Online betting firms eye overseas markets

Mumbai: Paying for their sins and spunk, India's online money gaming firms are desperate to salvage their chances in foreign shores where betting is not forbidden.

With shutters down, they are asking New Delhi to clear the fog on their offshore investments and brewing deals with overseas companies.

As enforcement authorities crack down on some for sharp practices and allegedly unethical profits, the real money gaming (RMG) companies are awaiting clarity on three issues: first, the fate of their overseas investments, particularly those made before a hurriedly passed, sweeping law banning betting last year; second, selling or renting their software for fees or profit-share to foreign platforms; and third, the possibility of leveraging their knowhow to run data and global capability centres in India to support international online money gaming platforms.


Overseas investments, under the regulations, can only be in an activity which is a bonafide business in India as well as in the foreign country receiving the investment. The Promotion and Regulation of Online Gaming Act, 2025 (PROGA) was passed last August, but is yet to be notified and come into force.

"Under the circumstances, Meity and the Reserve Bank of India should spell out whether overseas investments made in the real money gaming activities in the past and till now can continue or need to be wound up. Also, whether the government would allow overseas investments after law comes into force on the condition that Indian players do not participate in the foreign gaming platforms.

Further, since the intent of PROGA is to clearly prohibit online money games within India, supporting global gaming companies through back-offices, data centres or software development should not be prohibited. In fact, state governments have encouraged global gaming companies to set up GCCs and back offices," Jay Sayta, technology and gaming lawyer.

RETROSPECTIVE EFFECT?

One of the central issues, thus, is whether the policy changes will have retrospective consequences. According to Moin Ladha, partner at the law firm Khaitan, capital deployed under the then-prevailing framework cannot be treated as non-compliant by default. Clear transitional guidance under FEMA is essential to avoid forcing distressed exits or unnecessary enforcement friction.

"Equally important is the distinction between operating betting platforms and exporting technology. If an Indian company merely licenses software to a foreign entity operating lawfully in its jurisdiction, that is fundamentally a technology export question and not necessarily a domestic wagering issue. However, absent explicit guidance, companies face the risk of being viewed as indirectly facilitating betting. One would also need to examine the commercial arrangement," said Ladha.

The same ambiguity applies to running back-end operations or data centres in India for overseas betting firms. This, feels Ladha, sits at the intersection of IT export policy and public policy restrictions, and without regulatory articulation, businesses are exposed to interpretational risk.

The industry, which has been knocking on the government's doors for the last few months, is yet to receive a clarity on these issues which would determine whether the investments put in can be rescued and whether the business would have a life beyond the borders. Even as these questions haunt them, multiple petitions, filed before the Supreme Court challenging the 2025 law, point out that the statute is against the settled legal position for close to seven decades that games of skill are legitimate business activities protected by Article 19(1)(g) of the Constitution and wagers placed on games of skill are not gambling.

Also, a common refrain across petitions has been that the new Act was passed without any legislative competence as betting and gambling fall squarely within Entry 34 of List II (State List) of the Constitution's Seventh Schedule, which vests exclusive legislative competence in state legislatures.