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In a courtroom charged with anticipation and the weight of ₹2.5 lakh crore hanging in the balance, the Supreme Court of India continued hearing one of the most consequential tax disputes in recent memory. On Wednesday, a division bench comprising Justices JB Pardiwala and R. Mahadevan heard the arguments of E-gaming Federation. 

During the hearing, Justice Pardiwala on a lighter note quipped, “The fate of this litigation depends on our skill — we can't take any chance.” The entire matter hinges on the complexities and distinction between game of skill and chance. 

The matter lies a deceptively simple but deeply consequential question: should online games of skill be taxed the same way as gambling and betting under India’s Goods and Services Tax (GST) regime?

Representing the E-Gaming Federation (EGF), former Solicitor General and senior advocate Harish Salve took center stage, laying out a robust case that online gaming is being fundamentally mischaracterized under current GST notifications.

“No one is arguing that games of skill can’t be regulated when there’s money involved,” Salve told the bench. “But that’s a far cry from claiming that games of skill suddenly become games of chance just because stakes are introduced.”

Salve's argument hinges on the definition of "actionable claims"—a term crucial to determining how online games are taxed. He questioned whether the entry fees paid by players to participate in skill-based games like rummy or fantasy sports can be equated with “actionable claims” as defined under GST law. Citing the Supreme Court's 2006 ruling in Sunrise Associates, Salve emphasized that actionable claims typically involve a transferable right to a future benefit—like a lottery win—which doesn’t exist in skill-based gaming platforms.

“Online platforms are facilitators,” Salve asserted. “They don't offer any actionable claim. There is no guaranteed win, no transfer of rights—just competition among players.”

Yet under Rule 31A of the CGST Rules, tax authorities have classified participation in these games as equivalent to betting and gambling. This rule mandates that the entire face value of a bet be considered taxable at 28%, not just the operator’s earnings. Salve pointed out the significant flaw in this approach: gaming platforms typically retain only around 10% of the total entry fee as their platform fee, and even this already includes an 18% GST. The department's interpretation, however, seeks to levy 28% GST on the full entry fee amount—more than doubling the platform’s actual revenue in tax obligations.

“The operators are being taxed on money that never enters their accounts,” Salve said. “Players compete against each other. The platform simply hosts the game. How can that be equated with gambling?”

The implications of this case stretch far beyond courtroom semantics. With a staggering ₹2.5 lakh crore at stake, the outcome could reshape India’s digital gaming industry and establish a precedent for how skill-based digital services are taxed.

Gaming companies argue that Rule 31A was crafted for classic gambling scenarios—like horse racing and lotteries—where the outcome relies purely on chance. Applying it to games that require strategy, knowledge, and skill, they contend, not only misinterprets the law but risks stifling one of India’s most promising tech sectors.

As arguments will continue on May 15, what’s at stake is not merely a tax classification, but the very future of online gaming in India.

GST on online gaming: SC quips, ‘Fate of this litigation depends on our skill, can’t take a chance’

On Tuesday, former Solicitor General of India and senior advocate Harish Salve presented arguments on behalf of the E-Gaming Federation (EGF), challenging the applicability of Goods and Services Tax (GST) to online gaming platforms. The matter will be heard on May 14 as Salve continues with his submissions. 

Appearing before a division bench of the Supreme Court comprising Justices JB Pardiwala and R. Mahadevan, Salve submitted arguments whether the participation fees in online games—ranging from card games like rummy to fantasy sports—constitute "actionable claims" that can be classified as "goods" under the GST regime, and thus be taxed accordingly.

Salve contended that the current GST notifications and show cause notices (SCNs) fundamentally mischaracterize the nature of online gaming. He argued that online gaming platforms act merely as facilitators, not as suppliers of any transferable rights or claims. “There is no ‘actionable claim’ that arises from participating in a game of skill,” Salve asserted, referencing the 2006 Supreme Court ruling in Sunrise Associates, which defined actionable claims in the context of lotteries.

