Illegal betting companies like Parimatch and FairPlay rebrand as sportswear businesses, gaining endorsements from celebrities. Despite advisories from multiple ministries, these endorsements persist, exploiting regulatory loopholes and undermining legal frameworks. Varuni Khosla5 min read02 Sep 2024, 06:45 AM ISTDinesh Karthik advertising for the betting company’s circumvention clothing business, Parimatch Sports

Summary

Illegal betting companies like Parimatch and FairPlay rebrand as sportswear businesses, gaining endorsements from celebrities. Despite advisories from multiple ministries, these endorsements persist, exploiting regulatory loopholes and undermining legal frameworks. Through digital ads, endorsements and jersey sponsorships, global online betting platforms targeting sporting events from cricket to kho kho have crept back into the public space, even as the betting business itself remains prohibited across most of India.

When Dinesh Karthik returned to the game after a gap, the cricketer received a flurry of brand endorsements, including apparel from Parimatch, made by Prosports Wear Pvt. Ltd. Parimatch is a global betting platform.

Also read | Government wants a crackdown on illegal betting in season of IPL and elections

Parimatch Sports is led by Noida-based tax lawyers Vineet Sahay and Roopali Singhal. The company has netted more than Karthik: Last week, it said it had raised ₹8.4 lakh for the Yogeshwar Dutt Wrestling Academy and the Mary Kom Regional Boxing Academy.

FairPlay India, another betting platform with over 115,000 followers on Instagram, features actor Jacqueline Fernandez as its brand ambassador. In a video from May, Fernandez states that FairPlay is “India’s most trusted platform” for various sports, including cricket and tennis.

Celebrity deals

Actor Sonu Sood represents 1xBet Sporting Lines, also a clothing business, while cricketers Suresh Raina, Harbhajan Singh and Shikhar Dhawan, as well as actor Ankush and table tennis player Meghana K., are associated with Parimatch Sports.

Since many actors and cricketers enjoy immense popularity on social media, associating with them serves up a potential audience of hundreds of millions of people to the betting platforms, which have repeatedly come under government scrutiny. In May, Mint reported that the consumer affairs ministry had sought action against indirect ads ahead of the cricket and election season. In April, some apps opened bets on the Lok Sabha election results. In December last year, the information technology ministry asked tech companies to block advertisements promoting illegal loan and betting apps. In October 2022, the information and broadcasting ministry asked television channels, digital news publishers and streaming platforms to refrain from showing advertisements, including surrogate ads, of online betting sites.

Also read | IPL, elections are all fair game on illegal betting apps

However, betting apps have maintained their media presence through all the scrutiny.

According to Sandeep Goyal, chairman and managing director of advertising agency Rediffusion, regulators and the Advertising Standards Council of India (ASCI) are silent on the matter, and take note only when someone complains. “This is a huge circumvention of the law… If these kinds of advertisements are not nipped in the bud, they tend to keep testing the waters and become bigger. This is what’s happening here, as there is much more money at stake now than there was before.”

Massive market

Mint reached out to representatives of FairPlay, Parimatch and 1xBat but did not receive any response till press time. Mint also reached out to spokespersons of the I&B ministry as well as the ASCI, but did not receive any comments.

Illegal betting is a massive market in India. In December 2022, Parimatch International’s former CEO Anton Rublievskyi, told Mint that the industry’s size is between $50-100 billion annually. A Rashtriya Raksha University report called ‘Curbing Betting and Gambling in India’ suggests a tax revenue leakage of approximately ₹27,000 crore from these platforms.

Also read | Let us not resurrect the ghost of retro taxation

According to Dhruv Garg, a Delhi-based technology and policy lawyer, the ‘Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements’ guidelines 2022 prohibit surrogate advertisements. These guidelines are enforceable by the Central Consumer Protection Authority (CCPA), and similar restrictions are also advised under the ASCI Code. “A crackdown from these two regulators is the only immediate solution to the menace,” said Garg.

