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Gambling, Skill, and Money: Supreme Court Upends Decades Old Jurisprudence – II

June 15, 2026 by Rav Singh

In Part-I, my focus was on contextualising the dispute and providing a background. In this part, let me focus on the Supreme Court’s observations in Junglee Games case. The Supreme Court sub-divided the issues for consideration into nine different categories. Let me try and group them into five categories and analyse the Supreme Court’s observations on each issue.

I. Scope and Interpretation of Entry 34, List II

The Supreme Court relied on an extract of Constituent Assembly debates where a concern was expressed by some members that people in the State of Bombay (‘as it was then’) play rummy with such high stakes that it amounted to gambling. The Supreme Court cited this excerpt from the debates to hold that even a game of skill such as rummy, if played for money, can amount to gambling. And the Constituent Assembly intended games of skill, involving monetary stakes, to be regulated by States under Entry 34, List II. Relatedly, the Supreme Court held that if States were deprived of the power to regulate betting on games of skill, it would render them ‘powerless to prohibit the activity of betting and gambling.’ (para 223)

While a reference to the Constituent Assembly debates typically enhances the meaning and understanding of underlying Constitutional issues. However, in this case the reference to the Constituent Assembly debates did not serve the intended purpose. The Constituent Assembly members were concerned about preventing gambling and playing rummy was used as an example. The debate was not about the meaning of gambling. In fact, Dr. B.R. Ambedkar only stated that Entry 34, List II was to give States power to regulate gambling without defining what amounts to gambling. The question of what amounts to gambling was answered by the Supreme Court in RMDC-I case. The Supreme Court also observed that if Entry 34, List II is interpreted to exclude games of skill, it would denude States power to regulate games of skill. And, the ‘constitutional position’ needs to be respected. This was a questionable reason because the Constitution only permitted States to regulate gambling and not games of skill in the garb of regulating gambling. If the Constitution only permits States to regulate gambling/games of chance then the boundaries of such regulatory powers also need to be respected. Merely because States will be unable to regulate games of skill is not a justifiable reason to expand the scope of a legislative entry. The Union can always – and already has stepped into regulate online gaming.

II. Re-Interpretation of RMDC-I case

The Supreme Court underlined the import of RMDC-I case and the RMDC-II case. In the former while delineating the scope of games of skill, the Supreme Court had held that if the general public was invited to ascertain the result of an uncertain event then to assess if the game pre-dominantly involved skill or chance, the appropriate standard is common people and not expert statisticians. Relying on these observations, the Supreme Court concluded that:

the Court was cognizant of the fact that while games of skill may be excluded from the term “gambling”, they would still be covered under the expression “betting” as betting is nothing but staking money on the outcome of a future uncertain outcome. (para 245)

The Supreme Court’s conclusion does not follow from the observations made in RMDC-I case. The latter never expressed any opinion about the meaning of betting and only concerned itself with games of skill and games of chance distinction. Also, Supreme Court’s understanding of betting does not distinguish staking by players themselves or third parties. Instead, the Supreme Court – by misreading RMDC-I case – arrived at a generic and broadbrush meaning of betting. The Supreme Court added that:

Both betting and gambling involve the aspect of staking money on an uncertainty. Merely because the risk element is commonly perceived as “taking a chance”, it cannot mean an expression would cover only games of chances. In both Rummy, a game of skill, and Teenpathi, a game of chance, the persons staking on the uncertain outcome, equally risk and “take a chance” on their unknown and uncertain victory. (para 273)

The Supreme Court repeatedly emphasised on two elements in betting: staking of money and the uncertain outcome of game, irrespective of the game involved. Thereby making a clear departure from the jurisprudence post RMDC-I case wherein the pre-dominant element test was crucial to determine the nature of a game and not whether players had placed monetary stakes in a game. Only side-betting by onlookers was prohibited in the Satyanarayana case. But what about the Lakshmanan case where betting on game of skill was also permitted? The Supreme Court distinguished it from the impugned case by underlining that the Lakshmanan case involved betting on horse racing which took place in controlled environments and the exception was narrow and specific to horse racing. For example, betting can only take place on the day or horse racing and in specified physical enclosures inside the horse racing club.

