Indian authorities uncover betting apps laundering almost $48M via fake games
Directorate of Enforcement (ED), the law enforcement and economic intelligence agency of India has uncovered a large-scale illegal online betting racket involving unregulated gaming platforms operating throughout India. In the agency’s , the ED revealed that these platforms have laundered thousands of crores of rupees through intricate financial networks. By using apps, websites, and social media, they have targeted unsuspecting users, evaded regulatory oversight, and funnelled the proceeds of these criminal activities abroad.
Unregulated apps impersonating as online games
The ED reveled that fraudsters are creating betting apps and websites, often disguised as online gaming platforms, to lure users with promises of high returns. These apps are not licensed by Indian regulators and are frequently hosted overseas. Many platforms has gained traction by illegally live-streaming events such as Indian Premier League which is a professional Twenty20 cricket league in India, causing major revenue losses to official broadcasters like Star India.
Promotions are heavily done through Telegram, WhatsApp, and social media ads. According to the ED, some syndicates distribute malicious .apk files to bypass app stores and push users into funding wallets linked to the games. One such operation generated over ?400 crores ($48 million) by exploiting users through fake promises and manipulated games.
Rigged platforms and small wins to trap users
The ED noted that these platforms are often rigged to favour the house. Users initially win small amounts, encouraging them to deposit more. As trust builds, they start losing heavily. These platforms use deceptive interfaces and pre-programmed outcomes, ensuring consistent profit for the operators.
Mule accounts and payment aggregators used to conceal trail
As per the ED report, users are instructed to deposit money via UPI or IMPS into bank accounts that are not directly linked to the platform. These are mule accountsbank accounts opened in the name of individuals or shell companies. These accounts are then listed as merchants with popular payment aggregators like RazorPay or PayU, making it harder to trace the money flow.
Funds are pooled into central accounts, which obscures the connection between the end-user and the organisers. This layering process, the ED noted, helps hide the money trail from regulators and law enforcement agencies.
Domestic layering and fake business fronts
Once user funds are collected, the money is rapidly shuffled across multiple accounts. The ED found that in the case of Fairplay, hundreds of mule accounts were used to create circular transactions. Eventually, funds end up in a few central shell entities, including companies posing as legitimate businesses, such as pharmaceutical firms.
Siphoning abroad and re-entry through bogus FDI
The final step in the laundering process involves moving the money abroad. This is often done by converting it into cryptocurrency or through fake import-export deals. According to the ED, from there, the funds are re-routed back to India as clean money under the guise of Foreign Direct Investment (FDI), share capital in startups, or investment in real estate and luxury assets.
In a recent development, the ED intensified its crackdown by conducting fresh raids linked to the Mahadev Online Betting App case. On 16 April, the agency seized securities, bonds, and demat accounts valued at ?573 crore (approximately $67.33 million) across multiple cities including Delhi, Mumbai, Indore, Ahmedabad, Chandigarh, Chennai, and Sambalpur. Officials also recovered ?3.29 crore in cash and confiscated crucial electronic records and documents.
The probe revealed that proceeds from these illegal betting operations were funnelled abroad and subsequently reintroduced into the Indian financial system under the disguise of foreign portfolio investments (FPIs). These funds were then used to invest in listed companiesparticularly in the small and medium-sized enterprise (SME) segmentto manipulate stock prices. This deliberate inflation was aimed at misleading investors and falsely enhancing company valuations, thereby extending the cycle of financial deception and regulatory evasion.
