India's move to ban online betting apps is raising concerns about a potential surge in money laundering activities. On Wednesday, the Indian government introduced a parliamentary bill targeting online gambling, citing worries about addiction, financial harm, and possible connections to money laundering and terrorism funding. The bill, known as the Promotion and Regulation of Online Gaming Bill, 2025, aims to prohibit websites and apps that offer games involving users paying fees or depositing money with the expectation of winning. If passed, the law would impose imprisonment or fines on individuals and companies providing online money gaming services.
The government's decision stems from concerns over the "unchecked expansion" of the online gaming industry, which lawmakers believe is linked to financial fraud, money laundering, and even terrorism financing. They also pointed to the social and financial risks for young players. The bill seeks to align digital regulations with existing offline laws and state gambling regulations. It targets the promotion and facilitation of betting-like activities by banning online money gaming services, related advertising, and associated financial transactions. Banks and payment systems would be prohibited from processing funds linked to real-money games.
However, industry bodies have strongly opposed the ban, cautioning that it could devastate a sector that has attracted significant foreign investment. The All India Gaming Federation and the Federation of Indian Fantasy Sports warned that shutting down "responsible" Indian platforms would drive millions of players to offshore gambling sites and unregulated operators. They argue that instead of protecting people, this bill risks exposing them to fraud, exploitation, and unsafe practices.
The ban's potential to fuel money laundering arises from the likely shift of betting activity to illegal offshore casinos, which may use cryptocurrency to handle wagers and payouts, thereby boosting illicit financial flows. This underground shift could make it more difficult to track and regulate transactions, increasing the risk of money laundering and other financial crimes.
Despite the industry's concerns, the government remains firm in its stance, emphasizing the need to protect young people from predatory apps and prevent addiction and financial risks. Proponents of the ban argue that it can help prevent addiction, financial losses, and even suicide risks, while also curbing the misuse of platforms for fraud, money laundering, and terror financing, which compromise national security. The bill recognizes e-sports as a legitimate competitive sport and aims to promote it while strictly prohibiting harmful online money games.
The bill proposes strict penalties for violations, including imprisonment of up to three years and/or fines of up to Rs 1 crore for those involved in or facilitating online money gaming. Advertising such platforms could attract a penalty of Rs 50 lakh or up to two years of imprisonment. Any financial transaction related to money games could result in imprisonment of up to three years and/or a fine of up to Rs 1 crore. Repeat offenses would face enhanced penalties, including jail time of 3-5 years and a fine of up to Rs 2 crore.
As the bill progresses through the legislative process, the debate continues between those who prioritize regulation and those who believe an outright ban is the most effective way to address the risks associated with online betting. The long-term impact of the ban on money laundering and the overall gaming industry remains to be seen.
