Illegal betting and gambling: Tax authorities losing Rs 2 lakh crore annually, says report

New Delhi: As Cricket World Cup 2023 is gaining momentum, illegal betting activities are also picking up steam with crores of rupees invested through informal routes leading to a loss of about Rs 2 lakh crore to tax authorities, a report said.

The illegal sports betting market receives an estimated inflow of Rs 8,20,000 crore (USD 100 billion) per annum from India, according to Think Change Forum (TCF) report.

Factors such as digital infrastructure growth, smartphone usage, and the expansion of athletic events have contributed to this kind of inflow, it said.

Despite regulatory restrictions, India's illegal betting and gambling market has shown remarkable growth, it said.

According to the report at a baseline estimated deposits of Rs 8,20,000 crore being for betting at current GST rate of 28 per cent, India is losing Rs 2,29,600 crore per annum.

To restrict such activities, the report suggested strict implementation of the new GST regime by establishing a task force to monitor illegal offshore betting activities and forcing offshore operators to register in India to protect the outflow from legal gaming platforms to offshore platforms.

Without such stringent measures, the new regime could lead to the diversion of growth from legal gaming companies to illegal betting platforms and offshore operators, resulting in substantial tax losses for the government, it said.

In India, it said, cricket dominates, with the Indian Premier League (IPL) being a significant driver of betting activity. As per estimates, more than 140 million people in India participate in betting and gambling regularly and this number shoots up to 370 million during the IPL.

The report highlighted that a ban on betting and gambling transactions under India's exchange control regulations drives offshore gambling firms to employ covert methods for moving money both within and outside the country, it said.

Funds are funnelled through mechanisms like hawala, cryptocurrencies, and other illicit channels, posing a threat to the nation's financial stability. These diverted funds may fund illegal activities, undermining public order and national security.

According to the report, there are more than 75 betting and gambling sites that specifically target the Indian population, many of which persist in their operations despite legal bans.

To further attract Indian users, it said, they have secured the endorsement of popular Bollywood actors and sports figures as their brand ambassadors.

Delay in forming of Self-Regulatory Organizations (SROs) will allow illegal offshore betting sites to mushroom, as without these regulators will have no authoritative instrument to classify legal and illegal operators, it added.