Brand extension

ASCI has set certain thresholds for qualification as brand extension. For example, brands that are under two years must have minimum net sales of ₹20 lakh a month to qualify as a brand extension, and these net sales must not be to a sister concern or business. However, some of these clothing businesses could take the defence that these are mere ‘brand extensions’ and these products are not prohibited but only share the brand and logo with the prohibited products, added Garg.

The global betting platforms have often taken the stand that they’re located outside India and the local laws against online betting do not apply to them.

“The question essentially is to determine whether the product extension (garments or clothing in this case) is a legitimate business, or a tool to get illegal gaming across," said Safir Anand, an IPR lawyer and senior partner at Anand and Anand. “Extension story boards, visuals, impression of legitimate product versus the banned ones should not be the same. A good test of whether it is a surrogate product or not is whether it is available freely on third-party sites, and not positioned discreetly or in a limited quantity on its own site somewhere. If a viewer of the ad gets the impression that she/he is being attracted to the banned game, the ad may be struck down as per law,” he said.

Also read | It’s over to govt now in gaming regulation

In August, the Union health ministry advised the Sports Authority of India (SAI) and the Board of Control for Cricket in India (BCCI) to stop athletes from promoting illegal products. Despite previous warnings from the I&B ministry, smaller leagues such as the Andhra Premier League still have jersey sponsorships from betting companies like Fun88 and Dafa Bet. Cricketer Karthik also endorses other betting brands, including Crickex and Taj Rummy.

View Full ImageSonu Sood, doing a similar ad for the newly formed clothing company of 1XBAT, Sporting Lines

Regulatory loopholes

Roland Landers, CEO of the All-India Gaming Federation (AIGF), said the regulatory loopholes are allowing these companies to continue operating. “It’s concerning to see these illegal betting companies trying to rebrand themselves and find loopholes to continue their operations. Our booming digital and online gaming sectors have unfortunately become a target due to regulatory ambiguity."

“This lack of clear, comprehensive regulation has allowed illegal platforms to capitalize, despite the government’s and law enforcement’s efforts to clamp down on these activities, Landers said.” AIGF represents the interests of skill-based gaming companies like MPL, Zupee, and BaaziGames.

Also read | India must tackle illegal offshore gambling platforms

“There are clear advisories from various ministries, including the MIB and the ministry of consumer affairs in this regard; yet, some celebrities and influencers continue to endorse these illegal brands. Such endorsements not only lend undeserved legitimacy to companies operating outside the law but also mislead their fans and followers. Celebrities and influencers have a responsibility to be mindful of the impact of their endorsements, particularly when they involve products that are illegal and potentially harmful to the public,” Landers added.

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• #cricket
• #Twenty20 cricket

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Parimatch Sports is led by Noida-based tax lawyers Vineet Sahay and Roopali Singhal. The company has netted more than Karthik: Last week, it said it had raised ₹8.4 lakh for the Yogeshwar Dutt Wrestling Academy and the Mary Kom Regional Boxing Academy.

FairPlay India, another betting platform with over 115,000 followers on Instagram, features actor Jacqueline Fernandez as its brand ambassador. In a video from May, Fernandez states that FairPlay is “India’s most trusted platform” for various sports, including cricket and tennis.

Celebrity deals

Actor Sonu Sood represents 1xBet Sporting Lines, also a clothing business, while cricketers Suresh Raina, Harbhajan Singh and Shikhar Dhawan, as well as actor Ankush and table tennis player Meghana K., are associated with Parimatch Sports.

Since many actors and cricketers enjoy immense popularity on social media, associating with them serves up a potential audience of hundreds of millions of people to the betting platforms, which have repeatedly come under government scrutiny. In May, Mint reported that the consumer affairs ministry had sought action against indirect ads ahead of the cricket and election season. In April, some apps opened bets on the Lok Sabha election results. In December last year, the information technology ministry asked tech companies to block advertisements promoting illegal loan and betting apps. In October 2022, the information and broadcasting ministry asked television channels, digital news publishers and streaming platforms to refrain from showing advertisements, including surrogate ads, of online betting sites.

Also read | IPL, elections are all fair game on illegal betting apps

However, betting apps have maintained their media presence through all the scrutiny.

