In a recent interaction with online gamers from across India, the Prime Minister observed the role of gaming in building India as an innovation hub and leading to digital empowerment. Over the last few years, we have witnessed a prolific rise in online gaming across the country across various formats.
Today, many Indian corporates and startups are building games and formats that provide an avenue for entertainment, education, or deeper engagement with areas like sports, artificial intelligence, and e-commerce, which is contributing immensely to the growth of the digital economy.
However, while the legitimate players in this sector are building economic value, we are also witnessing the emergence of new threat vectors in the form of offshore betting and gambling platforms. These platforms operate under the garb of providing entertainment but are in essence using these platforms to either defraud users or funnel the proceeds from such operations toward funding unlawful activities.
As a former Director-General of Police of Goa and as a Special Commissioner of Police in Delhi, I have observed firsthand the escalating threats posed by the digital underworld, particularly from unregulated online betting and gambling.
The unregulated offshore online gambling and betting sector throws open profound national security risks, that are intricately linked to financial crimes, including money laundering and funding of terrorist activities. My experiences have reinforced my belief in the urgent need for a comprehensive regulation to address these critical issues effectively.
Nexus between Unregulated Gambling and Financial Crimes
Unregulated online betting and gambling platforms operate in an opaque environment that is ripe for financial malfeasance. The absence, especially of an effective regulatory oversight that distinguishes between legal and illegal operations enables these platforms to serve as perfect vehicles for money laundering.
Criminal elements and terrorist organisations exploit these platforms to obfuscate the origins of illicit funds through a series of complex, untraceable online transactions. The digital nature of these transactions and the global reach of the Internet compounds the problem, making it exceedingly difficult for law enforcement agencies to track the flow of money.
The issue becomes even more grave since one of the fundamental challenges we face is the “layering” technique that is employed in laundering money. The absence of any voluntary or compliance driven KYC standard on these platforms encourages anonymity allowing criminal actors to hide their identity.
The use of sophisticated online tools like VPN, TOR networks further allow such actors to maintain greater degree of anonymity on these platforms making laundering of money easier. These laundered funds can be used to destabilise financial markets, inflate asset prices and even manipulate market indices.
Threats to National Security
The implications of these activities extend far beyond economic disruption. There is a tangible and growing threat that proceeds from online betting and gambling are being channelled to fund terrorist networks.
This is not restricted to the presence of criminal actors on these platforms but also includes direct involvement of these organisations that rely on covert funding to sustain their operations, and the anonymity provided by their platforms acts as a boon in their fundraising efforts. The funds accumulated through these platforms can be used to purchase arms, train militants and finance the logistics of terror attacks.
During my tenure in law enforcement, we tracked several cases where offshore online betting and gambling sites were used as fronts for funding separatist movements and international terror cells. The integration of these gambling proceeds into the financial system poses a severe threat, not just domestically but also on a global scale.
The Road to Regulation
Given the complexity and transnational nature of online gambling, national efforts alone are insufficient. We must advocate for a unified regulatory response to govern online gambling. Such a framework should include the following.
- International Collaboration: Establishment of treaties and cooperative agreements to foster global oversight and law enforcement cooperation against misuse of online gambling platforms.
- National Law to prohibit online betting and gambling: Our current legal architecture is ill equipped to deal with the threats posed by online betting and gambling. To this end, a national law is required to prohibit such activities across the country and adequate enforcement powers should be created to ensure that errant actors are brought to justice swiftly.
- Distinctive Legal Framework for Permissible Online Real Money Games: India is uniquely placed as our legal structure allows skill based games to be played for money. This also obfuscates the landscape as there is no governmental framework for distinguishing such games from betting and gambling activities. A legal framework that creates obligations and requirements to qualify as a permissible online real money game is required to assist enforcement authorities further in bringing non compliant players to justice. The MeitY has already introduced a model framework under the IT Act to enable this but it is now imperative to bring such a model into effect.
- Regular Monitoring and Auditing: Conduct regular audits and continuous monitoring of online gambling activities to detect any irregularities or breaches of protocol that could indicate criminal activity.
- Technological Solutions: Leverage technology to enhance the efficacy of monitoring systems. Utilising artificial intelligence and machine learning can help in identifying patterns indicative of money laundering or terrorist financing.
The need for regulatory reforms to arrest the dangers emanating from online betting and gambling is urgent and non-negotiable. Unregulated online gambling is not merely a law enforcement problem; it is a potent threat to national and international security. As policymakers, regulators, and law enforcement officials, it is our duty to ensure that the digital advances that bring so many benefits do not make us vulnerable to new forms of crimes and more importantly terrorism.
This is a global challenge that requires a concerted global response. By strengthening regulations and fostering international cooperation, we can illuminate the shadowy corners of the Internet and make it a safer place for all thereby strengthening national security at a broader level.
The author is the Former Director General of Police (DGP), Goa and Former Special Commissioner of Police, Delhi Police. Views are personal.
