New Delhi: India’s 158-year-old law banning public betting is struggling to keep up with the rise of online gaming platforms, creating a regulatory vacuum that leaves online games largely unregulated.
The absence of a unified national law on online gambling has led to an inconsistent regulatory environment in India where each state sets its own rules—some regulating them, some banning them altogether.
Also, the Supreme Court is reviewing the legality of the government’s 2023 move to impose a 28 percent GST on online gaming companies, applied to the total entry amount, including prize pools, rather than just the platform’s earnings.
Moving online gaming activities from 18 percent to 28 percent GST slab triggered widespread concerns within the industry as it significantly raised their tax liabilities, with cumulative demands reaching approximately ₹2.5 lakh-crore.
The Supreme Court has stayed all ongoing GST proceedings against 49 online gaming companies and merged various related petitions from different high courts. This consolidated review aims to clarify the legal and tax status of online gaming in India. The final hearing is scheduled for 5 May.
In the backdrop, ThePrint explains the legal aspects of gambling and online gaming in India.
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Extant law doesn’t mention online gaming
The British-era Public Gambling Act, 1867 is still used as the central law to regulate gambling in India. It prohibits the operation or management of public gambling houses. Being a pre-Internet era law, the Act has no mention of online gaming or gambling.
However, section 12 of this Act excludes “game of skill” from the definition of gambling, giving states legal room to allow online gambling and casinos by classifying them as “game of skill”.
“(The) Act not to apply to certain games… Nothing in the foregoing provisions of this Act contained shall be held to apply to any game of mere skill wherever played,” according to section 12 of the Act.
‘Betting and Gambling’ is a State subject under the 7th Schedule of the Constitution, meaning each state can make its own laws on it. There is no central law to specifically govern online gambling.
Where is it legal & illegal?
Five states have legalised gambling with regulations for ‘game of skill’, nine have declared it illegal while 14 have no defined laws on it.
The states that have explicitly legalised gambling and online casinos have done so typically through a regulated framework or by permitting “game of skill”.
Goa allows licensed physical and limited online casino operations under the Goa, Daman and Diu Public Gambling Act, 1976. Meghalaya has established a regulatory structure for both offline and online gambling through the Meghalaya Regulation of Gaming Act, 2021.
Sikkim was one of the first states to legalise and regulate online gaming under the Sikkim Online Gaming (Regulation) Act, 2008.
Nagaland permits only ‘games of skill’ such as poker and rummy through its Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Act, 2016. Similarly, West Bengal allows “game of skill” under the West Bengal Gambling and Prize Competitions Act, 1957.
In all these states, operators must comply with licensing and operational norms to legally offer gaming services.
In contrast, several states have explicitly prohibited gambling, including online casinos, by enacting or amending legislation to ban such activities.
Andhra Pradesh and Telangana have passed amendments to their respective gaming acts in recent years to criminalise online gambling. Assam, Gujarat, Odisha, Kerala, Karnataka, Tamil Nadu and Maharashtra also have laws that ban gambling in general, which extend to online platforms as well.
Offering online gambling services or participating in them can lead to penalties in these states and gaming companies are often barred from operating.
The ‘Skills v. Chance’ debate
If a game is predominantly skill-based, it is not considered gambling even if money is involved. That is, despite there being an element of chance involved (as is the case in most games), the outcome of such a game must depend predominantly on skill. This has allowed platforms offering rummy, poker, fantasy sports to claim legal immunity with the “game of skill” tag.
In the Dr. K.B. Lakshmanan v. State of Tamil Nadu case of 1996, the Supreme Court held, “To put it simply, gambling involves paying a fee in order to have a chance at winning a prize. The game being played can either rely solely on luck or involve a combination of luck and skill. Games of chance rely entirely or partially on luck, such as rolling dice or spinning a wheel.
In these games, the outcome is completely uncertain and unpredictable. Games of skill, on the other hand, still involve an element of chance but success depends mainly on the player’s knowledge, experience, and abilities. Examples of games of skill include golf, chess, and Rummy.
The courts have determined that most games cannot be classified as purely chance or skill-based, rather fall somewhere on a spectrum between the two. The dominant factor, whether it be chance or skill, determines the nature of the game.”
In the State of Bombay v R.M.D. Chamarbaugwala, (1957) case, the Supreme Court interpreted the words “mere skill” to include games which are preponderantly of skill.
The court laid down that the competitions where success depends to a substantial degree on skill will not fall into the category of ‘gambling’; and despite there being an element of chance, if a game is preponderantly a ‘game of skill’, it would nevertheless be a game of “mere skill”.
Strategic use of ‘game of skill’
Online gaming portals in India strategically classify their offerings as a “game of skill” rather than a “game of chance”. They argue their games—such as fantasy sports, poker, and rummy— are games of skill rather than chance as they require knowledge, strategic acumen, memory, and decision-making.
In the State of Andhra Pradesh v K. Satyanarayana (1968), the Supreme Court ruled Rummy is a ‘game of skill’.
Later, various high courts (like the Punjab & Haryana High Court in the Dream11 case) observed fantasy sports require significant skill in player selection and analysis. The Supreme Court upheld these decisions, effectively giving a legal green light to platforms like Dream11 to operate.
Using these judgements as precedents, the Punjab and Haryana High Court held in the Shri Varun Gumber v. Union Territory of Chandigarh and Ors (2017) case that Dream 11’s online gambling does not render them liable for criminal prosecution under the Public Gambling Act, 1867 as their fantasy games require material and considerable skills by the user.
After the Varun Gumber case, a criminal Public Interest Litigation was filed in the Bombay High Court by a private person Gurdeep Singh Sachar (2019), alleging Dream11 was evading GST by not following the correct tax rate applicable to gambling.
Referencing the Punjab & Haryana High Court’s ruling in the Varun Gumber case, the HC rejected these claims and concluded there was no evasion of GST by Dream11. It held the GST rate followed by Dream11 was appropriate as its activities did not constitute gambling, so the higher gambling tax rate did not apply.
A total of nine judges across Supreme Court and high courts has separately evaluated the legality of the fantasy sports format offered by Dream 11. They consistently held it is a ‘game of skill’ and a legitimate business activity protected under Article 19(1)(g) of the Constitution that guarantees the right to all citizens to practice any profession or to carry on any occupation, trade or business.
Ruchi Bhattar is an intern who graduated from ThePrint School of Journalism.
(Edited by Ajeet Tiwari)