Betfair and William Hill target India

Britain's biggest betting companies are bidding for the first online gambling licence in India to gain a slice of the country's $60bn (£37bn) betting market. The high-street bookie William Hill, along with internet players Betfair and Bwin, are bidding for the internet licence in the Himalayan state of Sikkim in early September. A decision is expected in the next two weeks.

Some 13 betting companies, including local Indian operators, are battling it out for at least three licences in Sikkim. Sources said they want their betting services live from April 2010 – in time for the football World Cup in South Africa. The bookie Ladbrokes and the online specialist 888 are also considering bidding for a licence in Sikkim.

The licence holders will be able to promote their services in Sikkim, but they expect to be able to take bets from all over India. While Sikkim has a population of less than 600,000, India has a rapidly growing population of 1.2 billion. Furthermore, once other Indian states see the huge revenues and tax receipts flowing into Sikkim, they are likely to follow suit. Internet penetration in India remains low by Western standards, but is soaring in the more affluent states.

A William Hill spokesman said: "I can confirm that we are interested in entering the Indian market and we are in discussions with potential partners at the moment." Under Indian law, foreign companies have to partner with a local joint venture operator to launch in the country. William Hill is thought to have held talks with Global Torrent International, based in Sikkim.

Betfair, the peer-to-peer betting exchange, is partnering with Agilisys Managed Services. Betfair, which declined to comment, and Bwin, which did not return calls, have had teams on the ground in India for some time.

A Ladbrokes spokesman said: "We are watching the space to see what happens because there are several partner opportunities to get a licence in the province of Sikkim." 888, which also declined to comment, is also considering bidding for a licence in Sikkim.

The only legal betting activities in India are horse racing, trackside at meetings, and gambling at casinos in just two states, Goa and Sikkim.

According to official figures, legal operators of casinos and horse racing operations make about $400m in revenue in India each year from an estimated total betting turnover of $20bn.

But on the black market – of which cricket accounts for more than half – the total value of bets waged in India each year is at least $40bn. As a result, illegal outfits generate combined operator revenues of about $2bn each year. Online accounts for only a fraction of the overall market.

As all black market betting in India is done on credit, the current default rate – where either bookies or customers do not pay – is estimated to be about 40 per cent, which is a key opportunity that foreign betting companies are keen to exploit. But a degree of uncertainty remains about how the Sikkim licence will apply outside the state. As online gambling will be illegal elsewhere, it is thought that anyone placing a bet with the licensed operators in Sikkim will be breaking the law. But it is believed that criminal liability will be with the customer and not the licence operator in Sikkim.