<a href="https://www.storyboard18.com/gaming-news/sc-to-hear-%E2%82%B92-5-lakh-crore-online-gaming-tax-case-on-may-5-61796.htm">Read More: SC to hear ₹2.5 lakh crore online gaming tax case on May 5</a>

The petition also challenges the blanket application of Rule 31A of the CGST Rules, which mandates that the value of a bet in gambling or betting scenarios be considered 100% of the face value. Under the current interpretation, GST is being levied not just on the platform’s service fee but on the entire pool of money contributed by players—resulting in a tax burden that vastly exceeds the operators' actual earnings.

According to the breakdown provided in court, operators typically retain only 10% of the entry fee as a platform fee, which already includes an 18% GST component. However, the Department's interpretation demands GST at 28% on the entire entry fee, raising the tax liability to more than double the platform's gross earnings.

The petitioners emphasized that in fantasy sports and other skill-based games, the operators do not own or control the prize pool. Instead, players contribute to and compete for the pool, while operators merely earn a pre-defined fee for providing the platform. Additionally, the operators neither participate in the games nor receive a share of the winnings.

The submissions highlighted that players' deposits are maintained in escrow accounts, and winnings are credited directly to individual players’ wallets—emphasizing the separation between the operator's revenues and the game pool.

Salve said, "The essential feature of these games is that a Player who participates in the game plays against other Players, and the Operators only provide and handle the platform but do not participate in the games."

The legal challenge also points to constitutional concerns. Salve argued that the attempt to tax such games as "betting and gambling" contravenes the constitutional scheme, especially after the 101st Constitutional Amendment, which removed state authority to tax betting and gambling under Entry 62 of the State List.

Salve submitted that "Rule 31A is plainly a colourable exercise of legislative power in that it seeks to alter
the nature of the tax to a tax on betting and gambling."

<a href="https://www.storyboard18.com/gaming-news/breaking-wagering-on-game-of-skill-amounts-to-gambling-and-betting-govt-of-india-tells-sc-64545.htm">Read More: Wagering on game of skill amounts to gambling and betting: Govt of India tells SC</a>

The Supreme Court’s ruling in this case is expected to set a significant precedent in the rapidly growing online gaming sector, which has seen exponential growth in users and revenues. The final decision could reshape how digital entertainment platforms are taxed in India, with billions of rupees at stake.

The case, with an estimated financial impact of ₹2.5 lakh crore, is one of the biggest tax battles in India’s history. Gaming companies are challenging the government’s interpretation of Rule 31A of the CGST Rules, which states that GST at 28% should be levied on the face value of each bet. The industry argues that this rule applies only to gambling and betting, not to games of skill like rummy, poker, or fantasy sports.

<a href="https://www.storyboard18.com/gaming-news/breaking-supreme-court-hears-centres-seven-sutras-on-gambling-in-online-games-64712.htm">Read More: Supreme Court hears Centre’s ‘Seven Sutras’ on gambling in online games</a>

<a href="https://www.storyboard18.com/brand-makers/scintilla-of-skill-argument-returns-as-gaming-companies-challenge-govts-stance-in-sc-64900.htm">Read More: ‘Scintilla of Skill’ argument returns as gaming companies challenge govt's stance in SC</a>



SC online gaming case: GST rule a Constitutional overreach, ‘Colourable exercise of power’

On Wednesday, gaming companies appearing before a division bench of the Supreme Court comprising Justices JB Pardiwala and R. Mahadevan, contested that a game of skill cannot be classified as gambling when stakes are involved pointing out that historical legal interpretation shows that 'even a scintilla of skill' was once enough to avoid gambling classification.

The bench, comprising Justices JB Pardiwala and R. Mahadevan, heard impassioned arguments that drew from decades of legal precedent, constitutional interpretation, and the evolution of gambling laws in India.

Gaming firms, including leading operator Gameskraft, contended that games like rummy fall squarely within the legal definition of “games of skill.” Their lawyers emphasized that historically, even a “scintilla of skill” was sufficient to distinguish a game from gambling in the eyes of the law.