Instead, the Supreme Court pointed that the nature of online games was different and hinted at their restrictive and predatory nature by observing that:

If one examines the online gaming platforms, it is nothing but a systematic inducement technique to ensure a player bet more and more. This is provided in the form of discounts, incentives for repeated betting, incentives for a particular number of victories and of course, as stated above, retaining the winnings upto a particular amount before it could be withdrawn and a prohibition to withdraw the deposited amount before it is turned into winnings by staking the deposited amount repeatedly. (para 279)

The above observations of the Supreme Court would indicate that it viewed online gaming as a separate and independent category. And the nature of conditions and restrictions imposed by online gaming companies played a role in online money gaming being equated to gambling. However, the Supreme Court also added that placing monetary stakes on a game amounted to gambling irrespective of the medium. Thereby, contradicting itself and what was held in the RMDC-I case where monetary stakes were viewed as irrelevant to determine the nature of a game.

The Supreme Court justified its views by stating that it was only clarifying the interpretation of RMDC-I case and RMDC-II case, even if the said interpretation had been followed for more than seven decades. Specifically, the Supreme Court noted that it was trying to correct a misleading argument by online gaming companies that RMDC-I case protected games of skill played with stakes. And as part of the ‘course correction’ the Supreme Court held that:

Explicit gambling, though, while playing a game of skill, would remain gambling and taking protection under an assumed ratio of RMDC-I (supra) would be virtually undoing RMDC-I (supra). (para 286)

Thereby, a Division Bench of the Supreme Court in Junglee Games case found a cover in ‘misinterpretation’ to sidestep a decision of the Constitution Bench in RMDC-I case. An approach that is hard to justify. I would suggest that the Supreme Court’s understanding of gambling is at odds with RMDC-I case and misinterprets its ratio. The RMDC-I case was not being misinterpreted or misread by online gaming companies, but its ratio became inconvenient in wake of several States’ insistence to prohibit online money gaming.

III. Entry Fee, Tournaments, and Stakes

Even though the issue of entry fee in games was not categorised independently by the Supreme Court, it is worth a discussion. One of the claims by online gaming companies was that if money is the criteria to distinguish games of skill from games of chance/gambling then even a chess tournament played after payment of an entry fee would amount to gambling. In response, the Supreme Court permitted entry fee as an exception to the rule that monetary stakes per se convert any game into a game of chance/gambling. But only if the entry fee in a competition does not form part of stakes. If the entry fee forms part of a pool or stakes then it would become gambling. If a pre-determined prize money is awarded to the winners, then the entry fee does not become part of a stake.

Online gaming companies while offered a pre-determined prize money in some cases, a portion of the entry fee was retained by them as platform fees. Even though the online gaming companies did not enter into a contest between the players and only facilitated games by providing a platform, their deduction of money from the total pooled amount worked against them and the Supreme Court held that online gaming companies facilitated gambling. Also, the Supreme Court observed that online gaming companies cannot plausibly contend that they were organising a tournament. Online gaming companies had hundreds of virtual rooms with varying amounts of money and such a scenario is not akin to conducting a tournament. And, again, relying on RMDC-I case held that:

If a promoter is floating a skill-based competition for an entry fee, that per se would not be gambling. If a promoter is floating a chance-based competition for an entry fee, that per se would constitute gambling. This alone is the inference that can be drawn from RMDC-I (supra). (para 279)

The above inference has no basis in RMDC-I case. At no point, in the RMDC-I case did the Supreme Court express any opinion about entry fee and gambling. In fact, one of the reasons Prize Competition Act, 1955 was enacted was that entry fee charged by publications for prize competitions was viewed as a monetary stake as the participants expected to win a huge monetary prize by guessing the correct answers. And their entry fee was viewed by some members of the Parliament as a monetary stake. But the Lok Sabha and Rajya Sabha debates on the Prize Competition Bill, 1955 – which clearly mention entry fee as a monetary stake – find no mention in Junglee Games case. Supreme Court’s observations about entry fee in Junglee Games case are based on its own flawed assumptions and understanding of entry fee. The RMDC-I case is merely used as a cover and observations on entry fee are attributed to it which are not to be found in the case.

