times reported on Tuesday (April 11).
Some of the portals are masquerading as fantasy sports platforms, which are legal in India, and are helping wealthy individuals and celebrities launder money overseas, the report said, citing unnamed officials.
The 38 portals in India failed to pay some 120bn rupees ($1.5bn) in GST between April 2019 and November 2022, the report said.
"While some of the companies were posing as platforms for fantasy games, they were meant purely for betting and gambling,” the Economic Times quoted one unnamed official as saying.
“Users included HNIs [high net worth individuals] and social media influencers, and the amount was being deposited to their foreign account for which no income tax has been paid," the official said.
"We have shared the data with other agencies also as payments were being made by using international cards and cryptocurrencies which made it difficult for us to track all the users.
"These companies will have to pay the outstanding tax and get GST registration, otherwise the tax department will write to the Ministry of Electronics and Information Technology [MeitY] to block their gaming sites.”
Under the oversight of the Central Board of Indirect Taxes and Customs, the DGGI’s parent body, the probe has also resulted in the arrest of a man reportedly linked to the high-profile, Cyprus-based Ukrainian operator Parimatch.
The Hindustan Times reported on Tuesday that a Parimatch “director” is under arrest in Mumbai and in remand for at least 14 days for operating without GST registration, citing the DGGI’s Mumbai Zonal Unit.
The report said Parimatch has GST liability of 200m rupees ($2.4m) after allegedly offering bets on sports and esports, as well as live betting and other online casino functions. The alleged operation is also linked to football leagues and kabaddi, an indigenous Indian contact sport, it said.
It quoted an unnamed DGGI investigator as saying that “money collected from Indian users is routed through a systematic and layered creation of unauthorised gateways and bogus firms without discharging appropriate GST liability”.
The report said the entirety of Parimatch’s alleged operations in India are managed by crypto-trading platform IBlock Technologies, based in the Uttar Pradesh high-tech hub city Noida.
An India-facing and India-suffixed web address with the name Parimatch states that it is registered in Curaçao. Parimatch.com has an entry in the licensee register of Curaçao eGaming.
The website includes a section called “Is betting legal in India?”, under which it inaccurately states: “Yes, betting is legal in India and you can bet online using Parimatch without worrying about breaking the law”, and “Sports betting is skill betting which is not prohibited by Indian law”.
VIXIO GamblingCompliance has yet to confirm a connection between the Mumbai detainee and Parimatch. The DGGI did not answer telephone calls at its Delhi headquarters or at its Mumbai Zonal Unit. Parimatch did not answer calls at its Cyprus headquarters.
G2G, an India gaming news outlet, reported last August that the head of operations for Parimatch service company PMI had been detained in India. A PMI statement at the time denied that any of its employees was in custody.
Parimatch was one of several companies forced to shut down Ukraine operations last month over alleged links to Russia, despite exiting the Russian market and claiming to provide support for the Ukrainian military after the Russian invasion last year.
The enforcement action in Ukraine has prompted English Premier League club Aston Villa to cancel its sponsorship deal with the company. Other Premier League clubs such as Chelsea are considering the same.