All bets are off 💸

Prediction is the name of the illegal game

This is edition 314 of Beyond The First Order, a premium daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia

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Good morning,

Let’s start with a game in today’s free edition. Pick the right option:

a) Betting on sports is illegal in India
b) Running a betting platform for sports is illegal in India

Hint: The answer isn’t binary.

Okay, next:

a) Reliance is a green energy champion
b) Reliance is going to be one of the largest gas producers in India

Hint
: It’s Reliance, duh.

And finally:

a) WFH improves productivity
b) WFH destroys productivity

Before you answer that, you might want to take a quick peek at The Ken’s first-ever productivity survey results. And oh, there’s an 8 AM read you don’t want to miss!

PS: Did you know Slack has dedicated WFH emojis now? Which one’s your favourite? Mine, by a mile, is  <cat runs across the keyboard>

Fancy a punt on the football? Don’t do it

Are you watching the Euro 2020 football tournament? Got an office pool on who’s going to win? If you’re watching the football on streaming platform SonyLIV, you might have even seen ads of international betting companies like Betway. But they never use the word “bet” in the ads. It’s always “predict”. 

Why? Because sports betting is illegal in India. 

But then how are these platforms still advertising and operating in India, you ask? Good question. No one seems to know. A couple of stories in the media late last year when the ads first cropped up had various authorities—broadcasters, governing bodies, banks, and governments—passing the buck to each other as to whose responsibility it is to take action. But you would’ve thought at least one party would have cracked the whip by now.

So, after spotting more such ads while watching the Euro 2020 football last week, I decided to register on a couple of these websites to understand how they’re getting around Indian laws.

What I found was pretty amazing. On Betway, I was offered a 100% matched deposit bonus on a minimum deposit of Rs 500 (US$6.7). Basically, if I put in Rs 500, the platform would add another Rs 500 from their side, giving me a balance of Rs 1,000 (US$13.5) to bet with. 

The payment options included online banking, cards, and even UPI, India’s real-time payments system. And there were some other payment gateways I had never even heard of. 

Now, here’s where things got interesting. I clicked on the UPI option. It took me to a page that had details of the UPI ID I had to transfer the money to. The name “Betway” was nowhere to be found. The UPI ID was rhs44@icici. I logged into Google Pay and entered the ID. It was an ICICI Bank account registered under the name of JAI AMBE AGRO TRADERS. A quick Google search reveals several companies in various cities like Jalgaon, Vadodara, and Nashik with similar names.

A few days later, yesterday, while writing this piece, I tried it again. This time, there was a different ICICI Bank UPI ID: saurav1819@icici. It was registered under the name of SK ENTERPRISES. The account was set up in June 2021.

The process was similar on other platforms like Dafabet and Bet365. I then wrote to the customer service of some of these platforms asking if betting is legal in India and whether there would be any trouble if I placed bets. I got a standard response:

Betway and Bet365 are both registered in Malta, a tax haven, while Dafabet was founded in the Philippines. Technically, they’re not Indian companies and have no official presence in India. But they’re offering services that are illegal in India to Indian users. Pretty openly. How is that possible?

I put these questions to Seshank Shekar Rayaprolu, counsel at LawNK, a Bengaluru-based law firm that specialises in sports, gaming and media laws. These are some excerpts from our chat:

Q. Just because these companies are not registered in India, are they not culpable under Indian law?

They seem to be a little bold in [assuming] that they won’t be subject to any action under Indian law. It’s like, let’s say, a pornographic website. They may not be operating from India, but they’re offering pornography to users based in India.

 Q. But porn is not illegal in India, right?

Accessing porn is not illegal, but manufacturing, publishing, and circulating it is. Similarly here, while some state laws have punishment for individuals who are actually betting, the bias is towards people who are offering it and who are organising betting or gambling operations. 

Q. So then, how have none of the Indian authorities pounced on this yet? 

Yeah, it’s puzzling. The issue, I think to some extent, is that gaming and gambling is a state matter, so state governments have to take the initiative. Some states have passed laws banning betting, but they’ve not done anything else after that. They don’t proactively block websites in their state.

Q. Fantasy sports is considered a game of skill in India, and is legal. Isn’t there a very thin line between fantasy sports and sports betting? 

Not necessarily, because fantasy sports companies don’t let you try and win based on a binary outcome. The argument is that there is more skill involved because you’re building a team with a set budget and all of that, which is also being held under Indian law. But for betting, there’s nothing like that—you can basically hedge on a binary outcome. And once you do that, it’s not considered a game of skill in India. 

Q. So, basically, these betting companies have put the onus on the users in India…

Correct. I think if they get caught, they’ll just push it on to the users. And if they’re asked to stop operating and shut down, it’s just the user funds that are in danger, right? They will say that you accessed it at your own risk and we don’t have any responsibility for it. 

Q.  That explains the random UPI accounts…

Yes, and they keep changing the accounts, so it’s clearly not completely legitimate. They seem to have got some local operators here, handling all the Indian money. So the money is never leaving India. Basically, somebody’s operating a bank account here on their behalf. Betway’s name never shows up in your transactions. 

Last year, there were some articles that said this could be a FEMA (Foreign Exchange Management Act) violation. But a FEMA violation will come into effect only if the money is going out [of India]. I don’t know how someone can actually prove that the money is going out. 