IV. State’s Competence under other Legislative Entries

As mentioned in part-I, one of States argument was that even if it is not found competent to enact laws on betting under Entry 34, List II, it could enact such laws under alternate legislative entries. The Supreme Court held that law prohibiting online money gaming could be prohibited by States by relying on Entry 1, List II, i.e., public order. Citing a host of case laws the Supreme Court underlined how the term public order had been interpreted widely by courts. Public order included a state of tranquillity and if anything was detriment to the health and safety of public, States were competent to enact laws to regulate it.

The Supreme Court thereafter made a few generic observations about the wide and easy access to online gaming, attractiveness of online gaming to young people, booming business of online gaming companies due to their reach in rural areas and indicated that a public order question was intricately tied to online money gaming. The aspect of financial health, mental health, and emotional well-being of players was cited to indicate that rampant presence of online gaming had a proximate connection to disrupting public order. And upheld State’s competence to prohibit online money gaming by concluding that:

there is a proximate relation between the said Acts and the mischief they seek to curb and therefore, public order can be invoked to satisfy the competence of the States to enact the impugned legislations. The States have merely taken an effort to enforce the vision of the Constituent Assembly by seeking to protect the future and livelihood of the Population. (para 375)

While Supreme Court’s understanding of public order, its reading of relevant judicial precedents is difficult to find fault with; especially, because addiction with online gaming is a genuine concern that motivated States to prohibit online money gaming. However, the entire issue seemed superfluous once the Supreme Court decided that States could legislate on betting on games of skill under Entry 34, List II. States’ argument about possessing competence under Entry 1, List II was an alternate argument. Yet, the Supreme Court spent considerable space in concluding that States were competent to enact laws on games of skill under Entry 1, List II AFTER it had decided that States could enact such laws under Entry 34, List II.

V. Issues of Manifest Arbitrariness and Disproportionality

The Supreme Court dismissed the argument that amendments suffered from the vice of arbitrariness by stating that once monetary stakes come into the picture, the distinction between games of skill and games of chance is irrelevant. And held that:

… as far as betting and gambling are concerned, a differentiation cannot be made between games of chance and games of skill because the player staking the amount, in both cases, does it with a hope of winning more money than what is staked. (para 305)

The Supreme Court added that the medium, online or physical, is immaterial. If a game if played for stakes then it amounts to gambling. Thus, prohibiting betting on all games was not arbitrary and online money games were correctly classified as ‘res extra commercium’. And the occasion to consider the amendments as disproportionate did not arise since betting on games was also res extra commercium. Thereby refusing to grant online money games protection of Part III of the Constitution.

Confusing Way Forward

The Junglee Games case has decisively shifted the gambling jurisprudence. But cannot be faulted for introducing any significant clarity in gambling law concepts. Despite its obvious limitations and flaws, the Junglee Games case is likely to be a major pivot for two crucial reasons:

Firstly, endorsing monetary stakes as the distinguishing factor between games of skill and games of chance. A proper interpretation of the judgment is that it has preserved the pre-dominant element test laid down in RMDC-I case. A Division Bench of the Supreme Court could not expressly overrule a Constitution Bench judgment. At the same time, the Junglee Games case has added another element to gambling law jurisprudence by interpreting betting to mean staking money on the uncertain outcome of a game. This interpretation allowed the Supreme Court to sidestep binding nature of pre-dominant element test laid down in RMDC-I case. Reconciliation of both judgments is going to be an onerous task and is for future judges and cases.

