Competitive landscape analysis of the Indian betting payments industry

The competitive landscape of the Indian gaming payments industry is influenced by multiple factors such as legal, technological and market demand, and needs to be analysed in terms of the policy environment, key players, technological trends and risk challenges:

I. Policy and legal environment

Grey area regulation
- India's Public Gambling Act (1867) prohibits brick-and-mortar gambling but does not explicitly regulate online gaming (states have the power to legislate).
- Some states (e.g. Tamil Nadu) have a total ban on online betting, while Sikkim, for example, allows legal operations.
- Payment platforms are required to avoid "directly servicing gaming transactions" and usually process funds through third-party agents or cryptocurrency channels.
financial regulatory pressure
- The RBI (Reserve Bank of India) has restricted banks and payment gateways from processing transactions that are clearly labelled as "gambling".
- Spot checks of UPI payments by NPCI (National Payments Corporation) may result in the freezing of gaming-related accounts.

II. Major Payment Players and Strategies

1. Traditional e-wallet/UPI service providers

Paytm/Paytm Payments Bank: Having been investigated by the RBI for connected betting transactions, it now strictly filters high-risk merchants.
PhonePe/Google Pay: Proactively blocking access to gaming merchants and relying on AI to monitor unusual transaction patterns.

competition strategy: Compliance is a priority, sacrificing some market share for long-term licence security.

2. Small and medium-sized payment gateways (grey anchors)

Cashfree/Razorpay: Indirectly serving some gaming platforms through layered business structures (e.g. disguised as game top-ups or digital services).
emerging player: Juspay and others attract underground market customers through API interface flexibility.

competition strategy:: Playing games under the slogan of "technology neutrality" and charging higher fees (about 5%-15%, much higher than the general industry's 2%).

3. Cryptocurrency corridors

WazirX/Bitbnsand other exchanges offering USDT-INR exchanges, becoming the preferred route for high net worth gamblers. Shifted to P2P OTC trading model after regulatory crackdown.

4. International payments programme

International e-wallets such as Skrill/Neteller have been adopted by some high-end platforms for supporting cross-border settlements, but are facing INR withdrawal difficulties.

III. Technology and operational trends

hybrid routing: Split a bet into multiple orders of virtual goods (e.g., game coins + music subscriptions) to bypass the risk control system.
Tokenised top-upsThe "laundering" of funds occurs when users purchase gift cards for e-commerce platforms that are then converted into casino chips.
Cash-to-Cash Network::
- Mumbai/Delhi and other places have seen the emergence of O2O models where offline agents collect cash and recharge online.
Alternative settlement::
- Knockout transactions within Telegram groups are completed with UPI or personal transfers to avoid centralised clearing.

4Risks and future challenges

Enforcement volatility
2023 Delhi police raids on multiple POS agents involved in illegal gambling payments show sign of regulatory tightening.

2.Alternative systems erosion
Underground money changers (Hawala) in places like Mumbai divert demand for settlement of large bets above $30%, which are difficult to trace because of their anonymity.

3._ Rising costs_
The combined cost of each successful payment (including alternate route testing/proxy commissions) has accounted for an amount of 12%-20%, squeezing operator margins.

5Key findings

–short-term:: Survival is determined by the ability to "innovate by stealth" (Stealth Tech) - whoever develops a more decentralised and audit-resistant payment architecture has the advantage.
–mid-term:: Existing international players (e.g., DraftKings) could disrupt the market with a regular cooperative bank if federal uniform legislation opens up sports betting licences.
–long termThe promotion of the Central Bank Digital Currency (CBDC) may completely change the anonymous gaming space and push the industry to polarise into fully compliant or completely underground.

