In a high-stakes legal showdown that could redefine India’s online real money gaming landscape, the Supreme Court has scheduled July 25, 2025, as the date for the final hearing in a case involving show-cause notices issued to several online gaming firms. The case, with an estimated financial impact of ₹2.5 lakh crore, is one of the biggest tax battles in India’s history.
Gaming companies are challenging the government’s interpretation of Rule 31A of the CGST Rules, which states that GST at 28% should be levied on the face value of each bet. The industry argues that this rule applies only to gambling and betting, not to games of skill like rummy, poker, or fantasy sports.
The outcome of this case holds enormous implications for the real money gaming (RMG) industry. The controversial 28% GST has already dealt a severe blow to the sector. A ruling in favor of the gaming firms could reinforce the legal distinction between games of skill and gambling, potentially shaping future regulation, boosting investor confidence, and ensuring the long-term growth of the industry.
Division bench of the Supreme Court comprising Justices JB Pardiwala and R. Mahadevan on Tuesday were shocked to see the list of petitioners appearing on behalf of casinos, lotteries and real money gaming companies to submit their arguments and remarked, “This is a long list of petitioners, this will be a never ending saga.” Upon which Justice Pardiwala directed that the court will hear all petitioners until July 17 and will hear rejoinders by the government from July 18.
Pardiwala said, “We will reserve the judgement on July 25 and it will be the last day of hearing the gaming batch matters.”
Before the summer break, Additional Solicitor General (ASG) N. Venkatraman presented what he called the “seven sutras” or principles of gambling. These principles aim to create a clear legal framework around wagering, particularly in the context of real money gaming (RMG), a space that has seen explosive growth but remains mired in regulatory ambiguity.
In a methodical and strongly worded submission, Venkatraman drew upon earlier judicial rulings to stress that the presence of a financial stake—not the nature of the game—is the deciding factor in defining gambling.
Senior Counsel Harish Salve appearing on behalf of real money gaming companies submitted arguments whether the participation fees in online games—ranging from card games like rummy to fantasy sports—constitute “actionable claims” that can be classified as “goods” under the GST regime, and thus be taxed accordingly.
Salve contended that the current GST notifications and show cause notices (SCNs) fundamentally mischaracterize the nature of online gaming. He argued that online gaming platforms act merely as facilitators, not as suppliers of any transferable rights or claims. “There is no ‘actionable claim’ that arises from participating in a game of skill,” Salve asserted, referencing the 2006 Supreme Court ruling in Sunrise Associates, which defined actionable claims in the context of lotteries.
The legal challenge also points to constitutional concerns. Salve argued that the attempt to tax such games as “betting and gambling” contravenes the constitutional scheme, especially after the 101st Constitutional Amendment, which removed state authority to tax betting and gambling under Entry 62 of the State List.
Salve submitted that “Rule 31A is plainly a colourable exercise of legislative power in that it seeks to alter the nature of the tax to a tax on betting and gambling.”
The Supreme Court’s ruling in this case is expected to set a significant precedent in the rapidly growing online gaming sector, which has seen exponential growth in users and revenues. The final decision could reshape how digital entertainment platforms are taxed in India, with billions of rupees at stake.
