Colour trading, also known as colour prediction or colour games, is a form of online betting where users predict the next colour in a sequence (such as on a roulette wheel) and win if they’re correct. It’s not traditional trading, but a quick-betting format that relies entirely on chance, Feedinco.
In India, gambling laws are strict. The Public Gambling Act of 1867 bans most forms of gambling, and colour trading falls under that ban. While some states have relaxed rules, online colour betting platforms, especially those run from overseas, often operate in a legal grey zone or outright illegally.
Feedinco. Most Indian regulators, including SEBI and RBI, do not recognize colour trading as a legitimate financial activity.
Despite its simplicity and quick gameplay, colour trading has serious risks. Many users report it as being “a trap, a scam, and illegal.
What is Colour Trading?
Colour trading is a type of online betting, also known as colour prediction games. It involves guessing which colour, usually red, green, or blue, will appear next in a digital sequence. Players place bets on their chosen colour, and if they guess correctly, they earn money instantly.
Unlike traditional stock market trading, colour trading relies entirely on chance, much like a digital roulette game. Users typically participate through mobile apps or websites. Popular platforms include Colour Prediction, Fastwin, and Cope.
Here’s how colour trading works in practice:
Imagine a spinning wheel divided into coloured sections. You choose one colour and bet a certain amount. If the wheel stops on your selected colour, you win; if not, you lose.
For example, betting ₹100 on red might return ₹190 if red appears. However, the platform retains the rest, ensuring it always profits in the long run.
Despite its name, colour trading isn’t genuine trading. It involves no market analysis, skill, or strategy, just pure luck. That’s why it’s widely considered a form of gambling rather than a legitimate investment method.
Definition of Colour Trading
Colour trading is a betting game where you predict colours online to earn money. Unlike real financial trading, it doesn’t involve stocks, currencies, or analysis. Instead, you place a bet guessing the next colour that will appear on-screen, usually red, green, or blue.
Think of colour trading as a digital version of betting on a coin toss. For example, you might bet ₹50 on the colour green. If green appears next, you win a payout. If not, you lose the amount you’ve bet.
People often call it a “colour prediction game” because the results are random, like spinning a roulette wheel. Despite the term “trading,” it’s essentially gambling with colours instead of numbers or symbols.
How Colour Trading Differs from Traditional Trading Methods?
Colour trading differs from traditional trading methods, such as stock or forex trading, in several key ways.
First, colour trading is purely based on luck. You guess a colour, red, green, or blue, and win or lose immediately. There’s no skill or analysis involved. For example, betting ₹100 on red and winning is akin to flipping a coin and guessing correctly.
Traditional trading, however, involves conducting thorough research, analyzing the market, and developing effective strategies. Traders study market trends, company performance, economic indicators, and technical charts. Decisions come from knowledge, not guesswork. When buying stocks like Reliance or Infosys, you assess fundamentals and market sentiment before investing.
Additionally, traditional trading occurs under strict regulations imposed by authorities such as SEBI in India. Colour trading typically operates outside clear rules, which can lead to potential legal risks.
Lastly, in real trading, assets hold intrinsic value. Stocks represent a share in a company; currencies represent a country’s economy. Colour trading involves betting on colours without any actual underlying value or asset.
In short, traditional trading is about informed investing, whereas color trading is simply luck-based gambling.
Popularity and Risks in India
Colour trading has seen a rapid rise in India. Apps like Daman Games, Tiranga Games, and Bharat Club attract users by promising quick earnings. One article lists the “Top 10 Colour Trading Apps in India,” noting their instant payouts and easy setup.. Aseem Juneja+6, Newsnation English+6, Reddit+6. Many players jump in thinking it’s a low-effort way to earn money.
The losses can be severe. While colour trading is the focus, broader online trading scams highlight the danger. Recently, two people lost over ₹15 lakh to a fake trading app after being lured by Facebook videos, as reported by The Times of India. In another case, cybercriminals stole ₹73.65 lakh by posing as trading advisors, The Times of India.