Practitioners are advised to keep an eye on Sikkim state licence developments and NPCI's new draft regulations on VASPs (Virtual Asset Service Providers), and lay out identity-segregated fintech subsidiary structures in advance

VI. Market Segmentation Opportunities and Competitive Differentiation Strategies

1. Sports betting payment solutions

target audience:: Legal fantasy sports platforms such as Dream11, MyTeam11, etc. (which the Supreme Court of India has ruled are "games of skill" and not gambling).
Payment pains: High-frequency microprocessing of user top-ups/withdrawals is required, and the legitimacy of the use of funds needs to be demonstrated.
Innovation Cases::
- Franchised prepaid cards: For example, Oxigen Wallet issues virtual cards that are limited to reloading for fantasy sports, circumventing bank controls through a prepaid mechanism.
- Embedded Finance: Collaborate with cricket tournament live streaming apps (e.g. Hotstar) to shorten the conversion path by embedding bet payment buttons directly on the live streaming page.

2. High-net-worth user access to online casinos

Demand characteristics: High single transaction value (Rs. 50,000+) and strong requirement of anonymity.
prescription:
- Tiered USDT settlementThe fiat-cryptocurrency conversions are done through OTC counters in Dubai or Singapore, and are then channelled back to the Indian company's account in the name of "software service fees".
- Whitewashing of luxury goods: Work with the Bombay Diamond Exchange to convert bets into invoices for jewellery purchases (common in Hawala hybrid operations).

3. Regional underground lottery markets

market volume : Kerala/West Bengal's offline lottery has an annual turnover of over Rs 2,000 crore, and digital transformation has created demand for online generation.
Payment Innovations:
Using Aadhaar authentication + voice OTP confirmation (for illiterate users) through local grocery shops as cash collection nodes.

7Analysis of regulatory arbitrage models

Sikkim Licence Cover
Sikkim-based online gaming licence holders operate technical teams in Bangalore, claiming that their "services are limited to Sikkim", while in reality they are distributed nationwide through VPNs.
Cross-border server architecture
Placement of payment processing servers in Cambodia or the Philippines, with the front-end disguised as a "gaming skills competition platform", taking advantage of a loophole in the RBI's Foreign Exchange Management Act's jurisdiction over offshore merchants.
Judicial delaying tactics
Deliberate choice of Goa courts (where gambling jurisprudence is lax) to take advantage of inefficiencies in the Indian judicial system to delay the implementation of account freezes.

8Forecast of key variables for the next three years

variable dimension	Optimistic scenario	scenario
federal legislation	Introduction of the Online Gaming Commonwealth Act, which grants 10 national licences.	RBI completely bans non-licensed platforms from accessing UPI
technical reconnaissance	NPCI upgrades AI recognition capabilities lagging industry innovation by more than 2 years	UPI version V2 mandatory biometric linkage for all large transactions
Alternative currencies	USDT Becomes Default Settlement Vehicle Accounting for More Than 40%	CBDC Launches Post-Chain Tracking to Freeze All Gambling-Related Addresses

9Strategic recommendations

Compliance Prioritiser's Choice
→ Acquisition of small NBFCs (Non-Banking Financial Companies) to handle the flow of funds under the name of "Entertainment Technology Lending" (e.g. the logic of Paytm's early acquisition of CreditMate).

Survival rules for grey operators
→ Creating a Multi-Level Shell Company Structure.

graph LR

End user --> Dubai shell company (technical service contract) --> Singapore SPV [commission settlement] --> Indian entity (IT consulting invoice)

High-risk, high-return strategy
Development of an NFC-based offline chip exchange device to create physical pools in Macau/Nepal casinos to avoid digital traces.

10Special Considerations for Chinese Companies Going Overseas

1.Geo-risk aversion
Avoid direct use of the RMB settlement channel (CIPS is vulnerable to monitoring) and prioritise grafting onto the intermediary layer of Labuan Malaysia or Bank of Turkey.

2.Adaptation of cultural appropriateness
In response to Hindu taboos, the gambling interface was packaged as a "Mahabharata Epic Battle Game" (similar to Zynga's Ramadan-themed tweaks in Islamic markets).

3._ Alternate exit mechanisms_
Pre-register for the UK Gambling Commission licence, and if there is a sudden change in the Indian policy, you can quickly switch to European players to attract traffic.

Final conclusions.Increased Matthew effect in the industry from 2024 onwardsThe top five payment providers may control more than 80% of hidden traffic, but are required to set aside 15%-20% of revenue annually for legal reserves. Whether or not they continue to invest depends on whether or not the companies can afford to do so6