Centrally regulated online gambling is more effective than a complete ban on real-money games, according to a new study. National licenses for gaming protect users and the public good, making it harder for businesses to evade taxes and offer deceitful services.
Online Gambling Needs a National Policy
Real-money gaming presents important ethical and economic questions before any public authority. India has long-standing traditions in casual and festival gambling, and analysts have been adamant that these practices are easier regulated than done away with. A new research into the thriving online gambling industry reveals the effectiveness of a central regulation in tackling offshore and illegal gaming online.
Many of the Indias favourite real-money games and online casino platforms are made available by foreign operators, some without even any gambling license from an offshore jurisdiction. That makes it harder to require and impose measures for customer support, payment standards and any other protective measures (e.g. access by minors or excessive gambling).
A comparative analysis of mature gambling markets against emerging and unregulated jurisdictions shows that gaming companies are willing to operate legally if given the chance. Case studies and best practices illustrate how a national-level regulation and common standards raise the bar on quality, financial security and tackle problem gambling for all age groups.
Tax Evasion a Major Problem
Gaming industry compliance is a challenging matter when it comes to technical questions. It gets even tougher when operators need to report their revenues to taxation authorities. When a gambling platform or mobile app is openly accessible as a result of Central regulation, however, it becomes transparent enough to track for Responsible Gaming standards, advertisement sources, anti-money laundering (AML) and other business integrity control mechanisms.
More importantly, unregulated online gambling is often used for tax evasion and illegal fiscal activities. AML laws and gaming regulations are efficient in monitoring businesses, especially when they operate online and have legal digital transactions (via UPI or otherwise). In a traditionally vulnerable sector, often subjected to cash payments, providing a legal online alternative for gamblers makes it almost impossible for companies to evade taxes and channel black market funds.
The lack of consumer protection is just as relevant. It causes damage to the economy and the reputation of digital service providers, even indirectly related to online gaming for money. But leaving the initiative to black markets and unlicensed offshore operators is not a solution as governments surrender any monitoring and control options.
Gambling market rankings show that mature markets tend to have a much better efficiency in collecting local taxes. The issue is more relevant to company turnovers, as many nations don’t even collect duties on players’ winnings, e.g. the UK and Sweden. In comparison, emerging markets like Brazil, India and most of South-East Asia, remain more vulnerable to illegal operations and almost complete tax evasion by offshore businesses.
In this context, prohibition remains largely unfeasible in the long run. Gambling is indeed a special economic activity and precisely because of that it cannot be left unchecked. As the Committed on Reforms in Cricket (in 2015) and the Law Commission of India (in 2018) recommended, gambling and betting should soon be regulated and taxed.