The court ruled that states can prohibit online games played for stakes, including skill-based games such as rummy, poker and fantasy sports.
India.- The Supreme Court of India has upheld the constitutional validity of online gaming laws introduced by the states of Tamil Nadu and Karnataka as well as India’s 28 per cent goods and services tax (GST) framework for online gaming operators.
In the first ruling issued on Wednesday, the court ruled that states have the authority to regulate or prohibit betting and wagering activities linked to online games, including skill-based games. The cases stemmed from challenges brought by several gaming companies and industry groups against amendments introduced by Tamil Nadu and Karnataka in 2021. These laws expanded the definition of gambling to include online games played for money or stakes, including games such as rummy, poker and fantasy sports.
A bench composed of Justices J. B. Pardiwala and R. Mahadevan ruled that betting and wagering activities do not receive constitutional protection as legitimate trade or business activities. As such, states can still prohibit or regulate betting even if a game predominantly involves skill. The court said that once wagering becomes part of the game, “the nature of the game ceases to be of relevance.”
The court also upheld the legality of India’s revised GST regime for online gaming operators. The tax framework, introduced through amendments to the Central Goods and Services Tax Act in 2023, classifies online gaming alongside gambling and imposes a 28 per cent GST on the full face value of player stakes.
India’s Directorate General of GST Intelligence has issued tax demands totalling approximately INR1.12tn (US$13.4bn) against 71 gaming companies. Legal experts estimate total liabilities, including penalties and interest, could rise to nearly INR2.3tn (US$26.9bn).
The court clarified that the tax notices remain at the show-cause stage, meaning companies can still respond during ongoing adjudication proceedings and no final tax liabilities have yet been determined.
The court ruled that states can prohibit online games played for stakes, including skill-based games such as rummy, poker and fantasy sports. India.- The Supreme Court of India has upheld the constitutional validity of online gaming laws introduced by the states of Tamil Nadu and Karnataka as well as India’s 28 per cent goods and…
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