Karnataka’s Online Betting Bill: Reform or Ruin?

 

By Sharan Kumar

 

The Karnataka government’s proposal to permit online betting on horse racing has sparked significant debate within the racing community. While the move is presented as a step toward modernisation and digital integration, its implications extend far beyond technology. The central question now confronting stakeholders is whether this shift signals an effort to eventually curtail or even eliminate traditional bookmakers, whose role remains vital to the sport’s financial and operational stability.

 

Online betting in Indian racing is not a new concept. Race clubs have experimented with it previously, with limited success. The primary challenge has always been taxation. Under the current regime, GST rates approaching 40 percent significantly diminish margins, and Section 194BB imposes income tax on winnings above ₹10,000 without allowing set-off against losses. In a sport defined by frequent losses and occasional wins, taxing only the latter creates a clear disincentive for punters to use formal online channels. Unsurprisingly, earlier attempts saw minimal turnover and negligible contributions to race clubs.

 

The government’s renewed interest in allowing online wagering comes at a time when the environment for on-course betting has become more restrictive. The High Court has repeatedly directed authorities to monitor betting activities at the Bangalore Turf Club, citing the potential for irregularities and even recommending a Monitoring Committee. Simultaneously, bookmakers have faced increased scrutiny, including raids and investigations into allegations of unrecorded bets and tax evasion. These developments have sparked concern about the future of the bookmaker profession and whether the proposed online framework is part of a broader restructuring of how racing is expected to function.

 

This concern is well-founded. Bookmakers are not peripheral to the sport; they are integral to its economic structure. They provide liquidity on race days, attract bettors, and contribute substantial stall-fee revenue to clubs. Their presence creates the competitive odds environment that has traditionally drawn punters to the racecourse. Any reduction or removal of bookmakers would have immediate consequences for race-day activity, attendance, and the financial viability of race clubs. If bookmakers are curtailed without viable alternative revenue sources, the losses could be substantial and online betting, given its historically low uptake, is unlikely to compensate.

 

Compounding the issue is the ongoing growth of the grey betting market, which operates entirely outside formal regulation. This parallel market thrives on the absence of taxation, ease of access, and complete anonymity. Within the industry, it is widely acknowledged that illegal betting networks handle far greater volumes than legal mechanisms. If online betting remains unattractive due to taxation and bookmakers face restrictions, punters may be driven further toward unregulated channels, undermining the legal ecosystem even more.

 

Online betting has the potential to serve as a complementary avenue for racing, but only if it is introduced as part of a balanced system that acknowledges the indispensable role of bookmakers. Without such balance, reforms aimed at modernising the sport may, unintentionally, weaken its financial foundation. As discussions around the proposed legislation progress, the future of bookmakers and the clarity with which the government addresses their place in the new framework will ultimately determine whether this move strengthens or destabilises racing in Karnataka.

 

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