These scams employ common tactics, including glossy apps or ads, fake success stories, and pressure to invest quickly. Often, apps shut down without warning, leaving users empty-handed. Many operate from overseas, outside the oversight of SEBI or RBI, so users have no protection.
In short, colour trading enjoys high popularity due to its appeal and ease of use. But it carries significant financial risk. It’s a form of digital gambling, frequently linked to scams. Given India’s strict gambling laws and lack of regulation, users can end up losing a lot financially and legally.
Legal Status of Colour Trading in India
The legal status of colour trading in India is unclear, but it is mostly unfavorable. Currently, there are no official laws that specifically regulate colour trading apps. However, that doesn’t make them legal.
Most colour trading platforms operate under the radar.
They present themselves as “prediction games” to avoid being classified as gambling. But legally, they fall under gambling or betting, which is banned in most Indian states under the Public Gambling Act of 1867.
Authorities like the RBI and SEBI have not recognized colour trading as a valid financial activity.
SEBI regulates stock markets and investment products, but not betting games. RBI has also warned against unregulated apps that promise quick returns through gambling-like mechanisms.
In 2023 and 2024, multiple color prediction apps were taken down or banned due to fraud cases and links to cybercrime. Many of these apps are hosted overseas, making it challenging for Indian law enforcement to take action against them.
SEBI Guidelines on Colour Trading
SEBI has not issued any specific guidelines or approvals for colour trading apps. These platforms are not registered with SEBI, and the regulator has clearly stated that they offer no protection to users.
In November 2024, SEBI released an advisory warning investors against unauthorized virtual trading and gaming platforms that simulate real stock market activity for monetary gain. The Times of India, Securities and Exchange Board of India, and Mondaq. These include colour prediction apps that mimic trading behavior and offer real-time rewards.
SEBI has also directed stock exchanges and depositories to stop sharing real-time price data with third-party apps.
This move aims to curb fantasy trading platforms by cutting their data feed, making it more challenging to create a simulation that resembles real trading.
- In theory, if you, as reported by Aseem Juneja on Monday, lose money on one of these unregulated apps, you cannot raise that complaint through SEBI channels like SCORES.
- SEBI and stock exchanges are actively blocking data access, disrupting apps based on live market information.
RBI Regulations and Statements
The Reserve Bank of India (RBI) hasn’t issued specific rules targeting colour trading apps. However, it has repeatedly warned against unregulated online trading schemes that mirror its tactics.
The RBI maintains an “Alert List” of unauthorized trading platforms, mostly forex apps, but the warning extends to any platform offering quick, gamble-like returns through digital interfaces.
In 2023, the RBI updated this list with numerous apps, including options and forex schemes, stressing that using any unauthorized digital trading system violates the Foreign Exchange Management Act (FEMA). Though colour trading apps aren’t named individually, they fall into the same risky category.
Consequences and Penalties for Illegal Trading Activities
Participating in colour trading can lead to serious legal consequences in India. Since most colour prediction apps operate without regulatory approval, using them often falls under unauthorized trading or gambling, both of which are punishable under Indian law.
The Public Gambling Act of 1867 applies in many states and prohibits the operation or participation in betting activities. If caught, individuals can face:
- Fines up to ₹200
- Imprisonment for up to 3 months
- Or both, depending on the state’s enforcement policies
Some states, such as Telangana, Andhra Pradesh, and Tamil Nadu, have stricter anti-gambling laws that may result in harsher penalties, particularly when significant financial losses or fraud are involved.
Beyond gambling laws, involvement in illegal trading schemes could trigger violations under:
- The Information Technology Act, if online fraud is detected
- The Prevention of Money Laundering Act (PMLA) is linked to suspicious money flows.
- FEMA, if payments are made to overseas apps or wallets
In a 2024 case from Maharashtra, cyber police arrested a group running a colour prediction app scam. They seized digital wallets and froze over ₹50 lakh linked to online gambling accounts. The victims had no legal recourse or options for a refund.
The harsh reality:
Once money is lost in illegal apps, it’s nearly impossible to recover. Banks and law enforcement often cannot act if the platform is unregistered or based outside of the country.
