After the Ban: Where India’s Betting Money Went

While investigating a 1xBet-linked money-laundering case, Enforcement Directorate officials followed more than ₹331 crore deposited into a single bank account over eight months. The trail led to a bike-taxi driver who drives for a living. The account had received large deposits from many unidentified sources, and the money was quickly passed on to other suspicious accounts.

The driver wasn’t running a betting empire. His account had been rented. That one account sums up what happened to India’s betting money after the ban: it didn’t disappear. It went underground, and then it went on-chain.

The ban didn’t kill demand

Parliament passed the Promotion and Regulation of Online Gaming Act in August 2025. The real-money gaming segment had already fallen from $2.3 billion in 2024 to $1.3 billion in 2025, and the ban effectively wiped it out. The Act and its rules came into force on 1 May 2026, banning online money gaming completely and setting up a new regulator, the Online Gaming Authority of India.

The players didn’t go away. Research by Lumikai and VTION found that about one in three former real-money players moved to offshore betting platforms, spending up to ₹10,000 a month with no oversight. As Lumikai put it, “The ban shifted demand offshore rather than eliminating it.”

Other data points the same way. A CUTS International survey found that the share of offshore users betting every day jumped from 3.4% before the ban to 42.3% after it. ASCI counted an average of 795 offshore betting ads per month in the four months after the Act, up from 594 per month in the eight months before it. By 28 March 2026, the government had blocked or acted against 8,376 betting and gambling URLs, more than 4,800 of them after the Act was passed.

Blocking websites shuts the front door. The money leaves through the back.

The pipeline: rupees in, crypto out

Enforcement cases over the past year show the same three-stage pattern again and again.

Collection through rented accounts. An ETtech investigation found that payments to betting sites go through individual UPI IDs that act as collection points. These accounts usually belong to small vendors or laborer's who rent them out. In the Parimatch case, the ED said more than ₹2,000 crore had been collected from users into mule accounts and then passed through several payment aggregators and domestic money transfer agents.

Layering. The money is then split up and moved again. In the Parimatch case it went through crypto wallets, ATM cash withdrawals in a single locality in a Tamil Nadu city, and small UPI transfers. In one round of searches, the ED froze ₹110 crore held in mule accounts and seized 1,200 mule credit cards.

The exit. This month, the ED searched 20 premises across Mumbai, Pune, Mehsana, Surat and Hyderabad in a probe involving the platforms All Panel Exchange and MGM91. Investigators found money moving through more than 200 shell entities and mule accounts. They identified three main routes out of India: fake trade invoices, cash withdrawals, and conversion into cryptocurrency. They also found signs that the people running the platforms were operating from Dubai.

The bank trail usually breaks at that last step. Once rupees become stable-coins, they stop showing up in Indian bank records. The blockchain trail begins at exactly that point.

What the blockchain shows

Public blockchain data can’t yet separate Indian bettors from everyone else. It does show which rail this money rides on, and every Indian case points to the same one.

The rail is USDT on Tron. TRM Labs measured on-chain gambling at USD 51 billion in 2025 and USD 14 billion in Q1 2026 alone. On Tron, USDT makes up about 94% of gambling volume. Tron’s gambling inflows reached $19.3 billion in 2025, 38% of the total. Over the same period, Bitcoin’s share fell from about 36% in 2022 to around 2% as high fees pushed bettors to cheaper chains.

Indian cases show the on-ramp. This month, Delhi Police arrested a suspect who allegedly collected cash withdrawn from mule accounts and converted it into USDT through a hawala operator. That case involved cyber fraud rather than betting, but it shows the same move from bank money to stable-coin. In the Mahadev betting case, investigators had already traced alleged proceeds to Dubai-based assets and to crypto, including Bitcoin and USDT.

The money comes back through P2P. In September, the CBI warned that people who sell USDT to strangers for UPI payments may be receiving dirty rupees. In a Tamil Nadu case worth about ₹400 crore, agents collected cash and UPI payments, turned them into USDT, and then shut the app down. Ordinary P2P sellers end up as the unknowing final step that turns criminal proceeds back into normal bank balances. We covered this pattern in Money Mules to USDT: How India’s Scam Money Vanishes.

Freezes work, but networks adapt. The T3 Financial Crime Unit, a partnership between Tether, Tron and TRM Labs, says it has frozen more than $450 million in illicit USDT on Tron. The Huione case shows the limit of that approach. After Tether froze a Huione-linked address holding 29.62 million USDT, the operator started using a new business address and moved funds out of the frozen one.

Why the chain is where the trail survives

Almost all enforcement so far has worked on the rupee side: freezing mule accounts, blocking URLs and raiding offices. Those steps matter, but a mule account can be replaced overnight and a blocked site comes back on a mirror domain. On-chain, every hop is permanently recorded. That includes the sportsbook’s deposit wallet, the addresses in between, and the exchange where the money ends up. The hard part is reading that record at scale, across chains, through thousands of throwaway addresses, fast enough to matter.

Following the money with Nodestors

This is the problem Nodestors’ Wallet Intelligence System was built to solve. It maps wallet activity across chains and groups addresses into entities, so a new deposit address can be linked back to the operator behind it. It also flags suspicious flows before they turn into losses.

For the betting pipeline, that means:

• Investigators and regulators can trace a deposit from an Indian P2P trade to an offshore sportsbook, and follow the payouts back.

• Exchanges and compliance teams can check counterparties against betting-linked wallets before funds land on their platform.

• Banks can connect a suspicious UPI pattern to the on-chain activity that follows it.

The ban pushed India’s betting money onto a rail that never forgets. Our job is to make that rail readable.

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FAQ .

• Is online betting legal in India in 2026?
  No. The Promotion and Regulation of Online Gaming Act, 2025 and its rules came into force on 1 May 2026, banning online money gaming completely.

• Where did real-money gamers go after the ban?
  Lumikai’s research estimates that about one in three former real-money players moved to offshore betting platforms, spending up to ₹10,000 a month with no oversight.

• How does betting money leave India?
  ED investigations describe money moving through shell entities and mule accounts, then leaving India through fake trade invoices, cash withdrawals and conversion into cryptocurrency.

• Why do offshore betting sites use USDT on Tron?
  Low fees. TRM Labs found that USDT makes up about 94% of gambling volume on Tron, and Bitcoin’s share of on-chain gambling has dropped to around 2% because its fees are higher.

• Can crypto betting payments be traced?
  Yes. Every transfer is recorded on a public ledger, and stable-coin freezes are already happening. Tether, Tron and TRM Labs’ T3 Financial Crime Unit says it has frozen more than $450 million in illicit USDT on Tron. The hard part is linking constantly changing addresses back to the same operator.