Secondly, the Junglee Games case has, without expressly stating so, endorsed an intrusive regulatory regime for online gaming. States clearly admitted that online gaming is a complex area and designing a regulatory regime would be financial burden on States. In view of the potential for harm. At the same time, the Supreme Court has also suggested that once monetary stakes are involved it constitutes gambling. Medium – physical or online – is irrelevant. In view of the facts, the Supreme Court has certainly endorsed prohibition of online money gaming. But whether the same can extend to physical games remains to be seen. Though, given the wide canvas that Supreme Court has granted States to implement prohibition on gambling, it would not be surprising if physical games, involving monetary stakes, are next to face the axe of prohibition.

Gambling, Skill, and Money: Supreme Court Upends Decades Old Jurisprudence – I

June 15, 2026 by Rav Singh

I. Introduction

On 27 May 2026, a Division Bench of the Supreme Court – comprising of Justice P.B. Pardiwala and Justice R. Mahadevan – pronounced two inter-related judgments: The State of Tamil Nadu v Junglee Games India Private Limited (‘Junglee Games case’) and Directorate General of Goods and Services Tax Intelligence (HQS) & Ors v Gameskraft Technologies Private Limited & Ors (‘Gameskraft case’). The former upheld prohibition of online money gaming by the States of Tamil Nadu and Karnataka. While the latter upheld constitutional validity of amendments to Central Goods and Services Tax Act, 2017 – introduced in 2023 – which significantly increased the Goods and Services Tax (‘GST’) burden of online gaming companies.

The issues involved are multi-fold and layered, traverse regulation and taxation of online gaming; but once we peel the onionesque layer the dispute narrows down to legal meaning of gambling and scope of State’s regulatory and taxation powers in relation to it. The Supreme Court, in both decisions, was deferential to the State and approved all the statutory and related amendments. Thus, concretizing a bleak future for online money gaming in India. Though most online gaming companies have already shifted base outside India, downsized or shut shop even before the decisions were pronounced. Writing on the wall is, sometimes, not difficult to read.

In this two-part article, I will comment on the Junglee Games case. Part I contextualizes and summarizes the dispute and Part II comments on the Supreme Court’s response to the dispute. I will comment on the Gameskraft case separately with a sole focus on GST related issues.

II. Brief Overview of the Indian Gambling Law Landscape: 1957-2021

For more than seven decades, Indian gambling law landscape has been defined by Supreme Court’s ratio in State of Bombay v R.M.D. Chamarbaugwala (‘RMDC-I case’) with R.M.D. Chamarbaugwala v Union of India (‘RMDC—II case’). I will spare you the details and skip to the relevant part. In RMDC-I case, the Supreme Court endorsed the ‘pre-dominant element’ test to distinguish a game of skill from a game of chance/gambling. The pre-dominant element test means that to determine if a game is a game of skill or a game of chance, it is important to identify which of the two elements is pre-dominant in a game. If skill dominates chance, the game is a game of skill while if it is vice-versa it is a game of chance/gambling. A secondary observation of the Supreme Court in RMDC-I case was that in determining the nature of a game, the perspective of an ordinary common person is relevant and not an expert. If a game involves guessing a correct solution, its difficulty level, for a common person must not amount to taking ‘a shot at a hidden target’. If it is so, it is a game of chance/gambling. A game of skill must require application of skill by a common person, and such skill should pre-dominate the chance element.

The pre-dominant element test stood was central to gambling law jurisprudence for more than seven decades. And it is worth mentioning two relevant judgments of the Supreme Court which endorsed the test. In State of Andhra Pradesh v K Satyanarayana & Ors (‘Satyanarayana case’), the Supreme Court held that rummy is a game of skill since it requires memorizing cards. Thus, rummy was ‘mainly and preponderantly’ a game of skill. However, an important caveat in the Satyanarayana case was that ‘if there is evidence of gambling in some other way’ or ‘the owner of the house or the club is making a profit or gain from the game of Rummy’ then it will constitute an offence. The above caveat was interpreted to mean that ‘side-betting’ is not permitted. If players staked money in a game of rummy to win prize money it was permissible since rummy was a game of skill. Presumably also because players were pre-dominantly using their skill to earn the money. But if the house/club or a third-party placed money on the outcome of such a game of rummy, it was not permitted since it was assumed to be mere speculation. A third party placing monetary stakes on a game of skill was referred to as ‘side-betting’ or betting simpliciter. Though there was no unanimous or specific definition of either term.

