Why govt is unable to stop influencers from promoting illegal betting, gambling

New Delhi: Four months ago, the Ministry of Information and Broadcasting (MIB) issued a stern warning to social media influencers against promoting offshore online betting and illegal gambling platforms. The government made it clear that non-compliance would result in legal action, along with the removal of social media posts and accounts. 

But has this tough stance by the MIB paid off? The short answer: a resounding NO. 

This begs the question: why would an influencer risk their account and credibility to promote gambling platforms? Vaibhav Gupta, Co-Founder & Chief Product Officer at Klug Tech, has an eye-opening answer. 
“Influencers are paid three times the standard rate to promote gambling platforms. They sign long-term deals averaging Rs 50 lakh per month, with the flexibility to do as many paid promotions as they want. Payouts from platforms like Skyexchange can reach up to Rs 2 crore per week,” Gupta revealed.

Resounding the same bugle as Gupta, Rachit Juneja, co-founder of Zaamo, a community for budding content creators, said, “With such a massive stream of non-trackable cash coming in the way of influencers, it's hard for most influencers to say no to such easy money. The number of creators that have stood up against these platforms is only a handful and you can count them on your fingers. The premium rates offered by such brands can range from as low as 20% for mainstream brands to as high as 150% for new platforms with less credibility.”

In the words of Juneja, “The biggest deals in the gambling promotion space are bagged by YouTubers.

Influencers already charge Rs 10–50 lakh for content integration on one post, while some of the bigger deals in the space have been upwards of Rs 2-3 crore for multiple videos on Instagram.”

Due to a lack of regulations around creators promoting illegal offshore betting apps, the problem is growing as some influencers now have the links to download these apps embedded in their Instagram bios as well.

Businesses with addiction at their core have high gross margins; hence, they have a greater capacity to spend on celebrity endorsements and influencers. For gambling platforms, influencer marketing leads to direct results, not just from a marketing perspective but also in terms of downloads and user acquisition. 

Providing a legal perspective on the same, Roland Landers, CEO of All India Gaming Federation, said, “Due to the lack of regulation, these platforms do not have to pay TDS or GST, a fact they often advertise heavily, making them more attractive to users. However, they present a considerable risk to their users as they lack measures for fraud protection, responsible gaming, and other safeguards. 

Indian law enforcement agencies do not have jurisdiction over these offshore entities, leaving users who are wronged without recourse. 

Additionally, these illegal platforms can potentially be used for money laundering and terror financing, thus posing a national security risk as well.” 

Despite the regulations, some creators get away with openly embedding links to gambling platforms in their Instagram bios. Gupta highlighted influencers such as “Simran Kaur, who goes by the name @symrann.k on Instagram and Sofia Ansari, better known as Sofia9_official, are frequent violators of the CCPA's guidelines. It is important to note that these are just a select few examples and there are plenty of creators who resort to gambling promotions on their accounts.” 

Speaking of indirect promotions that still remain a huge part of the gambling content promotion mix, Landers said, “While we are not aware of the specifics, it is notable that these platforms also tend to collaborate with pages that have significant reach but do not promote them directly. Instead, they might insert their logo, name, or link into a reel that has no connection to the shared content.

Therefore, it is not just individual influencers but also anonymous meme pages or pages that curate content created by others that promote these platforms, both directly and indirectly.”

Diving deeper, the peak seasons where such collaborations spike are usually when sporting events such as the IPL and the World Cup take place. Gambling platforms employ multiple marketing techniques to woo customers during these sporting events.  

Commenting on the marketing strategy, Gupta said, “Skyexchange launched a promotional campaign in 2023 that featured creators who mentioned how they got invites for exclusive parties with top models on yachts in Dubai and Thailand for being the top spender on the app. Indirectly asking the users to gamble more and win a chance to party with models.”

There is an urgent need for brands to ensure that they do not collaborate with influencers who have links to betting apps. Juneja’s take on this was, “The process is still the same as how Pampers would select female influencers who have not worked with Huggies in the past six months. This is communicated to the influencer agency, which cross-checks and enforces the mandate. In the end, it all comes down to cost. Currently, we see that top brands are willing to pay a premium of 10-20% as an incentive to influencers for distancing themselves from gambling platforms.” 

