A new report from the Digital India Foundation (DIF), titled “Combating Money Laundering in the Online Gaming Ecosystem,” raises alarms about fraud, money laundering, and terrorist financing risks within India’s online gaming sector.
With an estimated 90 million daily players, the legal real-money gaming sector in India has seen rapid growth, expanding 28% from 2020 to 2023. The industry is projected to reach $7.5 billion by 2029. However, DIF warns that “vulnerabilities within India’s online gaming ecosystem pose serious threats to financial integrity.”
The foundation recommends “increased regulatory oversight, stronger KYC protocols, and more robust anti-money laundering (AML) measures by financial institutions.”
Illegal operators use deceptive tactics to attract players
DIF co-founder Arvind Gupta voiced particular concern over the surge of illegal online betting platforms.
“Despite regulatory efforts,” Gupta told The Hans India, “many platforms evade restrictions” using VPNs, mirror sites, geo-blockers, and other circumvention methods.
These operators often mislead players through “illegal branding and unrealistic promises,” according to the report. The use of cryptocurrency or cash for payments aids in laundering money, as virtual assets can obscure the origins of illicit funds.
“The increased ability to transfer gaming assets into fiat currency or cryptocurrency has led to a rise in money laundering and fraud,” the report found.
The DIF suggests:
- Establishing a task force to counter illegal online gaming
- Creating a whitelist of approved operators, both local and international
- Government commitment to identify and block illegal platforms
- A public campaign to alert players to potential fraud
A threat to India’s “digital citizens”
A July report from Rashtriya Raksha University echoed DIF’s warnings. The university’s Security and Scientific Technical Research Association (SASTRA) recommended whitelisting licensed gaming platforms in line with Indian law.
Illegal sites expose “digital nagriks” (digital citizens) to “cybersecurity risks and unsafe online environments,” SASTRA reported. “They pose a risk to national security by serving as conduits for money laundering and terrorist financing.”
Illegal online casinos generate an estimated $100 billion annually, dwarfing the revenue from legal operators.
“These rogue operators drain capital from our economy, destabilizing finances and promoting criminal activity,” SASTRA said, as cited by the New Delhi Business Standard.
Gupta emphasized the sector’s significance to India’s future, noting its job potential.
“With over 400 home-grown startups,” he said, “the industry directly and indirectly employs around 100,000 people and could create 2.5 million jobs by 2025.”