Similarly, in Dr. K.R. Lakshmanan v State of Tamil Nadu (‘Lakshmanan case’), the Supreme Court held that horse racing was a game of skill. The Supreme Court also extended the protection of game of skill to wagering or betting on horse racing. The dictum of Lakshmanan case meant that any a third person/onlooker wagering on outcome of a horse race was also indulging in a game of skill and such wagering cannot be classified as a game of chance. While the Lakshmanan case’s observation, prime facie, diverged from the Satyanarayana case; the betting permitted in the former was only in the context of horse racing. But betting on horse racing only took place in specific horse racing clubs, at a specified time and as per the rules of the horse racing club. So, while the Lakshmanan case expanded the scope of game of skill, it was a limited and contextual expansion and did not permit third party betting on all games of skill. Though the Lakshmanan case was also liberally interpreted to mean that betting or placing monetary stakes on games of skill is also a game of skill.

The above position of law was unchallenged until some States took a step to prohibit online money gaming, i.e., online gaming involving monetary stakes and/or a monetary prize. Let me mention two such prohibitions which were subject of the Junglee Games case.

III. 2021 Onwards: The Prohibition of Online Money Gaming

In 2021, Tamil Nadu amended the Tamil Nadu Gaming Act, 1930 while Karnataka amended the Karnataka Police Act, 1963. As per the amendments online gaming intermediaries could constitute ‘common gaming houses’. Relatedly, facilitating betting and wagering through collection or solicitation of bets for distribution of prizes through electronic funds was also made a punishable offence under the respective statutes. Another crucial amendment was that betting and wagering on online games was made a punishable offence. And the offence of betting or wagering was defined to include betting on uncertain events including online games of skill. Prohibiting betting on online games on skill was unprecedented as previously all games of skill – including betting on game of skill – were permissible activities and considered outside the purview of gambling laws.

Prior to 2021, Tamil Nadu Gaming Act, 1930 and Karnataka Police Act, 1963 recognized two kinds of games: games of chance/gambling and games of skill. The former were punishable while the latter were permissible. The amendments of 2021 created a new category – online money games. Any online game which involved monetary stakes was defined as online money game. And all online money games were prohibited irrespective of whether they were a game of skill or a game of chance. Only online games of skill that did not involve monetary stakes remained outside the scope of gambling laws.

To exemplify. In Satyanarayana case – physical rummy was held to be a game of skill. Thus, until 2021, both online and physical rummy if played for money or otherwise was not a punishable offence under the Tamil Nadu Gaming Act, 1930 and Karnataka Police Act, 1963. The amendments in 2021 stated that wagering or betting on online rummy was a punishable offence. Playing online rummy for money was equated to gambling and made punishable. Whether the monetary stakes were those of players or a third party was irrelevant. Equally, gaming intermediaries that facilitated the playing for monetary stakes could be labelled as common gaming houses and be made liable for penalties.

In short: in 2021, States used money to distinguish between online games of chance and online games of skill. Any online game involving money was termed as gambling. But the High Courts held use of money as a distinguishing element was at odds with the pre-dominant element test laid down in RMDC-I case.

