India’s tax intelligence agency has identified INR700 billion ($7.4 billion) in transactions connected to illegal online gaming and betting during one financial year, prompting proposals for additional payment records that could help authorities trace the movement of funds.
The Directorate General of GST Intelligence (DGGI) uncovered the transactions during a 14-month investigation into illegal online gaming and betting networks allegedly used for money laundering. Officials submitted a report to the Central Board of Indirect Taxes and Customs earlier this month.
The INR700 billion figure represents transactions identified by investigators. It does not indicate operator revenue, tax evasion or losses incurred by the government. Authorities continue to examine the exact amount of revenue loss.
DGGI Seeks Greater Payment Transparency
The investigation has prompted the DGGI to propose changes to information recorded during online payments. Under the recommendations, payment records would identify the website that directed a user to complete each transaction.
The agency also wants details of every bank account connected to a website’s goods and services tax registration. Investigators could then use the information to trace accounts involved in receiving, transferring or layering funds.
Banks and payment gateways currently record the merchant receiving a payment. Illegal betting platforms can direct users toward proxy merchant companies, requiring investigators to establish separately whether those merchants collected money for a gaming website.
Authorities have yet to decide which parties would collect and retain the additional information. Gaming platforms, payment gateways, aggregators and banks could potentially face the requirement. Regulators must also establish how they would verify the originating website.
The proposals remain under consultation because they could create additional due-diligence obligations for banks and payment companies.
India Strengthens Online Gaming Controls
The investigation follows the introduction of a unified regulatory framework for online gaming. The Promotion and Regulation of Online Gaming Rules, 2026, came into force on 1 May, activating the Promotion and Regulation of Online Gaming Act, 2025.
The legislation prohibits online money games and bars banks and payment systems from processing related transactions.
The new framework divides gaming into esports, online social games and online money games. Esports covers structured competitive play involving strategy and coordination, while social games focus on casual participation and interaction. Online money games involve financial stakes and have been associated with addiction, financial losses and other social concerns.
The framework followed legislation passed in August 2025 addressing financial harm, addiction and illegal activity associated with certain platforms.
Industry Growth Adds Regulatory Pressure
India’s online gaming sector generated INR232 billion in 2024, with transaction-based gaming accounting for 77 percent of that figure. The industry is projected to reach INR316 billion by 2027, with an estimated annual growth rate of 11 percent.
Authorities estimate that around 45 crore people have been affected by these platforms, with losses exceeding Rs. 20,000 crores.
The DGGI investigation has focused on how illegal gaming and betting networks move money through payment systems. Its proposed reporting requirements would give investigators additional information connecting websites with transactions they direct, potentially helping authorities follow payment trails involving proxy merchants and associated bank accounts.
Source:
“India tax agency traces $7.4B in illegal betting transactions, seeks payment trail”, agbrief.com, September 3, 2026
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