Self-regulation guidelines by ASCI are proving to be insufficient with each passing day and calls are being made for legally enforced penalties on creators who continue to carry out promotions on Instagram stories. Tackling story-based promotions is a challenging task for the regulatory bodies, as no trace can be found after 24 hours.

Landers calls for a whitelist of companies offering skill-based, legal games and a blacklist of off-shore illegal companies that offer gambling services in India. Sharing his thoughts on the issue at hand, Landers said, “The government needs to increase awareness among creators regarding this issue. To effectively address this problem, there should be a whitelist of companies offering skill-based, legal games. 

This can be achieved by implementing the 2023 IT Rules and establishing self-regulatory bodies to certify legal games. Once there is a clear distinction in the industry, influencers only need to check a company's certification before promoting them.” 

The side effects of harsh penalties could have overwhelming implications for the promotion of legal gaming platforms by influencers. Supplementing the idea, Landers said, “Imposing stricter penalties alone may not prevent the proliferation of ads; it could deter creators from advertising any gaming platform at all. Therefore, creating a clear distinction between legal and illegal entities is essential.” 

Gupta cited the lack of technology available to monitor and regulate influencers as the primary challenge in curbing influencer-based promotions around gambling platforms. “The primary reason for failure on the government’s part to crack down on these platforms is their approach. The government’s sole focus is to stop gambling platforms in India by cracking down on money laundering, as most influencers are paid in cash through illegal channels such as hawala.” 

Influencer marketing agencies play a crucial role in connecting gambling platforms with influencers. Alluding to the role that influencer marketing agencies play in the promotion of such platforms, Gupta said, “Over the last two years, there have been several raids on influencer agencies, particularly talent management agencies associated with YouTubers, particularly around evasion of tax since these payments are directly routed via the platform’s offshore accounts. Based on what we’ve heard, every case against such agencies was eventually settled. 

The promotion of gambling platforms openly has far and wide socio-economic repercussions on society. Citing insider data to prove his point, Gupta said, “The impact of creators promoting illegal betting apps may be negligible, as only 1% of the creators are actively involved in promoting gambling platforms; however, it has large socio-economic repercussions on society as a whole.  

Among the cohort that primarily engages with influencers who promote gambling platforms, 76% of people lie in the age group 18-34, and some of them are the sole breadwinners of the family. This audience is prone to addiction and may find itself in a tough spot if they suffer losses leading to suicides and deep financial troubles, as witnessed in the case of cryptocurrency, where students invested their college fees in crypto exchange platforms hoping to become millionaires in the future.” 

Calling for regulatory action against influencers who resort to promoting gambling platforms, Gupta suggested setting ground rules similar to the ones imposed by SEBI on influencers.

The Securities and Exchange Board of India (SEBI) recently came up with a framework for unregistered financial influencers, or 'finfluencers,' prohibiting regulated entities from dealing with them. 
 
SEBI’s latest move marks a significant step in protecting investors from misleading financial advice and ensuring that all financial influencers operate within a regulated framework. 

Given the scale of the problem and taking into account the socio-economic repercussions of gambling, Gupta puts forward a solution to the mess and highlights three key policy changes to curb the menace. 

“First of all, the government should revoke access to payment gateways such as UPI for gambling platforms, similar to how the RBI repealed access to crypto exchange platforms. With no access to payment gateways, the government can render these platforms futile. 

Secondly, the formation of a regulatory body similar to the UAE to regulate the influencer economy. In the UAE, every creator needs to register with that body and apply for a license. The regulatory body does its due diligence and introduces entry barriers that filter out citizens with a tendency to stray from their content. 

Lastly, there is a strong need to give ASCI jurisdiction powers for effectively implementing the regulations set by MIB,” said Gupta, highlighting three key policy changes. 

It is important to note that some legal experts have raised concerns about freedom of speech and expression if a regulatory body similar to the UAE is formed in India.