Representing the Union government, Additional Solicitor General N. Venkatraman laid out a nuanced legal framework, citing three categories of case law. He pointed out that when older Gambling Acts included a “carve-out clause” for games of skill, several High Courts upheld the legality of such games even when played for money.

Interestingly, even after some states amended their laws to remove this protective clause, courts have continued to allow wagering on skill games. Venkatraman argued that the phrase “betting and gambling” should be interpreted as “betting on gambling”—that is, betting on games of chance—not on games demonstrably driven by skill.

Senior advocate Dr. Abhishek Manu Singhvi, appearing for Gameskraft, took direct aim at recent efforts to categorize online rummy as gambling. In his argument, Singhvi made a clear distinction between games of chance and games of skill, asserting that the mere presence of stakes does not turn a skill-based game into a gambling activity.

He underscored this position with references to landmark judgments and sections of the GST Act. Singhvi also highlighted the potential financial fallout for gaming companies, pointing to hefty tax demands based on a revised interpretation of online rummy as gambling.

A significant portion of the hearing focused on the operational structure of online gaming platforms. Counsel clarified that these companies act as intermediaries or service providers—not bookmakers or betting operators—thereby reinforcing their legal position under existing laws.

In a noteworthy moment, the government’s own legal team acknowledged in writing that playing a skill-based game for stakes does not alter its fundamental nature. This admission could prove to be a game-changer as the court moves toward a consolidated hearing on gaming-related legal matters.

‘Scintilla of Skill’ argument returns as gaming companies challenge govt's stance in SC

In a case with major implications for India’s rapidly growing online real money gaming industry, the Union government has laid out its firm position on what constitutes gambling—regardless of whether the activity is based on skill or chance. 

Appearing before a division bench of the Supreme Court comprising Justices JB Pardiwala and R. Mahadevan, Additional Solicitor General (ASG) N. Venkatraman presented what he called the “seven sutras” or principles of gambling. These principles aim to create a clear legal framework around wagering, particularly in the context of real money gaming (RMG), a space that has seen explosive growth but remains mired in regulatory ambiguity.

In a methodical and strongly worded submission, Venkatraman drew upon earlier judicial rulings to stress that the presence of a financial stake—not the nature of the game—is the deciding factor in defining gambling. The seven key principles he laid out are:

1) There is no gambling if no stakes are involved, irrespective of whether the underlying game is a game
Of skill or game of chance.
2) There is gambling, once stakes are involved, irrespective of whether the underlying game is a game
Of skill or game of chance.
3) A game of chance involving even a competition fee is gambling. (RMDC)
4) A game of skill is per se not gambling.
5) A game of skill, when played with stakes, makes it gambling. (RMDC, Satyanarayana and Lakshmanan)
6) A game of skill played with stakes, though gambling, does not re-characterize the underlying game
From game of skill into game of chance.
7) Protection by some of the states on games of skill played with stake from penalty and prosecution Is proof that the same is nothing but gambling. Such an express carve-out exempting and protecting Gambling on games of skill from penal consequences is called for only because it is otherwise “gambling”. Games of skill played with stakes will not seize to be gambling merely because of a Protection given from penal consequences.

In short: when money is on the line, the government believes it’s gambling—skill or not.

To drive the point home, Venkatraman used a sports analogy. He argued that even if a player like Lionel Messi bets on himself to score four goals—or a fan places the same bet—the action is a prediction of an uncertain outcome and cannot be seen as controlled or entirely skill-based. “The dissection of game of chance and skill gets obliterated after one puts a stake on it,” he said.

He also clarified the position on horse racing. While racing is recognized as a game of skill, betting on it becomes gambling when done outside a licensed racecourse.

In a memorable line, Venkatraman added: “A game of dice leads to a game of vice.”

“We have no issue with games of skill,” Venkatraman reiterated, “but when a person wagers on the outcome, even in a game of skill, it amounts to gambling.” He warned that real money gaming platforms may fall foul of multiple state laws, even if the games they host are skill-based.

