India eyes tighter controls on booming online gaming industry due to fraud and money laundering fears
The Indian government is looking to increase its scrutiny of the online gaming sector, following some serious red flags from investigative agencies about rising cases of fraud and potential money laundering.
According to senior government sources, a detailed report is being compiled to assess the national security risks posed by the fast-growing digital gaming market, which has turned into a multi-billion-dollar industry very quickly.
At the heart of this review is a collaborative effort involving the Ministry of Finance, Ministry of Electronics and Information Technology (MeitY), and the Ministry of Home Affairs (MHA).
The Indian Cyber Crime Coordination Centre (I4C), under the MHA, are the ones who are drafting the report, which aims to inform potential new regulations.
“There is a growing concern over the unaccounted funds circulating via offshore betting platforms, with millions of users engaging in online gaming daily,” said one source. “The lack of clarity on which platforms are legal or illegal has added to the complexity, highlighting the need for the distinction.”
The Centre’s primary goal is to bring gaming platforms under anti-money laundering laws, meaning they will also have to abide by strict compliance standards.
The report will examine both skill-based games such as poker and rummy, and games of chance like lotteries, highlighting how some apps operate under the guise of legality but instead, are funnelling user funds offshore.
The government is particularly focused on major platforms such as Dream11, Games24x7, Zupee, and PokerBaazi, many of which are already being investigated.
Sources revealed that these platforms are being assessed for their role in potential investor fraud and money laundering, often masked by complex corporate structures and weak KYC compliance.
“Many of these so-called games of skill are being used as betting apps. Lakhs are downloading them every day and getting duped, with their money going offshore,” said another source. “We need solutions. We need to legalise and regulate aspects of the industry.”
While betting and gaming remain state subjects, the Centre is weighing how to plug regulatory gaps at the national level.
Key proposals include mandatory KYC protocols, real-time transaction monitoring, and a clear definition distinguishing legal games of skill from banned games of chance.
Once this formal regulatory framework is complete, both financial integrity and player protection will be bolstered, two main pillars that are currently under the most threat in India’s gaming space.
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