But using Indian banks’ payment gateways is pretty puzzling because, generally, banks are very thorough and ask for legal opinions. They make sure that it’s a game of skill, and only then allow these guys to hook up their payments to them. Maybe they’re not aware of what it’s being used for. 

Q. What about the advertisements? How are you allowed to advertise betting platforms on streaming websites?

You’re actually not allowed to advertise gambling or betting in India. They’re using a surrogate branding kind of system where they advertise it as a prediction app, and not a betting or gambling app. Dafabet has even established a sports news website called Dafanews

Q. So, as a user, should you think twice before using these platforms?

Yeah, especially with tax implications. You’re technically supposed to pay a 33% tax on winnings. And the platforms are doing a KYC check by asking for PAN and Aadhaar details while registering. They’re covering their backs if their records are ever requested by the government. 

As a user, it’s not legal to actually bet in India. While the bias in terms of law enforcement is to go after the organisers rather than people who bet, that doesn’t mean you’re not at risk. Especially when it comes to large amounts. I think the risk is much higher when you’re actually winning and not declaring it.

***
So, in case you’re wondering whether to give these betting platforms a shot, friendly advice: don’t. They don’t have much to lose. After all, sports betting is a US$200 billion industry globally. Bet365 recorded a revenue of GBP 2.76 billion (US$3.83 billion) and profit of GBP 129.3 million (US$175.4 million) for the year ended March 2020.If you still go ahead and bet, at the very least, pay your taxes accordingly.


PS: During the World Test Championship cricket final last week, I saw some prediction videos on Twitter posted by cricketer-turned-broadcaster Aakash Chopra, sponsored by Betway. At the end of the videos, he asks viewers to log into Betway and “predict”. Never “bet”.

RIL – stepping on the gas, again

Two announcements at Reliance Industries’ (RIL) recent AGM (annual general meeting) hogged the limelight—the company’s green energy push and the impending launch of the JioPhone Next smartphone. Lost in the din and the razzmatazz was a seemingly innocuous statement by chairman Mukesh Ambani.  

In its exploration and production (E&P) business (the company’s ‘upstream’ oil & gas mining business), bp and Reliance JV commenced production in the KGD6 basin. In record time, it brought two of its three deep water gas projects to production. And it’s on course to add the third. 

This will establish Reliance again as one of the largest producers of gas in India, meeting 20% of India's gas demand. E&P will again be a source of significant value and sustained earnings growth over the next decade.”

Why is this significant? Primarily because E&P has been the rare miss in RILs’ hit parade—refining, petrochemicals, telecom, retail—over the past two decades. The business has been languishing for years for a variety of reasons, ranging  from pricing disputes to production declines. Both its key bets in the domestic market (Krishna Godavari (KG) offshore block) and in the international market (US shale gas) did not live up to expectations. 

Much hope was riding on the KG-D6 block but it flattered to deceive. Gas production here started in April 2009, quickly zoomed to 60 mmscmd (million metric standard cubic metre per day), and was expected to rise much more. But instead, output fell drastically and eventually touched single-digit territory. While RIL blamed geological complexity, the government blamed the company for not drilling enough wells and also accused it of gold-plating costs. A messy legal row ensued. Some also alleged that RIL was suppressing output for want of a good price; the company, of course, dismissed this.

Even global energy major bp that took about 30% stake in the business for top-dollar couldn’t turn things around. Also, the company’s bet on US shale gas came a cropper due to pricing challenges. Ergo, the E&P business turned a dud and stuck out like a sore thumb. Its share in the company’s total revenue shrunk to insignificance and it posted serial losses in contrast to the other profit-churning businesses. In the year ended March 2021, the E&P business posted an operating (EBIT) loss of Rs 1,477 crore (~US$200 million).

But RIL has stepped on the gas again. 

Along with bp, it started production in two wells in the KG-D6 block last year. The output has increased to 12.8 mmscmd, and going by Ambani’s commentary, it should hit 30 mmscmd in a couple of years with a third well. It helps, of course, that gas pricing rules are now more favourable for new fields, especially for deep-sea ones. 

But oil and gas E&P is a notoriously unpredictable business, especially in deep-sea fields—something RIL knows well. Yet, if it manages to pull it off this time around and the path-to-profitability fructifies as planned, RIL’s cash register will ring louder. 

Now, isn’t the company’s renewed focus on natural gas—a fossil fuel—at odds with RIL’s new green energy push? Well, arguably, it is. But then, gas is considered relatively clean, compared with its dirtier cousins such as oil and coal. The Indian government is also batting for its increased use. Trust RIL to have its cake and eat it too.   

Productivity—the untamed beast of the pandemic workplace

Last week, we asked you to take part in our survey on what the pandemic did to our workplace productivity. Thank you for your responses, it helped us shape the narrative to the story we are about to tell today.

2,061 readers took The Ken’s survey and most of you told us that your productivity fell, even as work hours and workload rose. The impact of this shows up in many readers’ desire to quit their jobs. 

Source: The Ken

Read our story today at 8:00 am IST, where we speak with consultants, companies, and employees to understand the mismatch between employees’ and employers’ versions of productivity. And how companies are grappling with a bigger question: how do you measure productivity when you can’t see your employee working?

Do share the piece widely:
https://the-ken.com/story/longer-wfh-hours-more-work-but-how-productive-are-you-anymore/

That’s it from us today.

If you’d like to share this free edition, here’s the link for you:

https://the-ken.com/bfo/314

Stay safe,
Olina
olina@the-ken.com

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