Gaming Report: ED Attaches ₹213 Crores Worth ‘Proceeds of Crime’ Related to Money Laundering; Disney Star India Seeks Regulatory Clarity From Govt on Online Betting Ads & More

The Enforcement Directorate (ED) recently informed the Parliament that it has attached ₹212.91 Crores worth of ‘proceeds of crime’ (PoC) cases where online betting and gambling sites/apps were used for money laundering and hawala transactions.

K. Madhavan, the country manager for Disney Star India and the president of the Indian Broadcasting and Digital Foundation, has reached out to the government, seeking clarification on the distinction between gaming and gambling ads after the company suffered losses in revenue during the T20 World Cup 2022.

According to sources, the Ministry of Electronics and Information Technology (MeitY) is about to finalize a policy to regulate online gaming. It will likely mandate an age verification mechanism and know-your-customer (KYC) norms for all real-money games.

Enforcement Directorate Attaches ₹213 Crores Worth ‘Proceeds of Crime’ Related to Money Laundering Via Online Betting & Gambling Sites

On Tuesday, December 20, the Enforcement Directorate (ED) informed the Parliament that it has attached ₹212.91 Crores worth of ‘proceeds of crime’ (PoC) in cases where online betting and gambling sites/apps were used for money laundering and hawala transactions.

In a written reply in the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary said the Directorate of Enforcement is investigating several cases related to cyber crimes and crypto assets-related frauds. In some instances, it has been noticed that online betting and gambling sites/apps were used for money laundering and hawala transactions.

“In these cases, as on December 16, 2022, PoC amounting to ₹212.91 crores have been identified, which stands attached / freezed / seized under the provisions of PMLA. Also, 03 Prosecution Complaints have been filed in these cases,” he said.

He was questioned on whether there is no clear definition for ‘game of chance’ and ‘game of skill’ under GST, resulting in difficulty in taxation on online gaming and betting, leading to multiple litigations. In response, the minister said the central government has constituted an Inter-Ministerial Task Force (IMTF) to look into all aspects of online gaming regulation.

“Actionable claims in the form of betting and gambling, including those arising from online gaming, attract 28 percent GST, and the GST Acts does not make the levy dependent on whether it is a game of skill or game of chance. Cases have been filed challenging the levy of GST on online gaming,” Chaudhary added.

Disney Star India Seeks Regulatory Clarity From Government After Company Suffers Losses Due to Advisory on Online Betting Ads

The Indian government’s efforts to stop all illicit online gambling advertisements on media platforms have been going strong. The government has been working aggressively in recent months to curtail online betting and gambling in the country, as concerns from the socio-economic, financial, and security angles remain. However, there seems to be some confusion regarding the distinction between gaming and gambling ads. K. Madhavan, the country manager for Disney Star and the president of the Indian Broadcasting and Digital Foundation, has sought clarification on this issue from the government.

In a recent interview, when asked about the losses of the ad industry due to the ban on advertising of betting and gambling firms, Madhavan replied that they had lost a significant amount of revenue during the T20 World Cup 2022 as a result. He also pointed out that the entire betting and gambling policy is unclear.

According to Madhavan, the central government should deal with the matter, and a central legislation should be in place. Every state has a different policy, and every other business requests injunctions in High Courts and the Supreme Court. The Centre should define gaming and gambling and remove this from the states.

Madhavan claimed that no one has any idea what gaming constitutes at present. He said that it should be made clear so that it’s easy to understand by all the stakeholders, which will also benefit both broadcasters and regulators.

Madhavan said that currently, only 3% of TV viewing in India comes from sports broadcasts, compared to 10% in the US. The total advertising revenue generated by sports is less than $1 Billion. He believes that in the next three to four years, this may increase to $3 Billion, but only if the conditions are appropriate for growth which is what everyone wants.

MeitY May Include KYC Feature For Real Money Online Games

The Ministry of Electronics and Information Technology (MeitY) is close to finalizing a policy to regulate online gaming. It will likely mandate an age verification mechanism and know-your-customer (KYC) norms for all real-money games.

According to sources, Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 will include the framework. It is also expected that the government will suggest a self-regulatory approach for the gaming business, supported by self-regulatory organizations.

The gaming business in India has experienced a massive spike in recent years, needing controls. Regulations are urgently required because addiction and financial stress reports have recently increased. Additionally, the lack of a unified legal framework has forced various states to develop their own regulations, which has resulted in a blanket prohibition in states like Tamil Nadu and Karnataka and created regulatory uncertainty in the industry.

Earlier this year, a group appointed by the Indian government proposed a separate regulatory organization and structure to oversee the industry. The ministerial grouping had proposed to Meity at a meeting earlier this month that Meity amend the Information Technology Act of 2000 to include regulations for the gaming industry, much like how the Intermediary Guidelines and Digital Media Ethics Code were introduced in February of last year.