Zepto, a major quick commerce startup in India, has been called out for showing ads featuring Parimatch, an illegal offshore betting site, during the Indian Premier League (IPL) season. The controversy has come on the heels of another case of Uber cabs in Delhi and Mumbai displaying ads for 1xBet, another banned gambling entity. Parimatch was blocked in India in 2023 under Section 69A of the IT Act, 2000, but the operators exploit digital advertising loopholes to keep their brand visible. The incident has renewed concerns about the adequacy of ad monitoring mechanisms and the need for greater regulatory scrutiny. With digital platforms coming in between brands and consumers, responsible ad placements need to be enforced to avoid the encouragement of illegal activity.
Allegations of FDI Violations Against Zepto
India’s quick commerce market is led by Zepto, which has a 21% market share and has been accused of breaching FDI (Foreign Direct Investment) regulations. The Confederation of All India Traders claims that Zepto conducts direct selling of products rather than facilitating sales between third-party sellers and consumers, which renders it ineligible for FDI, as per the sections of the FOREIGN EXCHANGE MANAGEMENT ACT (FEMA), 1999. Fill in Failing to show manufacturer details Zepto Café, which is the platform’s in-house brand, another selling point of the platform has also been questioned under the norms of FDI for not displaying its manufacturer details, which is a compulsory step. If substantiated, such breaches could have regulatory implications and penalties attached.
Betting Laws in India: A Fragmented Landscape Central Regulations:
The Ministry of Electronics and Information Technology (MeitY) has actively blocked illegal betting platforms operating in India. Under Section 69A of the IT Act, 2000, the government has blocked 581 applications, including 174 linked to betting and gambling. Betting platforms operating in India are subject to a 28% Goods and Services Tax (GST) on player bets. The Directorate General of Goods and Services Tax Intelligence (DGGI) is responsible for monitoring tax compliance.
State Regulations
India is unique; gambling laws are state-specific, which creates grey areas and the opportunity for offshore platforms to exploit. Some, such as Goa and Sikkim, do so under regulation, while in others, stricter prohibitions are imposed. There are no laws governing online betting despite the Public Gambling Act, of 1867 being the primary law. Betting Ads MIB Rules Recently, the Ministry of Information and Broadcasting (MIB) framed strict guidelines forbidding the promotion of illegal betting and gambling platforms in all forms of media including television, digital platforms, and print advertisements. Advisory Notices: The MIB has repeatedly warned digital platforms, television networks, and social media companies against broadcasting ads related to offshore betting platforms.
Advertising Ban
Companies cannot promote betting platforms under the guise of sports blogs, fantasy gaming, or news portals.
Mandatory Compliance
This is a mandatory disclaimer for advertisers, broadcasters, and digital platforms to ensure that they do not promote gambling services, in which case, a penalty can be imposed under the Cable Television Networks (Regulation) Act, 1995, and the IT Act, 2000. Action on Violators: The MIB has also urged intermediaries like Google, Facebook, Instagram, etc to take down any advertisements related to betting and ordered television networks to follow its guidelines. Article 2, Clause 7 provides for the exercise of the Ministry of Culture’s policy in the bet database regulation based on this law and related acts.
How Illegal Betting Platforms Operate
Platforms like Parimatch and 1xBet operate through multiple mirror sites, ensuring uninterrupted access. They accept payments via UPI, cryptocurrencies, and e-wallets, making transactions difficult to trace. These platforms distribute access links through Telegram, WhatsApp, and Discord, making enforcement challenging.
Enforcement Challenges & The Way Forward
Despite government efforts, enforcement remains murky due to state gambling laws’ fragmented nature. Offshore platforms operating beyond Indian jurisdiction. Evasive tactics like mirror sites and alternative payment methods. Online betting, which generates millions of rupees a day in income, needs a more comprehensive and centralized solution to efficiently manage revenue and plug leaks. This could include tighter regulations on digital advertising, better monitoring of financial transactions, and strict penalties for violations. Conclusion The Gorakhpur Controversy: Cracking down on illegal betting in India will need stricter digital advertising norms and regulatory oversight, and the Zepto Parimatch controversy highlights that urgency. So as digital commerce grows, platforms should do more due diligence around ad placements, so that they’re not inadvertently promoting illegal services.