The Supreme Court has confirmed that organized online gaming falls under the GST regime
The Supreme Court reasoned that while online gaming involves skill, there is significant money involved and there is uncertainty about the outcome. Image is for representation only. | Photo credit: Getty Images/iStockphoto
The Supreme Court on Wednesday (May 27, 2026) upheld the constitutionality of the inclusion of organized online gambling games under the Goods and Services Tax (GST) regime.
A Bench of Justices JB Pardiwala and R. Mahadevan in their judgment dismissed the challenges raised against the levy of GST on claims arising from organized online gaming activities and fantasy sports under the heading of betting and gambling.
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‘uncertain results’
The court reasoned that while online gaming involves skill, there is significant money involved and there is uncertainty about the outcome.
“Online gaming activities, including fantasy sports and other games played on digital platforms that involve betting on uncertain outcomes, constitute betting and gambling for the purposes of the GST framework,” Justice Mahadevan said for the Bench.
The bench also upheld the statutory ban on games like rummy and poker, which are played online for stake, bet, money or other stakes.
The court said states have a duty to preserve public peace and public health in light of the growing problems of addiction and death due to financial losses suffered online.
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Empirical data
The court said the Tamil Nadu law was based on empirical data gathered through a panel chaired by a former judge of the Madras High Court.
The court rejected an argument by online gaming companies comparing online “skill” games to horse racing. They argued that the Supreme Court had categorized horse racing as a game of skill.
Judge Pardiwala responded in the judgment that horse racing and betting on it were strictly regulated by the state and could not be compared.
“In this case, betting on online games of skill poses a threat to the state and the welfare of the masses. Such betting would not enjoy immunity merely because it takes place in a game of skill,” the court said.
The court said that while it may be true that games of skill may not be covered by the term “gambling,” it was incorrect to say that betting on games of skill is beyond the purview of the state legislature.
“The earlier decision on horse racing has no relevance to the present case. The entire process of horse racing and betting was highly regulated and organized, which is very different from the uncertainty and veil of invisibility associated with online gaming activities, whether of skill or chance,” the court said.
The court allows the appeals filed by the governments of Tamil Nadu and Karnataka, while the Madras and Karnataka high courts’ decisions strike down laws banning online gaming activities.
In 2021, the Madras High Court found that the amendments introduced through the Gambling and Police Act, 2021 violated the fundamental right to carry on a profession, vocation or trade.
Published – 27 May 2026 22:31 IST