Regulation, Not Bans, Can Protect Online Gamers

• The Promotion and Regulation of Online Gaming (PROG) Act, 2025 was enacted with the objective of protecting individuals, particularly youth and vulnerable populations, from the adverse social, economic, psychological, and privacy-related impacts associated with online games involving money. The Act aimed to reduce gambling addiction, financial losses, cyber risks, and privacy concerns arising from online gaming activities.
• However, evidence emerging after its implementation indicates that the legislation may have produced unintended consequences. Instead of eliminating gambling activities, the Act appears to have encouraged users to migrate from regulated domestic gaming platforms to illegal offshore betting and gambling websites operating beyond Indian jurisdiction. This shift has created new concerns related to cybercrime, money laundering, terror financing, and weak consumer protection mechanisms. The experience suggests that in the digital era, blanket bans may not always produce the intended outcomes.

Rise in Offshore Platform Use

Shift from Domestic Platforms to Offshore Operators

Following the implementation of the PROG Act in October 2025, users increasingly shifted from regulated Indian gaming platforms to offshore betting websites.

Studies conducted by CUTS International reported a significant rise in offshore participation after the implementation of the Act.

In Tamil Nadu, offshore participation increased by approximately 15.2 percentage points, indicating a major behavioural shift toward foreign gambling platforms.

These figures indicate that rather than abandoning online gambling, users increasingly relied on offshore platforms operating outside Indian laws and regulatory oversight.

Risks Associated with Offshore Platforms

The growing use of offshore gambling websites has raised several concerns.

Financial and Security Risks

Offshore platforms may facilitate :

• Money laundering 
• Terror financing 
• Illegal financial transactions 
• Tax evasion 

Since these platforms remain outside domestic oversight, monitoring financial activities becomes difficult.

Weak Consumer Protection

Users accessing offshore gambling platforms often lack :

• Grievance redressal mechanisms 
• Legal remedies 
• Consumer safeguards 
• Data protection guarantees 

As a result, users face greater vulnerability to fraud and exploitation.

Technological Challenges in Enforcement

Illegal offshore operators use sophisticated technologies to bypass government restrictions and enforcement measures. These include :

• Virtual Private Networks (VPNs) to evade geographical restrictions. 
• Proxy servers to conceal user identities. 
• Encrypted applications such as Telegram and WhatsApp. 
• Mirror websites that replace blocked domains. 

Whenever authorities block one website, users are quickly redirected to alternative platforms with minimal disruption.

The widespread use of VPNs and encrypted communication channels weakens enforcement efforts and reduces the effectiveness of outright bans.

A Case for Strong Regulation

Limitations of Blanket Bans

Across industries, strict prohibitions rarely eliminate consumer demand. Instead, bans often shift activities toward underground or unregulated channels.

This challenge is particularly significant in digital markets because users can easily access global platforms through the internet.

The Ministry of Electronics and Information Technology informed the Lok Sabha during the Budget Session that the government had blocked 8,376 URLs to curb illegal betting networks and cybercrime activities linked to offshore operators.

Despite these enforcement efforts, reports of gambling-related fraud and financial distress continue to emerge, demonstrating the limitations of prohibition.

Example of Offshore-Linked Fraud Networks

A major online gambling and fraud racket uncovered in Sivaganga district of Tamil Nadu illustrates the risks posed by illegal offshore networks.

The accused promoted a fraudulent “Old Coin Purchase Task” scheme through Telegram groups, promising high returns through fake old-coin investment activities.

Victims were persuaded to invest money, while villagers from Sivaganga, Paramakudi, and Kalayarkovil were encouraged to open “mule accounts” in exchange for small payments. These accounts were later used to divert illegal funds.

The incident demonstrated how offshore-linked networks can exploit vulnerable populations and support organised financial crimes.

International Experiences and Regulatory Models

United Arab Emirates

Although the UAE historically maintained strict restrictions on gambling activities, it introduced a regulated federal licensing framework in 2023.

The framework includes :

• Licensing requirements 
• Compliance standards 
• Deposit limits 
• Consumer protection safeguards 
• Harm-prevention mechanisms 

The objective is to reduce illegal offshore activity while ensuring accountability and regulatory oversight.

Sri Lanka

Sri Lanka is also moving toward a regulated framework through the establishment of a centralised Gambling Regulatory Authority, expected to become operational by June 2026.

The authority aims to :

• Regulate online gambling activities 
• Consolidate oversight mechanisms 
• Bring offshore operations under domestic regulation 

These international examples indicate that several countries are shifting from prohibition toward regulated governance systems.

Need for a Balanced Regulatory Framework

Advantages of Regulation

A regulated online gaming ecosystem could provide several benefits.

Consumer Protection Measures

Regulation could introduce :

• Age verification systems 
• Deposit limits 
• Responsible gaming practices 
• Player protection mechanisms 
• Grievance redressal systems 

Improved Monitoring

Regulation would enable authorities to :

• Track suspicious transactions 
• Monitor illegal money flows 
• Reduce money laundering risks 

Revenue Generation

A regulated gaming ecosystem could also generate tax revenue.

These funds could be used for :

• Strengthening cyber enforcement systems 
• Monitoring offshore networks 
• Supporting awareness campaigns 
• Addressing gambling addiction and financial risks 

Several Western countries have adopted similar approaches successfully.

Need for Centre–State Coordination

Addressing illegal online gambling requires coordinated action among :

• Central Government agencies 
• State Governments 
• Cybercrime units 
• Financial intelligence agencies 
• Regulatory bodies 

A combined approach involving regulation, technological monitoring, enforcement, and public awareness may provide a more sustainable solution than prohibition alone.

Conclusion

• The experience following the implementation of the Promotion and Regulation of Online Gaming (PROG) Act, 2025 demonstrates that outright bans may not effectively control online gambling in the digital era.
• Rather than eliminating gambling activities, the policy appears to have encouraged the growth of offshore platforms operating beyond domestic oversight. The rise in offshore gambling participation, cybercrime risks, financial fraud, and weak consumer protection highlights the need for a more balanced policy approach.
• In the long term, strong regulation, technological safeguards, effective enforcement mechanisms, and public awareness initiatives are likely to provide a more effective solution for addressing online gambling challenges in India than blanket prohibitions.