The Supreme Court has delivered a major judgment on online betting and money gaming, holding that there is no fundamental right to engage in betting and gambling activities.
Upholding the laws enacted by Tamil Nadu and Karnataka, the Court said states have the constitutional power to ban or regulate online games played for money or stakes, including rummy, poker and fantasy sports.
A bench of Justices JB Pardiwala and R Mahadevan set aside the judgments of the Madras and Karnataka High Courts which had struck down the state laws. The Court observed that once money is staked on an uncertain outcome, the activity acquires the character of betting and gambling. It further said that even if a game involves skill, states can still prohibit it if betting is involved.
Cyber law expert Pavan Duggal described the judgment as a landmark ruling. Speaking to iTV Network, Duggal said the Supreme Court has clarified that online gaming involving money is taxable and subject to the 28 percent GST regime.
He said gaming platforms can no longer claim to be mere intermediaries and are now treated as active service providers. Duggal added that the judgment clearly distinguishes between games of skill and games of chance. He said games involving money and uncertain outcomes could attract criminal liability, while e-sports and online games without money involvement should be encouraged. Duggal also stressed the need to create public awareness about the legal risks of online betting and gambling.
Supreme Court advocate Virag Gupta said the judgment has far-reaching consequences for the gaming industry.
He noted that states informed the Court about rising cybercrime, suicides and financial distress caused by online betting platforms. Gupta said the ruling strengthens the powers of state governments to prohibit online money gaming within their jurisdictions.
He also pointed out that gaming companies may now face heavy GST liabilities and possible insolvency proceedings.
According to Gupta, the judgment may also impact pending challenges to central laws regulating online gaming, since betting and gambling largely fall within the legislative domain of states.