IV. High Courts Question a Blanket Prohibition on Online Money Games

The amendments to both the legislations were struck down in Junglee Games India Pvt Ltd v The State of Tamil Nadu and All India Gaming Federation v State of Karnataka by the Madras High Court and the Karnataka High Court respectively. While both the High Courts cited various reasons for not upholding the constitutional validity of both amendments, two reasons are worth mentioning. To begin with, the High Courts reasoned that a blanket prohibition on all forms of online money games including games of skill was disproportionate. A narrowly tailored prohibition was recommended. The legislatures of both States introduced amendments on the assumption that all online games involving monetary stakes amounted to gambling. While a more considered approach would have involved determining which physical games, when played online, partake the character of gambling. If physical poker played for money was a game of skill, then the same game played online for money does not amount to a game of chance/gambling. The High Courts suggested that an inquiry into the surrounding circumstances, identifying the terms and conditions of online games that transformed them into gambling was necessary. And the legislature must accordingly determine which online money games amounted to gambling instead of imposing a blanket prohibition on all online money games.

The High Courts also questioned competence of the States to legislate on games of skill. Entry 34, List II, Seventh Schedule is ‘Betting and gambling’. The High Courts interpreted the two words conjunctively and held that States do not have legislative competence to enact laws on betting alone as betting is not a standalone category. Under Entry 34, List II, States can enact laws only on betting related to gambling. Thus, any laws that prohibited betting on games of skill were outside the purview of State’s legislative competence under Entry 34, List II.

One implication of the above is that, if online games of skill or betting on games of skill are not included within the scope of Entry 34, List II then they cannot be termed as ‘res extra commercium’. In RMDC-I case, the Supreme Court had termed gambling as res extra commercium and undeserving of protection under Part III of the Constitution. But games of skill remained eligible for protection under Part III of the Constitution. Most notably Article 14 and Article 19(1)(g) read with Article 19(6). Thus, any restrictions on games of skill cannot be arbitrary, need to be reasonable and must satisfy the proportionality test. And the High Courts in their respective judgments – concluded that the blanket prohibitions on online money games were disproportionate and struck them down.

States introduced money as the criteria to distinguish online games of chance from online games of skill, but the High Courts cited the pre-dominant element test and held that latter cannot be clubbed with the former only because they involve monetary stakes. The skill-chance parameter remains relevant for online games as well.

Both the States resisted the High Court’s views and in Junglee Games case, filed an appeal and the Supreme Court decided the petitions together since they raised analogous issues.

V. Appeal before the Supreme Court

(a) Justification by States

States justification for prohibiting wagering or betting on online games was multi-pronged. The State of Tamil Nadu relied on financial distress, predatory practices of online gaming companies, suicides, addiction among other similar reasons. And argued that even if States were found to not possess legislative competence under Entry 34, List II it was competent to prohibit the wagering or betting under other legislative entries. For example, public order (Entry 1, List II), public health (Entry 6, List II), or sports, entertainments and amusements (Entry 33, List II).

Further, State’s argument – which proved crucial to fate of the case – was that the phrase ‘betting and gambling’ in Entry 34, List II should not be construed conjunctively. And both terms can be interpreted independently. Entry 34, List II should not be restricted to mean ‘betting on gambling’ denying States authority to regulate betting on games of skill. States argued that a third-person betting on a game of skill is merely guessing the outcome of game and not applying their skill in the game. States are competent to prohibit such betting even if the underlying game is a game of skill.

States also resisted terming the prohibition on betting and wagering as a blanket ban by suggesting that some online games of skill are still permitted. For example, online games of skill which do not involve monetary stakes. Alternatively, a prohibition was justified on the ground that online gaming is a complex area and designing a regulatory landscape was a significant financial burden on States. Thus, States are entitled to impose a ban on betting and wagering on online games and cannot be questioned on the ground for not choosing the ‘least intrusive option’ and violating the doctrine of proportionality.

(b) Online Gaming Companies Resist the Prohibition

Online gaming companies tried to resist the prohibition on wagering and betting by pointing to its wide scope, lack of States legislative competence under Entry 34, List II, and a misapplication of the well-founded distinction between games of chance/gambling and games of skill recognized by the Supreme Court in RMDC-I case.

