Zepto faces scrutiny for promoting illegal betting app Parimatch during IPL season

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Zepto, a leading quick commerce startup, has come under fire for displaying advertisements for Parimatch, an illegal offshore betting platform, amid the ongoing Indian Premier League (IPL) season. The company has yet to provide an official statement regarding the matter.

According to a report by MediaNama, this incident follows a similar controversy where Uber cabs in Delhi and Mumbai were seen promoting 1xBet, another illegal betting entity. Both platforms, Parimatch and 1xBet, are based in Cyprus and operate multiple mirror sites to bypass legal restrictions, particularly during major sporting events like the IPL.

Despite being banned in India in 2023, Parimatch continues to maintain visibility through digital advertising. The Ministry of Electronics and Information Technology (MeitY) had previously blocked 581 applications under Section 69A of the IT Act, 2000. Of these, 174 were linked to betting and gambling platforms.

Allegations of FDI Violations Against Zepto

Zepto, which holds a 21% market share in India’s quick commerce sector, has received significant Foreign Direct Investment (FDI) to scale its operations. The Confederation of All India Traders has alleged that Zepto bypasses FDI regulations by directly selling products instead of acting as a facilitator between sellers and consumers. If proven, this would make Zepto ineligible for FDI under the Foreign Exchange Management Act (FEMA), 1999.

Additionally, Zepto Café, the platform’s in-house brand, has come under scrutiny for not displaying the manufacturer’s details on its portal. As per FDI norms, e-commerce platforms operating under the marketplace model must disclose the seller’s name, address, and contact information.

Concerns Over Ad Placements

The Parimatch advertisement on Zepto was listed with a Rs. 0 price tag, reducing the likelihood of users removing it from their carts. This ensured prolonged exposure, reinforcing brand recall for an illegal betting platform. The incident raises concerns about the lack of scrutiny in digital ad placements and highlights the need for stricter monitoring mechanisms to prevent the promotion of restricted services in India.

Advertising plays a crucial role in shaping consumer behavior, making it imperative for platforms to be more accountable. Given that Parimatch is not registered under Indian jurisdiction, questions arise regarding the regulatory framework under which it operates.

Challenges in Enforcement

Indian authorities face significant challenges in enforcing laws against foreign-registered betting platforms. While MeitY has blocked access to these platforms, companies like Parimatch and 1xBet circumvent restrictions using mirror sites and alternate domains. The Directorate General of Goods and Services Tax Intelligence (DGGI) has attempted to crack down on such entities, but legal loopholes continue to allow them to function in the country.

The lack of uniform betting laws across Indian states further complicates enforcement. Platforms operating outside India avoid taxation, creating unfair competition for legal entities that pay a 28% Goods and Services Tax (GST) on player bets. In a recent Lok Sabha address, IT Minister Ashwini Vaishnaw reaffirmed that online gaming intermediaries fall under central government jurisdiction.

How Illegal Betting Platforms Operate

Illegal betting platforms make it easy for Indian users to access their services. They offer multiple payment options, including UPI transactions, and use mirror sites to ensure continued access. Users who create an account on one domain can log in on another, preventing disruption even if a site is blocked.

These operators distribute alternative access points through Telegram, WhatsApp, and Discord, making enforcement even more difficult. By positioning themselves alongside legal platforms, they create revenue leakage of 2–3%, making regulation a challenge.

The Zepto-Parimatch controversy has once again highlighted the pressing need for stricter digital ad regulations and improved enforcement mechanisms to combat illegal betting activities in India.

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