The Supreme Court on Wednesday (May 27, 2026) confirmed the constitutional validity of bringing organised online gaming activities with money stakes under the Goods and Services Tax (GST) regime.

A Bench of Justices J.B. Pardiwala and R. Mahadevan, in a judgment, declined challenges raised against the levy of GST on actionable claims arising from organised online gaming activities and fantasy sports under the betting and gambling head.

Explained | What does the new online gaming Act outline?

‘Uncertain outcomes’

The court reasoned that even if online gaming involves skill, there was substantial money involved and an uncertainty at stake on the outcome.

“Online gaming activities, including fantasy sports and other games played on digital platforms, involving staking upon uncertain outcomes, constitute betting and gambling for the purpose of GST framework,” Justice Mahadevan pronounced for the Bench.

The Bench also upheld the statutory ban on games like rummy and poker, played online for a wager, bet, money or other stakes.

The court said the States had a duty to maintain public tranquility and public health, considering the growing problems of addiction and deaths due to financial losses suffered online.

Also Read | Government, online companies spar in Supreme Court on GST over games of skill, chance

Empirical data

The court said the Tamil Nadu law was based on empirical data collected through a panel chaired by a former Madras High Court judge.

The court rejected the online gaming companies’ argument comparing online games of “skill” with horse racing. They had argued that the top court had categorised horse racing as a game of skill.

Justice Pardiwala responded in the judgment that horse races and wagers upon them were heavily regulated by the State, and there cannot be a comparison between the two.

“In the present case, betting on online games of skill is posing a threat to the State and well-being of the masses. Such betting would not enjoy immunity merely because it is taking 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 expression ‘gambling’, it was wrong to say that betting on games of skill would be out of the competence of the State legislature.

“The earlier decision on horse racing has no relevance to the case at hand. The entire process of horse racing and wagering was highly regulated and organised, 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 setting aside the decisions of the Madras and Karnataka High Courts striking down the laws banning online gaming activities.

In 2021, the Madras High Court had found the amendments brought in through the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021 violative of the fundamental right to practice a profession, occupation or trade.