Online gaming companies’ argument was that betting and gambling (Entry 34, List II) only provides States legislative competence for betting on gambling. And State cannot treat betting as an independent category and legislate for betting on games of skill. The phrase ‘betting and gambling’ must be interpreted conjunctively. The implication, as suggested, above, was that betting on games of skill would not be ‘res extra commercium’ and any restrictions on it would be examined on the touchstone of reasonableness under Article 19(6) and whether they adhere to the doctrine of proportionality.

To support their argument, online gaming companies relied on relevant judicial precedents, especially the Lakshmanan case. Online gaming companies relied on the Lakshmanan case to reinforce the argument that wagering or betting on game of skill is also a game of skill and cannot be included within Entry 34, List II.

Further, online gaming companies argued that it was the Parliament which had competence to regulate online games and fantasy sports. Entry 31, List I: ‘Posts and telegraphs; telephones, wireless, broadcasting and other like forms of communication’ covered online games that were solely dependent on the internet. Permitting States to regulate online games would lead to ‘regulatory chaos’ and regulation of online games also involved an inter-State trade element which should be exclusive preserve of the Parliament. Online gaming companies also underlined that they were online gaming intermediaries under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and under regulatory purview of Ministry of Electronics and Information Technology of India.

Additionally, online gaming companies argued that the amendments disregarded well-established distinction between games of skill and games of chance as per the pre-dominant element test laid down in RMDC- I case. Merely because monetary stakes were involved in an online game of skill does not convert it into a game of chance. The pre-dominant element test needs to be applied to online games as well to distinguish an online game of chance from an online game of skill. To apply the pre-dominant element test, each game will have to be scrutinized on the skill-chance parameter. Instead, States had chosen to prohibit all online money games, i.e., all online games involving monetary stakes.

VI. ‘Stakes’ Before the Supreme Court

A perusal of the lengthy arguments – which also involved challenge by online gaming companies on grounds of Article 14 – reveals that the entire online gaming sector faced an existential threat. If all online money games were prohibited, the entire revenue model of online gaming companies would come to a halt. And that seemed to be intention of the States. Why?

States of Tamil Nadu and Karanataka put forth allegations of predatory practices by online companies, fears of addiction among general population, mounting debts, and adverse impact on mental and emotional well-being of people. And while States’ concerns should have invited a nuanced regulatory response, a blanket prohibition was an easy and quick solution for States.

Nonetheless, a distillation of arguments of both sides suggests that stakes before the Supreme Court were as follows:

Firstly, relevance of the pre-dominant element test for online gaming. In RMDC-I case, the Supreme Court had laid down the test for a prize competition that invited entries from participants. Whether the test could be seamlessly applied to online gaming or do the latter constitute a separate category of games altogether? The High Courts did not permit ‘medium-based regulation’ and dismissed the States’ argument that online games were a distinct category that can be regulated differently as compared to physical games. However, States insisted that the nature of online games – their pervasiveness, propensity for addictive behavior, constant availability – demanded a separate and customized regulation.

Secondly, understanding and applying dictum of the Lakshmanan case. Players staking money in a game of skill is different from a third-party staking money on the outcome of a game of skill. Former is permissible, but in the Lakshmanan case even the latter was interpreted to be within scope of game of skill in the context of horse racing. Though in the Satyanarayana case side betting or the club earning more money than its expenses was prohibited. These positions needed reconciliation in view of online games especially fantasy gaming.

Thirdly, meaning of betting and whether betting constituted an independent category. Monetary stakes are an essential element of games of chance/gambling but optional in games of skill. Thus, meaning of betting assumes a more crucial role for games of skill. Playing poker without monetary stakes does not involve ‘betting’ by players, but third parties can still ‘bet’ by staking money on the outcome. If players themselves stake money does that count as betting, or does it remain protected under the umbrella of game of skill?

The Supreme Court had a few things to say on all the above though it did not provide adequate or all the answers. Supreme Court’s response is elaborated here.