July 16, 2021
TCP : ADVERTORIAL
The state is diligent in keeping tax legislation up-to-date, but analysis shows that more than that is needed for the sake of public health and consumer protection.
Online Casinos Make Use of Science, Sometimes Crossing Red Line
A recent analysis explores the ways online casino operators and betting platforms have put insights from the science of behavioral psychology to their benefit. The authors – researchers Saksham Singh and Anirudh Tagat – hold the view that there are cases where businesses go too far and may be harmful to users, even sending them along “the slippery slope to addiction”.
While ‘nudges’ might be a legitimate technique to assist the customer to make decisions in his or her benefit, their darker and more sinister variant – ‘sludges’ – are designed to harm the user to the benefit of the online business. Clever user interfaces and designs trick consumers’ brains and make them bet more and more.
Signing up on casino or betting platforms like PureWin is usually an easy and frictionless process that requires nothing but a phone number. Alert messages that inform users about the inherent risks of gambling and the potential loss of money are rather rare.
Then, the user is welcomed into the brightly lighted and colored interfaces which are designed to resemble real offline casinos. Attractive offers about big discounts and huge prize pots flash in great numbers in front of the eyes of the consumer. The whole user experience is designed to provide a constant flux of dopamine into the player’s head, similar to what happens when we receive a lot of ‘likes’ on social media.
The Fear Of Missing Out or the FOMO phenomenon is also widely used by some platforms. They promote gambling as a social event and notify users to play with friends offering video calls and chatting. The number of players online is constantly highlighted and inactive users are urged to come back.
The St Petersburg Paradox that makes people overestimate their minimal chances to win or the Gambler’s Fallacy when players misjudge the probability for the occurrence of an event based on previous outcomes from the same type of event are both well-known behavioral patterns used by some businesses in the sector.
Behavioral-Induced Malpractices Possible in Unregulated Gray Areas
The legal status of betting and gambling in Bharat is regulated on the national level by the archaic colonial-era Public Gaming Act of 1867. Then, the Constitution leaves the decision making to the individual state legislators. This makes for a complex and often confusing legal environment, but in most cases online gambling and betting turn out too new to be discussed in laws and bylaws, which results in a gray regulatory area.
Nevertheless, both the Income Tax Act with its amendment by the Finance Act of 1986, and the Central Goods and Services Tax Act (CGST) of 2017 take care to levy gambling and betting . The laws even state that all legal and illegal activities must be taxed.
Taxation is Not Equivalent to Regulation
The need for regulating the Indian gambling market does not mean just filling the nation’s treasury by devising new ways to tax people and businesses. Even though Deloitte estimates the Indian online gaming market at $ 2.8 billion (approximately ₹ 20,500 crore) in their 2021 Technology, Media, and Telecommunications Predictions report, public interest is larger than that and includes consumer protection and public health concerns as well.
Regulation on online gambling will make operators encourage responsible gaming through interface additions like speed-of-play limits, single-window or single-app rules, prohibitions on false wins and reverse withdrawals, and other similar measures.
To be effective, regulation should have legal clarity and come with strong mechanisms. Personal data protection should be balanced with the need to verify age so to prevent children to play with the potential to be harmed. Gambling and betting platforms should be registered and regularly audited and monitored.