Venkatraman also argued that RMG platforms go far beyond just providing a venue. “They facilitate the entire flow of money,” he noted, pointing to features like “cash-in” and “cash-out” systems and in-house game rule-setting as proof of deeper involvement than simple software leasing.

The debate also touched on taxation under the Goods and Services Tax (GST) framework. Venkatraman emphasized that there is no distinction between skill and chance when it comes to GST levies.

Smita Singh, a partner at S&A Law Offices, elaborated on the implications. “Actionable claims like lottery, betting, and gambling are generally outside GST’s purview,” she said. “But betting and gambling aren’t clearly defined under GST laws.”

She pointed to a crucial shift in October 2023, when the GST Council decided that horse racing, rummy, and online gaming fall within the list of actionable claims. This has far-reaching consequences, Singh warned. “It changes how online gaming is classified—from services to goods. That’s a stark deviation from GST’s basic classification principles.”

With hearings set to continue until May 9, however the matter is likely to be extended for further dates. The Supreme Court’s verdict could reshape the legal and business landscape for India’s booming online gaming sector. 

Breaking: Supreme Court hears Centre’s ‘Seven Sutras’ on gambling in online games

In a significant development in the ₹2.5 lakh crore Goods and Services Tax (GST) dispute involving India’s online gaming industry, the government argued before the Supreme Court that staking money in games of skill constitutes to gambling and betting. The landmark hearing, which began on May 5, saw the Centre assert that real money gaming (RMG) platforms are not merely technology providers but active enablers of cash-based gaming.

A division bench comprising Justices JB Pardiwala and R. Mahadevan is presiding over the case, with hearings scheduled until May 9. The proceedings are expected to shape the future of India's rapidly growing online gaming sector, which has come under regulatory and tax scrutiny in recent years.

Representing the Union government, Additional Solicitor General (ASG) N. Venkatraman laid out the Centre’s position, stating that platforms offering cash-based games, even those categorized as games of skill, engage in gambling due to the financial stakes involved.

“We have no issue with games of skill,” said Venkatraman during the hearing. “But when a person wagers on the outcome, even in a game of skill, it amounts to gambling.” He also pointed out that real money gaming maybe also stand illegal under various state gaming laws. 

Venkatraman emphasized that RMG platforms do more than just host games—they actively facilitate the flow of money. He pointed to how these platforms provide both "cash-in" and "cash-out" systems and create the rules for the games, demonstrating a deeper involvement than mere software leasing.

To support the government’s argument, Venkatraman cited previous judicial rulings to underline that wagering—defined as placing a financial stake on an uncertain outcome—remains a key characteristic of gambling, regardless of whether the underlying activity is skill-based or chance-driven.

“Even if the outcome depends on skill, the element of uncertainty makes the act of staking money a form of wagering,” he said. He further clarified that paying a fixed fee to enter a tournament may be permissible, but wagering money on an uncertain result crosses into the realm of gambling.

Using fantasy sports as an example, he noted that while users may create teams based on skill, the actual results depend on the performance of real-life players in unpredictable live events such as cricket, football, or kabaddi.

The gaming industry, on the other hand, is contesting the government’s interpretation of Rule 31A of the CGST Rules. The rule mandates a 28% GST on the full face value of each bet, a policy gaming firms argue should apply only to traditional forms of gambling and betting—not to games requiring skill, like rummy, poker, or fantasy sports.

Prominent legal figures including Senior Advocates Harish Salve, Abhishek Manu Singhvi, Mukul Rohatgi, C. Aryama Sundaram, Sajan Poovayya, Vikram Nankani, and Arvind Datar are representing various gaming companies in what is being seen as a defining legal battle.

The outcome of the case could have far-reaching implications. A verdict in favor of the gaming industry would solidify the legal distinction between games of skill and games of chance, potentially influencing future tax regulations, investor confidence, and the overall growth trajectory of India's RMG sector. Conversely, a ruling for the government could validate the imposition of higher taxes and reshape how online gaming is treated under Indian law.

The Supreme Court is expected to conclude arguments by May 9, with a judgment likely to follow in the coming months.