Global Popularity and Regulatory Landscape
Colour trading isn’t just big in India, it’s booming worldwide. In India, it’s quick-bet apps. In the US and Canada, similar games are part of the broader casual mobile gaming scene, generating billions in revenue.
In some countries, colour prediction games skirt gambling laws by framing themselves as games of skill. For example, in parts of Europe and North America, free-to-play platforms that reward small prizes operate with fewer restrictions. But once real cash is involved, regulators often treat them as gambling.
Different regions handle this differently:
- United States: Most real-money prediction platforms are regulated by the CFTC or classified as gambling. Platforms like Polymarket and PredictIt operate with strict no-action letters or licenses and have faced fines; Polymarket paid US$1.4 million and faced geo-blocks in Belgium, Poland, France, Singapore, and Other Countries.
- Europe: Nations like Ireland and Malta regulate colour-betting and binary options under financial laws. Others, like Belgium and France, ban or restrict them on Wikipedia.
- Asia: In countries such as Pakistan and Indonesia, real-money colour games are blocked, restricted, or require VPN access.
Most global regulators treat cash-based colour trading apps like illegal gambling or unlicensed financial products. Only if platforms shift to non-monetary rewards or operate under official licenses do they escape scrutiny.
Real-world case:
Polymarket, a popular US prediction market, faced a $ 1.4 million penalty and was banned in multiple countries for operating as an unregistered derivatives market. It shows how seriously regulators take these platforms when real money is involved.
Countries Where Colour Trading is Legal?
Colour trading, or colour prediction games, has a legal presence in only a handful of regions, and even then, with clear restrictions. Most countries treat it as a form of gambling, meaning legality depends on how the game is structured and whether real money is involved.
1. United States (Limited & Regulated)
In the US, colour prediction platforms are not explicitly legal unless they are registered under a financial regulator or operate as a no-money game. Real-money prediction markets, such as Polymarket, faced action from the CFTC (Commodity Futures Trading Commission) for operating without proper licenses. So, while platforms may exist, they’re heavily watched and restricted.
2. United Kingdom
The UK permits specific betting-style platforms under the jurisdiction of the Gambling Commission. If a colour trading app registers properly and adheres to gambling laws (such as age verification, fair play, and tax policies), it may operate legally. However, none of the popular India-based apps are licensed there.
3. Malta
As a known hub for online gaming licenses, Malta permits some forms of colour-based prediction apps if they are certified under its Malta Gaming Authority (MGA) framework. Operators must meet strict standards on fairness, payout ratios, and anti-money laundering measures.
4. Nigeria
In parts of Africa, including Nigeria, colour prediction games are offered under licensed gaming platforms like Bet9ja or local alternatives. They’re seen as a form of lottery or betting, not financial trading, and regulated accordingly.
5. Philippines
With regulation under PAGCOR (Philippine Amusement and Gaming Corporation), some local apps offer prediction games legally, often in entertainment zones or licensed e-casinos.
Regulatory Practices in Major Markets (US, Europe, Asia)
United States:
In the US, real-money prediction platforms like colour trading fall under commodity and betting laws. Platforms like Polymarket were fined by the CFTC (Commodity Futures Trading Commission) for running unregistered markets.
Colour trading apps must either:
- Operate as free-to-play games (with no cash involved), or
- Register under strict derivatives/gambling laws.
Unauthorized apps often get geo-blocked or face legal action. The US market has zero tolerance for “quick bet” money games without regulation.
Europe:
European Union countries treat colour trading as gambling, not trading. The rules differ:
- UK: Under the Gambling Commission, any betting platform (including prediction games) must be licensed. Real-money colour apps must verify age, disclose odds, and adhere to fair play principles.
- France & Belgium: Ban most real-money prediction games.
- Malta & Ireland: Allow apps under strict iGaming or lottery frameworks.
In short, if an app uses real money and resembles gambling, it must comply with gambling laws across Europe.
Asia:
Asia is restrictive primarily toward colour trading:
- India: No legal recognition. Most apps fall under gambling bans.
