Major Crackdown on Rs 13,000 Crore Illegal Online Gaming Network in Hyderabad
In a significant enforcement action, authorities have dismantled a sprawling illegal online gaming network valued at approximately Rs 13,000 crore, which allegedly operated through a complex web of shell companies, fabricated digital identities, and compromised payment systems. The breakthrough came with the arrest of fintech entrepreneur Pankaj Kumar in Hyderabad on Thursday, according to official statements.
Key Arrest and Judicial Custody
Pankaj Kumar, the founder of Adsum Advisory Services Private Ltd, was apprehended by the Directorate General of GST Intelligence (DGGI) on Wednesday evening. He was subsequently remanded to judicial custody the following day, marking a pivotal moment in the ongoing investigation.
Alleged Role of Adsum Advisory Services
Investigators have leveled serious allegations against Kumar's firm, asserting that it served as a critical gatekeeper in the illicit operation. Adsum Advisory is accused of clearing fraudulent Know Your Customer (KYC) verifications, thereby enabling shell entities to gain unauthorized access to banking channels regulated by the Reserve Bank of India (RBI). This facilitation allegedly allowed for the large-scale movement of funds connected to real-money gaming platforms.
DGGI sources revealed that Adsum Advisory provided third-party fraud detection and customer verification services, including digital KYC processes. It is alleged that the company knowingly facilitated the onboarding of shell companies for Unified Payments Interface (UPI) integration. These accounts were then exploited to route proceeds from illegal gaming sites, with proper merchant risk profiling deliberately bypassed in exchange for syndicate-linked financial gains.
Expansion of the Probe and Financial Impact
The investigation has broadened into a comprehensive crackdown targeting online gaming networks and their associated financial intermediaries. Officials highlighted that India's online gaming sector is projected to reach an estimated $23 billion, or roughly Rs 2 lakh crore, by 2025, underscoring the scale of the issue.
As part of the enforcement measures, approximately Rs 100 crore in bank accounts has been frozen, and multiple suspects have been arrested. The case originated after DGGI received specific inputs regarding online platforms offering real-money gaming in and around Hyderabad.
Uncovering the Organized Syndicate
Investigators focused their scrutiny on two websites—funinmatch360.com and racejeet247.com—and meticulously tracked outward fund flows. As the probe expanded, officials uncovered an organized syndicate operating illegal gaming websites with alleged support from various fintech players, including payment aggregators, gateways, and technology service providers.
Payment aggregators typically depend on third-party verifiers for merchant onboarding and KYC compliance. In this instance, investigators allege that shell firms paid these verifiers to expedite onboarding without conducting adequate due diligence. Around 100 shell entities across the country have been identified, many of which allegedly filed GST returns showing minimal revenue while processing disproportionately large transactions.
Misuse of Banking APIs and Technology Providers
Officials also raised concerns about the alleged misuse of banks' payout APIs (Application Programming Interfaces) by technology providers masquerading as fintech firms. These systems, designed for bulk automated transfers, can process payments without requiring OTPs or manual checks when accessed by authorized clients. This capability allowed for the rapid and unchecked movement of funds, according to investigators.
The crackdown underscores the growing challenges in regulating the burgeoning online gaming industry and highlights the critical need for robust financial oversight to prevent such large-scale fraudulent activities.
