Surrogate advertising remains a dark area in the Indian advertising landscape. While liquor brands have moved on, betting apps like Lotus365 have taken their place and continue to brazenly advertise on social platforms, investing significant amounts of money in high-profile celebrity endorsements. However, Lotus365 is not a legal app in India.
Celebrities endorsing Lotus 365, including popular names like Govinda, Sunil Shetty, Bigg Boss 15 winner Tejasswi Prakash, and many others, have not just raised concerns about influencer content and potential violations but also questions regarding the app’s legitimacy and compliance with regulations.
According to Abhinay Sharma, Managing Partner at ASL Partners, a boutique law firm, Lotus 365 was officially banned in India in February 2023 by the Ministry of Electronics and IT (MeitY). The ban was imposed under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which banned 138 Chinese-affiliated betting platforms, including Lotus 365. Although Lotus 365 claims to be licensed by the government of Curacao, this license is not recognized by the Indian government, making the app an illegal betting platform in India.
So how are they still functioning in India?
Ekta Rai, Advocate at Delhi High Court elaborates.
“The ban is with an objective of national security and not in the context of legality of online gaming, which also means that the ban is not upon any court directions towards banning online gaming, but merely to ban the said domain. Accordingly, the app currently operates from a surrogate domain and not the domain which has been banned,” she says.
While the celebrities and influencers endorsing the app are not directly violating any codified law, they are in violation of the directions of the Central Government since the app is banned and any promotions of it are illegal.
While there is no prima facie case of promoting a threat to national security against the celebrities and influencers, they can still be penalized for violating guidelines set by the Advertising Standards Council of India (ASCI). These guidelines state that gambling ads must not be misleading or deceptive and must not target children or vulnerable groups. Therefore, influencers and celebrities promoting Lotus 365 on social media could be in violation of these guidelines.
“Under section 21 of the Consumer Protection Act 2019 and the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022, endorsers doing illegal advertisements without due diligence may face penalties such as fines of up to Rs 10 lakh (which may extend up to Rs 50 lakh for subsequent violations) or prohibition from making endorsements for a period of up to one year (three years for subsequent violations),” explains Rohit Jain, Managing Partner at Singhania & Co.
These offshore betting platforms have significantly increased their ad spends, with an estimated Rs 2000 crore spent on marketing activities around IPL 16. Betting ads have grown tenfold on digital platforms and twenty-sevenfold on television media in 2022. However, Lotus365 and other platforms have shifted their focus to social media platforms, collaborating with influencers, meme pages, and parody accounts to increase brand recall.
Earlier this year, the Indian government took notice of the rise in gambling and betting ads during the Indian Premier League cricket season. The Ministry of Information and Broadcasting urged the chief secretaries of states to curb outdoor ads related to gambling and betting. However, there has been no response from the ministry regarding Lotus365.
Overall, Lotus365 is an illegal betting app in India, and the celebrities and influencers endorsing it may face penalties for their involvement in promoting an illegal platform.