Real-Money Gaming Companies Brace for Next Move after SC GST Ruling

Real-money gaming (RMG) companies are scrambling to figure out their next move after the Supreme Court rejected their challenges to retrospective tax demands totalling nearly ₹2.5 lakh crore and upheld the constitutional validity of the 28% goods and services tax (GST) on online gaming, according to Moneycontrol.

A bench of Justices JB Pardiwala and R Mahadevan ruled on May 27 that organised online gaming activities, including fantasy sports, involving money staked on uncertain outcomes constitute betting and gambling under the GST framework, and are therefore subject to the levy, as per Live Law.

Companies are now weighing several options, including filing a review petition, seeking a hearing before a larger bench, approaching the GST Council, or negotiating a settlement framework with the government, according to Moneycontrol.

However, a top gaming executive told the publication that chances of a different outcome through review are slim. The more likely next step, the executive said, is adjudication of show-cause notices, a process that could take three to six months and would allow companies to dispute tax figures on different grounds.

What the Court Ruled

The bench held that even skill-based games take on the character of betting and gambling for GST purposes once players stake money on uncertain outcomes.

It further ruled that gaming platforms are not mere intermediaries facilitating transactions between players, but are themselves suppliers of "actionable claims", a legal category that attracts GST under the Central GST Act.

The court also held that amounts staked by players constitute "consideration" under the GST Act, meaning the tax applies to the full face value of deposits, not just the platform commission.

The bench additionally ruled that regulating or banning online gaming falls within the powers of state legislatures under Entry 34 of the State List of the Constitution, which covers gambling and betting.

The Tax Dispute's Origins

The legal battle began in September 2022, when tax authorities issued a ₹21,000 crore notice to Gameskraft for alleged tax evasion.

The Karnataka High Court quashed the notice, but the Supreme Court stayed that order, opening the door to similar demands across the industry.

Between 2023 and 2024, over 50 petitions were filed by RMG platforms — including Dream11, Games24x7, Mobile Premier League, Head Digital Works, WinZO, and Baazi Games — as well as industry bodies EGF and AIGF, challenging retrospective demands calculated at 28% on the full face value of bets.

Platforms had argued that GST should apply only to their gross gaming revenue (GGR), the commission they charge to host games, which typically ranges between 5% and 15% of deposits. The court sided with the tax department.

The recent ruling compounds an already severe crisis for the industry.

In August 2025, the Indian government enacted the Promotion and Regulation of Online Gaming Act (PROGA), which prohibits online money games where users deposit funds with the expectation of winning.

The law came into effect from May 1, 2026, triggering the collapse of what was a $3.5 billion industry, with companies collectively laying off over 3,000 employees as revenues dried up.