- China: Gambling is illegal, and colour trading platforms are blocked.
- Philippines: PAGCOR allows limited digital betting under license.
- Indonesia, Pakistan, Bangladesh: Ban real-money prediction apps.
Even in markets like Vietnam or Thailand, colour prediction games face regulatory heat and operate under stealth or grey market conditions.
Case Study: Colour Trading Regulations in the US and UK
United States (US):
In the US, colour trading apps fall under the same category as prediction markets or online gambling. The Commodity Futures Trading Commission (CFTC) strictly regulates platforms that allow real-money predictions.
A significant example is Polymarket, a blockchain-based prediction platform. In 2022, the CFTC fined Polymarket $1.4 million for offering “event-based binary options” without proper registration. The platform had to shut down specific markets and block US users from unlicensed features. It illustrates how US regulators view such platforms as illegal financial derivatives unless the relevant authorities formally approve them.
To operate legally in the US, a colour prediction platform would need:
- CFTC approval or a no-action letter
- Compliance with anti-gambling and financial fraud laws
- Complete user identity verification (KYC)
Currently, no major colour trading app has such clearance in the US. It means most are either geo-blocked or operating in a legal grey zone.
United Kingdom (UK):
In the UK, the Gambling Commission governs all forms of betting, including online games that involve real-money outcomes based on chance or prediction.
If a colour trading app allows users to deposit money and win cash prizes based on colour guesses, it’s legally treated as a game of chance, not financial trading. That means it must:
- Obtain a UK Gambling License
- Prove fairness and randomization of outcomes.
- Follow consumer protection laws and advertise responsibly.
Apps failing to meet these rules can be fined or banned. For example, many offshore betting platforms targeting UK users have been blocked or blocked if they operate without a license.
Lessons from International Experiences
Examining how other countries handle colour trading provides India and its users with essential insights.
1. Regulation is key
In the US and UK, colour prediction apps are treated like gambling or financial contracts. Without proper licenses, platforms like Polymarket have faced multi-million-dollar fines and restrictions. It demonstrates that robust regulatory frameworks safeguard users and ensure accountability.
2. Clear definitions matter
Countries that have legalized or restricted color trading clearly define what constitutes gaming, gambling, or financial speculation. In the UK, for example, if real money is involved and the outcome is based on chance, it must comply with gambling laws. India, by contrast, still lacks clarity, which leaves users vulnerable to fraud.
3. Grey zones lead to scams
In countries where colour trading exists in a grey area, such as many parts of Asia and Africa, scam apps thrive. Without enforcement or oversight, users often lose money and have no legal path to recover it. It mirrors many Indian cases where colour trading apps shut down overnight.
4. Education and awareness reduce losses
Regulators in the US and Europe publish consumer alerts and blocklists of unapproved apps. These efforts enable users to make more informed choices. In India, similar public awareness campaigns could warn people before they fall for fake “trading” apps that are essentially digital gambling platforms.
5. Legal protection must go both ways
Where apps are legal and licensed, users gain access to refund mechanisms, customer support, and legal recourse in the event of fraud. It isn’t possible with illegal or overseas apps; users are left completely exposed.
Impact of Colour Trading on Global Financial Markets
The rise of colour trading has made waves, not in a good way, in global financial conversations. While it doesn’t directly affect stock exchanges or forex markets, it does influence public perception and investor behavior, especially among new and inexperienced users.
1. Distracts from real investing
Apps that promote colour trading as a “quick money” tool often lure young people away from regulated investment platforms. Instead of learning fundamental trading skills, such as reading charts or managing risk, they gamble based on color predictions. It weakens financial literacy, especially in emerging markets.
2. Increases fraud risk in fintech ecosystems
Globally, the growth of shady apps mimicking legitimate trading has blurred the lines between regulated fintech and gambling. In countries such as India, Nigeria, and Vietnam, fake trading apps erode trust in legitimate financial platforms. Investors become skeptical even of legitimate apps due to widespread stories of fraud.
