10/27/09 - The province of Sikkim is likely to have the distinction of being the first Indian state to issue online gambling licenses, and UK gambling giants like Betfair and William Hill Online are among the first into the sector with licensing applications, reports The Independent newspaper.
A decision on the licenses, which will come into effect in September 2010, is expected within the next two weeks.
"Some 13 betting companies, including local Indian operators, are battling it out for at least three licences in Sikkim," the newspaper reports. "Sources said they want their betting services live from April 2010 – in time for the football World Cup in South Africa. The bookie Ladbrokes and the online specialist 888 are also considering bidding for a licence in Sikkim."
Approved licence holders will be able to promote their services in Sikkim, but they expect to be able to take bets from all over India. While Sikkim has a population of less than 600 000, India has a rapidly growing population of 1.2 billion, and once other Indian states see the huge revenues and tax receipts flowing into Sikkim, they are likely to follow suit.
The rapidly growing Internet penetration in the affluent Indian states will likely also contribute to a business that could be substantial.
"I can confirm that we are interested in entering the Indian market and we are in discussions with potential partners at the moment," a spokesman for William Hill plc said Monday.
Any entry into the Indian market will have to include local partnership deals. Under Indian law, foreign companies have to team up with a local joint venture operator to launch in the country. The Independent notes that William Hill is thought to have held talks with Global Torrent International, based in Sikkim.
Betfair declined to comment on the report, but is understood to be partnering with Agilisys Managed Services. Similarly, Bwin declined to comment on reports that it was involved in an Indian venture, but has had teams on the ground in India for some time.
Ladbrokes commented: "We are watching the space to see what happens because there are several partner opportunities to get a licence in the province of Sikkim."
888, which declined to comment, is reportedly also considering making a bid for a Sikkim licence.
Current land gambling restrictions in India permit only horse racing, trackside at meetings, and gambling at casinos in just two states, Goa and Sikkim. According to official figures, legal operators of casinos and horse racing operations make about $400 million in revenue in India each year from an estimated total betting turnover of $20 billion.
However, 'black market' gambling - where betting on cricket matches comprises 50 percent of the action - is conservatively valued at around $40 billion and generates income of around $2 billion a year....and the nascent online sector presently accounts for only a small fraction of that.
The drawback with black market gambling is the current default rate. Because betting is done on credit, there is an approximately 40 percent default rate where either bookies or players do not meet their obligations. This represents a window of opportunity for well established and trusted online gambling companies entering the market, and Western firms are keen to make the most of it.
Whether a Sikkim licence will permit extra-state operations remains uncertain. Sikkim will use to introduce its licensing and regulation is currently uncertain. Online gambling will technically be illegal elsewhere, and it is thought in some quarters that anyone placing a bet with the licensed operators in Sikkim may be breaking the law. However, there is speculation that if that were the case, the liability would rest with the outside-state customer and not the licence operator in Sikkim.