Breaking: Wagering on game of skill amounts to gambling and betting: Govt of India tells SC

One 97 Communications Limited, the parent company of First Games Technology Private Limited has received a show cause notice (SCN) from the Directorate General of GST Intelligence (DGGI), Delhi Zonal Unit. The notice pertains to an ongoing tax matter in the online gaming industry and proposes a demand of ₹5,712 crore in unpaid Goods and Services Tax (GST), along with applicable interest and penalties.

The notice, received by First Games on April 28, 2025, argues that GST should be levied at 28% on the total entry amount collected by the platform, rather than the 18% paid on platform fees — a stance that has become a contentious issue across the online real money gaming sector. The liability outlined in the notice covers the period from January 2018 to March 2023.

Paytm clarified that this issue is not unique to First Games, noting that the GST department has sent similar notices to several gaming companies in the past. The matter is currently under consideration by the Supreme Court, which has granted interim relief by staying further proceedings.

In response, First Games plans to file a writ petition to challenge the SCN on legal grounds, particularly opposing the retrospective application of a GST amendment effective from October 1, 2023. The petition will also question the interpretation of regulations before this amendment, seeking interim relief consistent with that granted to other companies in the industry.

Paytm has emphasized that the SCN has no operational or financial impact on One 97 Communications Limited itself. As per accounting standards, First Games is treated as a joint venture (JV), and its financials are not consolidated into Paytm’s statements. The company noted that its investment in First Games is already valued at nil as of March 31, 2024, with an exposure limited to ₹225 crore in shareholder loans as of December 31, 2024.

The Supreme Court of India will hear the biggest taxation matter of online gaming industry from May 5-9. The case, with an estimated financial impact of ₹2.5 lakh crore, is one of the biggest tax battles in India’s history. 

Gaming companies are challenging the government’s interpretation of Rule 31A of the CGST Rules, which states that GST at 28% should be levied on the face value of each bet. The industry argues that this rule applies only to gambling and betting, not to games of skill like rummy, poker, or fantasy sports.

Breaking: Paytm's First Games receives ₹5,712 crore GST show cause notice

In a high-stakes legal showdown that could redefine India’s online gaming landscape, the Supreme Court has scheduled May 5, 2025, as the date for the final hearing in a case involving show-cause notices issued to several online gaming firms. The case, with an estimated financial impact of ₹2.5 lakh crore, is one of the biggest tax battles in India’s history.

Gaming companies are challenging the government’s interpretation of Rule 31A of the CGST Rules, which states that GST at 28% should be levied on the face value of each bet. The industry argues that this rule applies only to gambling and betting, not to games of skill like rummy, poker, or fantasy sports.

On Tuesday, Solicitor General N. Venkatraman and senior counsels representing the gaming firms appeared before the bench comprising Justices JB Pardiwala and R. Mahadevan. While the court was initially hesitant to allow a delay, stating that the expectation was for the proceedings to begin that day, it ultimately agreed to an adjournment after persistent requests from both the Additional Solicitor General and the defense team.

The matter will now be heard on May 5, 2025, and is expected to continue throughout the week. The court made it clear that no further delays will be entertained.

The outcome of this case holds enormous implications for the real money gaming (RMG) industry. The controversial 28% GST has already dealt a severe blow to the sector. A ruling in favor of the gaming firms could reinforce the legal distinction between games of skill and gambling, potentially shaping future regulation, boosting investor confidence, and ensuring the long-term growth of the industry.

A senior legal counsel, speaking on the condition of anonymity, said, “The industry has a strong case on its merits. Numerous High Court rulings support our position, and decades of jurisprudence have consistently distinguished games of skill from gambling and betting.”

According to this counsel, the government’s stance is that Rule 31A—taxing gambling and betting at 28% on the face value of bets—should also apply to online skill-based games played for money between July 2017 and October 2023. The government argues these platforms are offering "actionable claims" akin to gambling and betting.

As the case heads into its decisive phase, all eyes are on the Supreme Court. Its verdict will not only decide the fate of India’s online gaming industry but also set a critical precedent for how digital innovation is taxed and regulated in the country.