According to Sandeep Goyal, chairman and managing director of advertising agency Rediffusion, regulators and the Advertising Standards Council of India (ASCI) are silent on the matter, and take note only when someone complains. “This is a huge circumvention of the law… If these kinds of advertisements are not nipped in the bud, they tend to keep testing the waters and become bigger. This is what’s happening here, as there is much more money at stake now than there was before.”

Massive market

Mint reached out to representatives of FairPlay, Parimatch and 1xBat but did not receive any response till press time. Mint also reached out to spokespersons of the I&B ministry as well as the ASCI, but did not receive any comments.

Illegal betting is a massive market in India. In December 2022, Parimatch International’s former CEO Anton Rublievskyi, told Mint that the industry’s size is between $50-100 billion annually. A Rashtriya Raksha University report called ‘Curbing Betting and Gambling in India’ suggests a tax revenue leakage of approximately ₹27,000 crore from these platforms.

Also read | Let us not resurrect the ghost of retro taxation

According to Dhruv Garg, a Delhi-based technology and policy lawyer, the ‘Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements’ guidelines 2022 prohibit surrogate advertisements. These guidelines are enforceable by the Central Consumer Protection Authority (CCPA), and similar restrictions are also advised under the ASCI Code. “A crackdown from these two regulators is the only immediate solution to the menace,” said Garg.

Brand extension

ASCI has set certain thresholds for qualification as brand extension. For example, brands that are under two years must have minimum net sales of ₹20 lakh a month to qualify as a brand extension, and these net sales must not be to a sister concern or business. However, some of these clothing businesses could take the defence that these are mere ‘brand extensions’ and these products are not prohibited but only share the brand and logo with the prohibited products, added Garg.

The global betting platforms have often taken the stand that they’re located outside India and the local laws against online betting do not apply to them.

“The question essentially is to determine whether the product extension (garments or clothing in this case) is a legitimate business, or a tool to get illegal gaming across," said Safir Anand, an IPR lawyer and senior partner at Anand and Anand. “Extension story boards, visuals, impression of legitimate product versus the banned ones should not be the same. A good test of whether it is a surrogate product or not is whether it is available freely on third-party sites, and not positioned discreetly or in a limited quantity on its own site somewhere. If a viewer of the ad gets the impression that she/he is being attracted to the banned game, the ad may be struck down as per law,” he said.

Also read | It’s over to govt now in gaming regulation

In August, the Union health ministry advised the Sports Authority of India (SAI) and the Board of Control for Cricket in India (BCCI) to stop athletes from promoting illegal products. Despite previous warnings from the I&B ministry, smaller leagues such as the Andhra Premier League still have jersey sponsorships from betting companies like Fun88 and Dafa Bet. Cricketer Karthik also endorses other betting brands, including Crickex and Taj Rummy.

View Full ImageSonu Sood, doing a similar ad for the newly formed clothing company of 1XBAT, Sporting Lines

Regulatory loopholes

Roland Landers, CEO of the All-India Gaming Federation (AIGF), said the regulatory loopholes are allowing these companies to continue operating. “It’s concerning to see these illegal betting companies trying to rebrand themselves and find loopholes to continue their operations. Our booming digital and online gaming sectors have unfortunately become a target due to regulatory ambiguity."

“This lack of clear, comprehensive regulation has allowed illegal platforms to capitalize, despite the government’s and law enforcement’s efforts to clamp down on these activities, Landers said.” AIGF represents the interests of skill-based gaming companies like MPL, Zupee, and BaaziGames.

Also read | India must tackle illegal offshore gambling platforms

“There are clear advisories from various ministries, including the MIB and the ministry of consumer affairs in this regard; yet, some celebrities and influencers continue to endorse these illegal brands. Such endorsements not only lend undeserved legitimacy to companies operating outside the law but also mislead their fans and followers. Celebrities and influencers have a responsibility to be mindful of the impact of their endorsements, particularly when they involve products that are illegal and potentially harmful to the public,” Landers added.

• #cricket
• #Twenty20 cricket

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