Opinion: A passage to a regulated Indian market

Sports betting is a hot topic in India right now. The final weeks of the IPL were mired by yet another spot fixing scandal and a debate has finally entered the national media over how to deal with this endemic problem. Proper regulation might seem the obvious answer but a number of hurdles face the pro gambling lobby in India.

First, politics in India make regulatory change over controversial issues very difficult. A feature of the Indian political system is the coalition government (overall majorities are very rare). This means that new policies are rarely made on controversial subjects and there is a tendency towards conservatism when it comes to these matters. The government in Goa is currently back tracking on its progressive gambling policies and it would be a big risk for any political figure to come out in favour of gambling at present.

Ironically, the very culture of gambling in India at present represents another hurdle to regulation. Decades of illegal gambling in India have shaped how people in India gamble. Almost all gambling is done on a credit based system whereas the online industry relies on users depositing before they bet. Bets are placed over the phone and odds are represented in neither a fractional nor decimal format. Most interestingly though gamblers are very resistant to using money from their bank accounts to gamble with. This money is viewed as being “white money” and is more valuable than “black money” which takes cash form and may have been acquired via dubious means. With “white money” being considered more valuable than “black money”, gambling with “white money” makes little economic sense.

This currency issue fits into the final hurdle we will discuss, payment processing. At all levels, payment processing will prove to be a particularly difficult issue to solve. Flipkart, the Indian equivalent of Amazon, has had such difficulty with payment processing that it now offers a cash on delivery service, and this is now a model widely used online in India. Only a small number of Indians have bank accounts and government regulation of transactions, particularly to accounts outside of India, means online transactions are costly and particularly so when dealing in smaller denominations.

From a regulatory view point, India is in the very early stages of discussing the issue of legalised online gambling and there is certainly a long road ahead before effective regulation can be put in place. However, a younger, more liberal India is clearly eager to see change and it is important to address the issues facing regulation if the debate surrounding online gambling in India is going to progress beyond vilifying cricket cheats.