Zerodha Founder Proposes Crackdown on Offshore Betting Apps
Following India’s recent crackdown on domestic real-money gaming platforms, a new and potentially riskier trend is emerging. Offshore betting and gambling applications are rapidly gaining users in the country. Nithin Kamath, the founder and CEO of India’s largest stock brokerage Zerodha, has raised a public alarm about this unchecked growth and its dangers.
The Regulatory Vacuum and Rising Risks
Last year, the Indian government amended its tax laws, imposing a 28% Goods and Services Tax (GST) on the full value of bets placed in online games. This move, coupled with state-level bans, severely impacted many domestic real-money gaming companies. However, this regulatory action did not extend to platforms based outside India. These offshore entities, often operating from locations like Malta, Curacao, or Cyprus, are now aggressively targeting Indian users with advertisements and local payment options.
Nithin Kamath warns that this situation creates a perfect storm for consumers. Unlike domestic companies, these offshore apps operate in a regulatory gray area. They are not bound by Indian laws regarding data protection, fair play, or grievance redressal. This exposes users to significantly higher risks of financial fraud, data theft, and manipulation. Users who face issues have little to no legal recourse, as the companies are beyond the jurisdiction of Indian authorities.
Kamath’s Proposal: Blocking the Financial Pipeline
To curb the spread of these platforms, Kamath has suggested a direct and practical solution. He proposes that Indian authorities and financial institutions should block domestic payment access to these identified offshore betting and gambling applications. This means preventing transactions from Indian bank accounts, UPI, and credit cards to these entities.
This approach targets the lifeblood of these operations: the flow of money. If users cannot easily deposit funds, the apps lose their appeal and operational viability. Kamath points out that this method has been effectively used in the past to restrict access to other prohibited foreign platforms. It leverages the control that the Indian financial system has over transaction gateways.
The core of Kamath’s argument is about consumer protection and regulatory parity. If real-money gaming is being restricted within India, allowing foreign entities to fill the void undermines the policy’s intent and puts citizens at greater risk. It creates an uneven playing field where regulated Indian companies are sidelined by unregulated foreign operators who do not contribute to the Indian tax base or follow its rules.
A Broader Debate on Regulation and Enforcement
This issue highlights the challenges of regulating internet-based services in a globalized economy. Simply banning a domestic activity often pushes consumers toward less visible, international alternatives that are harder to control. Experts note that a cohesive national policy, combined with international cooperation, may be needed for a long-term solution.
For investors, the situation underscores the regulatory risks in the fast-growing fintech and gaming sectors. It also points to potential opportunities for companies that provide payment security, identity verification, and compliance technology as regulators seek more sophisticated enforcement tools. Kamath’s intervention has sparked an important conversation on how to effectively protect consumers while enforcing digital economy laws in India.
