The Centre has informed the Supreme Court that the distinction between skill-based and chance-based games is irrelevant for taxation under the Goods and Services Tax (GST) framework. The government argues that any form of betting on a game’s outcome counts as gambling, regardless of whether the game is skill-based or chance-based. In its submission, the Centre emphasizes that the classification of the game does not affect its tax liability. This holds true even in states like Nagaland, where the law protects skill-based games. Despite these protections, betting on skill-based games remains classified as gambling.
If the court agrees with the Centre’s position, gambling activities could face a 28% GST. This would have significant financial implications for the online gaming industry. To strengthen its argument, the government compared fantasy sports to international football betting. For example, betting on the number of goals scored by players like Lionel Messi. The government highlighted that, in both cases, the outcome is unpredictable and beyond the control of the participants. In fantasy sports, players create virtual teams and earn points based on real-world performances. However, they have no control over the actual outcomes. This lack of control makes the game similar to betting.
The Centre further described fantasy games as a form of betting and gambling, emphasizing that they often entice players with the prospect of large rewards. It argued that gaming platforms frequently offer inducements that can lead to addictive behavior and other negative consequences. The Supreme Court is currently hearing the case, which involves broader legal questions concerning the classification and taxation of online gaming platforms. The case could have significant implications for the regulation of such platforms in India.
