Demonetization gives severe blow to betting in India

The recent move by the government of India to cease the legal tender of 500 and 1000 notes has seen huge impact. The sudden announcement by the Prime Minister of India Narendra Modi caught almost everyone off-guard. The announcement came on November 8 as the notes became illegal tender from that midnight itself. No doubt that the move is great initiative to curb black money. However, the common people have been facing a lot of problems.

Having said that, it is obvious that to incorporate any massive change, a few blows are bound to happen. One needs to cooperate with the government so that the entire agenda bears fruit. The black money holders faced a severe crisis. Two of the most affected sectors by this move are the betting sector and the Hawalas. Hawala, which mean trust, is laid on the foundations of black money.

It is the practice of gambling wherein most of the transactions are made only by cash. Hence there are no official records of huge sums of money kept. A simple illustration to explain this scenario is this. Suppose a person in London needs money. His counterpart in India has the money but cannot make a huge transfer directly. A direct transfer would mean coming in to the eyes of the government easily.

Hence, what the person does is ask the Hawala to pay the money. The Hawala in Mumbai speaks to his partner in London to handover the cash to the person needing it in London. In return, he takes his money from the person in cash in India. Now, with huge sums of money piled up with Hawalas, they are left with no option but to handover it to the government.

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The bookies have also had a major sector. The legal and illegal gambling practices in India have faced a severe blow too. Betting is a huge business in India. The Lodha committee had recently recommended betting to be legalised in India. On what scale and on what plan of action it is to be done, that was not suggested though.

“We have been smacked, and are completely shut down. The fact that we are a cash based system is one of the reasons why we are down in the dumps at the moment,” a Mumbai-based bookie quoted. It is obvious that with so much of illegal money in hands, they are having huge confusion as what is to be done with it.