SC to hear ₹2.5 lakh crore online gaming tax case on May 5

The Indian government on Tuesday sought adjournment at the Supreme Court in the 28% GST case levied on gaming companies. Gaming companies are mounting a strong defense against what they call an unjustified tax burden that could cripple the sector. The case, with an estimated financial impact of ₹2.5 lakh crore, is one of the biggest tax battles in India’s history.

Additional Solicitor General N. Venkatraman, who will argue in favor of the tax demands and defend the government’s position on retrospective taxation sought the adjournment due to another important taxation matter at the Supreme Court. Senior counsel Dr. Abhishek Manu Singhvi representing Gameskraft requested for next hearing to be in month of April or end of March. 

Justices JB Pardiwala and R Mahadevan heard the matter and were inclined to hear the matter within next few days. 
 
Gaming companies are challenging the government’s interpretation of Rule 31A of the CGST Rules, which states that GST at 28% should be levied on the face value of each bet. The industry argues that this rule applies only to gambling and betting, not to games of skill like rummy, poker, or fantasy sports.

It should be noted that 28% GST has drastically affected the real money gaming industry but if the Court rules in favor of the gaming industry, it would set a major legal precedent, reinforcing the distinction between games of skill and gambling. The decision will also impact future regulatory policies, investor sentiment, and the long-term sustainability of India’s booming real-money gaming (RMG) sector.

Another top counsel on condition of anonymity said, "The industry has a very strong case on merits as plethora of High Court judgments support the case and there is seven-decade of jurisprudence making it clear that games of skill are distinct from gambling and betting. The government is claiming that Rule 31A of CGST Rules (taxation of gambling/betting @28% on face value of bets) is applicable for the period July 2017-October 2023, online skill-gaming when played for stakes falls within the ambit of betting and gambling and that the platforms are supplying actionable claims amounting to gambling and betting."

As the battle unfolds, all eyes are on the Supreme Court’s final verdict, which could determine the fate of India’s online gaming sector.

Breaking: SC 28% GST gaming case, Govt seeks adjournment

The Indian online gaming industry is bracing for a landmark Supreme Court showdown as the 28% GST levy faces intense legal scrutiny. With the final hearings set to commence on March 18, gaming companies are mounting a strong defense against what they call an unjustified tax burden that could cripple the sector. The case, with an estimated financial impact of ₹2.5 lakh crore, is one of the biggest tax battles in India’s history.

Gaming companies are challenging the government’s interpretation of Rule 31A of the CGST Rules, which states that GST at 28% should be levied on the face value of each bet. The industry argues that this rule applies only to gambling and betting, not to games of skill like rummy, poker, or fantasy sports.

This high-stakes battle has drawn some of India’s most prominent legal minds. Representing gaming companies are Harish Salve who represented Vodafone in a significant $2.5 billion tax dispute with the Indian government, ultimately securing a favorable verdict from the Supreme Court, Kulbhushan Jadhav case at the International Court of Justice achieving a stay on the execution of Indian national and Salman Khan Hit-and-Run Case. 

Dr. Abhishek Manu Singhvi represented during Bhima Koregaon Case for petitioners and activists and during National Judicial Appointments Commission (NJAC) Case. 

Sajan Poovayya was part of the legal team that argued for the recognition of the right to privacy as a fundamental right under the Indian Constitution and involved in the landmark case challenging the constitutional validity of the Aadhaar scheme, focusing on issues related to privacy and data protection.

Rakesh Dwivedi argued on behalf of the Travancore Devaswom Board, defending the traditional practices of the Sabarimala temple. Senior counsels include Dhruv Mehta, Gopal Sankarnarayanan, Balbir Singh, Vikram Nankani, and Arvind Datar, among others.

On the other side, the Union of India will be represented by Additional Solicitor General N. Venkatraman, who will argue in favor of the tax demands and defend the government’s position on retrospective taxation. Some of his notable cases include Kerala v. Union Suit on Borrowing Limits and The Chamber of Tax Consultants vs Director General of Income Tax. 

