India banned online money gaming in 2025. Someone forgot to tell the bettors.
Polymarket and Kalshi are still allowing Indian users to sign up and trade on their platforms, despite a formal government warning. India’s Ministry of Electronics and Information Technology said in a letter last month that users are accessing “illegal and blocked prediction market and online betting platforms” in defiance of “domestic prohibitions,” pointing specifically to Polymarket and similar sites that internet providers are supposed to be blocking. They aren’t being blocked. Not effectively, anyway. And the people running these underground markets know it.
This is not a fringe phenomenon. This is a craze.
What Are Prediction Markets, and Why Does India Care
The basic concept is simple enough. You pick an outcome — will DMK win Tamil Nadu, will crude oil hit $90, will Pakistan win the next Test — and you buy a position. If you’re right, you profit. If you’re wrong, you lose your stake. By late 2025, prediction markets globally were processing over $2 billion in weekly transactions, with major events drawing hundreds of millions in wagers. They now permeate social media, retail investment apps, and search engines, reaching millions of users, operating as mainstream infrastructure rather than niche tools.
India is not supposed to be part of that. The Promotion and Regulation of Online Gaming Act, 2025, passed in both houses of Parliament and received Presidential Assent on August 22, 2025. It imposes a blanket prohibition on all “online money games” and does not provide concessions for games of skill. That’s the law on paper.
In practice, platforms are getting around it the way people always get around things in 2026: VPNs and crypto wallets.
The Underground Machine
Indians are accessing Polymarket — an unregulated offshore platform — through VPNs and crypto wallets like USDC. Anyone doing so is violating the Income Tax Act, the Black Money Act, PMLA, and FEMA, and faces serious penalties and prosecution. That list of acronyms is not trivial. PMLA is the Prevention of Money Laundering Act. FEMA governs foreign exchange. The legal exposure for an Indian citizen placing a bet on Polymarket is not theoretical — it is real and stacked.
And yet. Tamil Nadu police sources reportedly indicate that illegal betting gangs are actively running election wagering through encrypted WhatsApp and Telegram groups. Private business groups have allegedly conducted independent opinion polling exercises before placing large-scale bets worth crores.
That last part deserves a second read. These are not casual punters placing a few hundred rupees on cricket results. These are organized operations commissioning their own surveys to get an edge before they bet. Sources suggest betting syndicates may even distribute fake polling data through WhatsApp and Telegram to influence trader behaviour. At that point, you are no longer looking at a prediction market. You are looking at a manipulation operation wearing a prediction market’s clothing.
The Homegrown Grey Zone
Platforms like Probo, MPL Opinio, SportsBaazi, and Big Cash are already operating inside India, and they have been doing so by threading a needle that the law has not yet definitively closed. They call it “opinion trading.” They call it a game of skill. Despite operating in a legal grey area, these platforms continue to thrive on venture capital money and crores in trading volumes — without users having any real recourse if something goes wrong.
SEBI issued an advisory in April 2025 noting that such applications lie outside its regulatory purview and do not warrant investor protection under securities law. It also warned investors against platforms mimicking investment terminology. Translation: SEBI looked at this mess and decided it was somebody else’s problem. Since these trades don’t involve traditional securities, SEBI says it’s not in their court. So the platforms mostly regulate themselves.
Nobody finds that reassuring.
Petitions to ban opinion trading platforms are underway in the Gujarat High Court, Punjab and Haryana, Chhattisgarh, and other jurisdictions. The Gujarat petition argues that outcomes depend on external circumstances, not user skill — that this is gambling dressed in a blazer. The platforms counter that analytical skill drives results and that informed users have an edge. Courts have not yet ruled definitively either way. There is still no clear legal precedent specifically for prediction markets.
The Manipulation Problem Nobody Wants to Admit
Here is the part that should worry people beyond the legal exposure.
Former Income Tax investigation official PS Sivasankaran explained the mechanism: people with better ground information or insider tips bet early, then use information seeding and leaked false opinion polls to swing the market. When DMK was at 60% in January, it jumped to 86% after exit polls. Manipulators bet low, push the price up with false news, and exit with profit without waiting for actual results.
That is a pump-and-dump scheme. Except instead of a penny stock, the commodity being pumped is public perception of an election outcome. Low trading volume and few participants mean even small trades can substantially shift prices and manufacture the appearance of consensus, influencing political expectations rather than simply reflecting them — turning electoral forecasts into instruments of influence rather than collective judgment.
The global precedent is not encouraging. In the 2025 New York mayoral race, trading was concentrated among a small number of accounts, including foreign participants. In January 2025, Kalshi announced Donald Trump Jr. as a strategic advisor, raising concerns about potential access to insider political information. These are not hypothetical risks. They are documented, named concerns that regulators in the world’s most sophisticated markets have not yet resolved.
What the Legal Risk Actually Looks Like
For the individual user sitting in Mumbai or Bangalore, accessing Polymarket through a VPN, the risk calculus feels abstract until it isn’t. The violations stack quickly. Foreign exchange outflows through crypto. Undisclosed taxable income. Potential money laundering exposure depending on the transaction trail.
The only viable path forward for platforms would be to seek regulatory legitimacy, obtain recognition as a stock exchange, and get approval from the central government — which would validate event contracts and remove future legal burdens. The 2025 Online Gaming Act’s blanket prohibition creates a significant headwind, though prediction markets could theoretically be carved out through future amendments or separate legislation.
“Theoretically” and “could” are doing heavy lifting in that sentence.
The Addictiveness Nobody Is Discussing
Prediction markets exhibit similar structural and functional trends as online gaming. Platforms deploy dark patterns and nudges to drive engagement and impulsive trading. Many platforms mirror gambling features such as countdown timers, visual feedback, leaderboards, loot-box-style token rewards, and timed prompts — features that turn forecasting into play and “instant loss-chasing,” as users chase fleeting sensations of foresight rather than data-driven decision-making.
The “wisdom of crowds” framing, the idea that aggregated bets reflect genuine collective intelligence, is the intellectual veneer on top of a product that is engineered to keep people trading. That framing is not wrong exactly. Prediction markets can aggregate information usefully. But so can a lot of things that people still get hooked on.
The bet on whether this gets regulated in India before it causes serious harm is, at this point, still wide open.