I wondered whenever I passed by Mumbai’s sprawling Mahalaxmi Race Course, why betting on horses was legal in India, if gambling was supposedly illegal. Turns out, there is a distinction between a ‘game of skill’ and a ‘game of chance’, as per the Public Gambling Act (1867). Therefore, while betting on horses is considered a game of skill and hence exempt, betting on cricket matches is not. (Tomahto tomayto?) Casino games are also considered gambling. However, one of my ex-bosses (a genius statistician who had worked in insurance fraud) one day, over lunch taught a bunch of us how to card count at the Blackjack table. I found that it took a lot of skill. So, Blackjack should classify as a game of skill. No?
Anyway, this distinction has paved the way for the current explosion of online fantasy sports (OFS). OFS has been ruled as a game of skill and not gambling in recent rulings by the honorable Punjab HC and Bombay High Court. But the fact that these are legal sports has not stopped such sports from being leveraged for many fraud and money laundering schemes. For example, the GVfootball app, that initially showed patrons some profits and allowed capped withdrawals. One fine day, terminated withdrawal without notice, when the promoters pulled the rug. The app owners were later linked to 222 cases of cybercrime by the I4C. Shocker.
I was chatting with a fellow fraud-fighter friend about the Mahadev Book gaming-betting app’s ongoing probe. Let me outline that story in short format. Two friends leave their hometown to escape overdue loans. They fly to Dubai. Hire developers and build a gaming-betting app that they operate in India, although headquartered in Dubai, make mountains of money. They give out franchises to empanel operators in India and share profits, 70:30. One of the founders gets married in Dubai, throws a lavish bash with Bollywood celebs. Engages an event management company who is delivered Rs.112 Cr, via Hawala. Illicit cash earning from the betting operations are also laundered through wallets. ED conducts raids across India to find evidence to this effect and freezes assets worth Rs.400 Crore and change.
Earlier, in another money laundering bonanza 1,175 individuals in Gujarat fell victim to a Ponzi Football betting app. Some of the perpetrators were Malaysian and Chinese nationals laundering the money though dummy bank accounts. Many such apps are manipulated to hook the users with small initial wins.
Net-net. Online gaming / betting apps make for an easy ecosystem for fraud and money laundering rackets. Some are legal. Some not so legal. That’s the thing. It’s really hard to tell. I guess that’s where the skill comes in handy. Like how Kenny Rogers wraps it up in the classic, I suppose – “You gotta to know when to hold ’em, Know when to fold ’em, Know when to walk away, And know when to run.”