Sources also claim that the matter will be pushed to April considering other important tax related matters being in focus of the government. 

Adarsh Somani, Partner,  Economic Laws Practice said, "It is important to note that should the Supreme Court uphold the tax demands or merit of the notices so issued, many businesses may be forced to cease operations, as the tax liabilities would far exceed their revenues—let alone their profits."

Somani further said, "Also, in a potential turn of events, the government has introduced Section 11A, aimed at regularizing industry practices. It will be interesting to see whether, even if victorious, the government would resort to this provision only to safeguard the industry & its future.”

It should be noted that 28% GST has drastically affected the real money gaming industry but if the Court rules in favor of the gaming industry, it would set a major legal precedent, reinforcing the distinction between games of skill and gambling. The decision will also impact future regulatory policies, investor sentiment, and the long-term sustainability of India’s booming real-money gaming (RMG) sector.

Another top counsel on condition of anonymity said, "The industry has a very strong case on merits as plethora of High Court judgments support the case and there is seven-decade of jurisprudence making it clear that games of skill are distinct from gambling and betting. The government is claiming that Rule 31A of CGST Rules (taxation of gambling/betting @28% on face value of bets) is applicable for the period July 2017-October 2023, online skill-gaming when played for stakes falls within the ambit of betting and gambling and that the platforms are supplying actionable claims amounting to gambling and betting."

As the battle unfolds, all eyes are on the Supreme Court’s final verdict, which could determine the fate of India’s online gaming sector.


SC showdown: Top lawyers to face-off for 28% GST gaming case on March 18

The Finance Ministry has invited multiple stakeholders from the real-money gaming (RMG) industry to a meeting to discuss issues related to money laundering in online gaming. The stakeholders on Friday will also address challenges faced by the industry, including GST and the growing presence of offshore gambling companies in India.

According to a report by Ernst & Young and the US-India Strategic Partnership Forum (USISPF), the online gaming sector was projected to create 250,000 jobs by 2025. However, under the new GST regime, this figure has dropped significantly, with only 30,000 additional jobs now expected. Additionally, 83.3% of companies are struggling with employment creation. Foreign Direct Investment (FDI) in the sector has also nearly stalled under the new tax framework, a sharp contrast to the $1.7 billion FDI received in 2021.

Officials from the Financial Action Task Force (FATF), an intergovernmental organization that sets international standards to prevent money laundering and terrorist financing, will also be present at the meeting. The FATF will outline its agenda and the government's stance on the industry while seeking feedback and suggestions on curbing money laundering in online gaming.

An RMG operator told Storyboard18, "The Finance Ministry aims to discuss strategies for combating money laundering in the online gaming space. We anticipate a swift crackdown on offshore gambling platforms that are illegally operating in India. These unregulated offshore betting companies not only affect the revenue of legitimate businesses but are also involved in terror financing and money laundering, which is a serious concern."

A source close to the development stated, "During the 40-minute open discussion session, we will address the challenges faced by the RMG industry, including GST issues and the infiltration of offshore gambling firms that operate in India without paying taxes."

It is important to note that in its 50th meeting held in July 2023, the GST Council decided to impose a 28% tax—the highest slab—on the full face value of online gaming, bringing it in line with casinos and horse racing. In September 2024, Finance Minister Nirmala Sitharaman announced that revenue from online gaming had increased by 412%, reaching ₹6,909 crore within six months. Meanwhile, casino revenues saw a 30% rise.

A recent report by Ernst & Young and USISPF highlighted the impact of the 28% GST. Among the 12 companies surveyed, 20% of early-stage startups were forced to shut down, 40% halted hiring, and 20% laid off employees.

Approximately 30 petitions have been filed by RMG companies challenging retrospective GST demands exceeding ₹1.5 trillion, calculated at 28% on the face value of bets. Of these, 27 pleas have been transferred to the Supreme Court from various High Courts. The original petition was filed by Head Digital, Play Games24x7, and Baazi Games, while the GST department has also challenged a Karnataka High Court verdict.