3. Creates regulatory burdens
Governments and financial bodies are compelled to dedicate time and resources to shutting down these apps, issuing warnings, and blocking payments. In the US, the CFTC and FTC have cracked down on illegal prediction markets. In the UK, the Gambling Commission must monitor and license platforms that attempt to operate in the grey area between gaming and trading.
4. Misleads global user bases
Many colour trading apps falsely advertise themselves as financial products or investment tools. This misrepresentation can lead to cross-border legal challenges, particularly when international users incur financial losses and seek legal recourse.
Fraud Prevention and Legal Measures Globally
Governments across the world are taking colour trading scams seriously. As fraud cases rise, regulators are enforcing stricter rules and shutting down suspicious platforms.
1. Regulatory blocklists
In the US, the CFTC and FTC publish lists of illegal prediction and trading platforms. These help users avoid falling into scams. For example, platforms like Polymarket have been fined and geo-blocked for violating derivatives rules.
The RBI in India also maintains an alert list of unauthorised trading apps. Though many colour trading apps aren’t named directly, they fall under similar risky patterns. These blocklists warn the public and help prevent fraud before it happens.
2. Payment gateway restrictions
Many countries now block unlicensed apps from using local payment systems. In the UK, if a gambling or prediction app doesn’t hold a Gambling Commission license, it can’t access payment processors like PayPal or Visa. It cuts off their revenue streams and discourages illegal operation.
3. Geo-blocking and app takedowns
Regulators work with Google Play, Apple App Store, and ISPs to ban or block access to colour prediction apps that don’t follow the rules. In Europe, apps flagged for unlicensed betting are swiftly removed from app stores or geo-restricted.
4. User education campaigns
Public awareness is a powerful tool. The SEC in the US and the FCA in the UK regularly run campaigns warning users about “too good to be true” trading schemes. These include flashy apps that promise quick returns through color guessing or binary predictions.
5. Legal penalties for promoters
In many countries, not just platform owners but also influencers or promoters of scam apps face action. In India, FIRs have been filed against agents of colour trading apps for cheating and financial fraud. The Philippines’ PAGCOR and Singapore’s MAS also monitor local advertising to block misleading campaigns.
Key Takeaways for Indian Regulators and Investors
India is at a tipping point when it comes to colour trading. The rise of these apps necessitates swift, transparent action from both regulators and everyday investors.
For Indian Regulators:
Define the legality
SEBI and RBI must clearly state whether colour trading is gambling, financial speculation, or something else. Currently, the legal status is unclear, resulting in confusion and potential loopholes.
Introduce licensing norms
Learning from the UK and Malta, India can introduce a framework where any app involving real-money predictions must register, disclose payout odds, and follow KYC norms. It would filter out scams early.
Collaborate with tech platforms.
Authorities should collaborate with Google, Apple, and payment gateways to block unlicensed apps and limit transactions to legitimate platforms. A “verified” label for compliant apps could help users stay safe.
Launch public awareness drives.
Just like the RBI’s campaigns against fake loan apps, similar efforts can educate users about the dangers of colour prediction games. Many users are unaware that these are unregulated and carry high risks.
For Indian Investors:
If it feels too easy, it’s a trap
Colour trading may seem fun or profitable, but it’s not investing, it’s gambling. Apps are designed to make you lose over time.
Avoid apps without transparency.
If an app doesn’t share company info, lacks proper licenses, or offers insane returns, run the other way. It’s likely a scam.
Stick to regulated platforms.
Whether it’s stock trading, mutual funds, or even gaming use platforms regulated by SEBI, RBI, or India’s gaming authorities. You’ll have legal protection if anything goes wrong.
Conclusion
Colour trading may wear the mask of a modern money-making tool, but at its core, it’s a high-risk digital gamble. In India, it’s operating in a legal vacuum not officially recognized, not regulated, and certainly not safe for users.
From flashy apps promising instant wins to offshore platforms vanishing with users’ funds, the trend is clear: colour trading is not a financial opportunity it’s a trap. Global case studies from the US and UK show that without regulation, these platforms can cause serious financial damage and spark legal consequences for both users and promoters. Stay informed. Stay alert. And trade wisely not blindly.
