In a landmark submission to the Supreme Court, the Government of India has challenged the long-standing distinction between games of skill and chance by asserting that any form of betting amounts to gambling under the Goods and Services Tax (GST) regime. The Centre argues that even if an activity is predominantly skill-based, as in fantasy sports, the act of betting on outcomes renders it a form of gambling—liable for a steep 28% GST. This stance, if upheld, could redefine the financial landscape for online gaming and fantasy platforms, previously shielded by legal interpretations distinguishing them from traditional gambling.

Government's Position: Betting is Gambling, Full Stop

The Centre’s submission before the Supreme Court seeks to remove ambiguity in the taxation of online gaming by collapsing the legal distinction between skill and chance—at least for GST purposes. In its words, “whether the underlying game involves skill or chance is irrelevant; if there’s betting on an outcome, it’s gambling.”

This position directly targets fantasy sports platforms, where users create virtual teams and earn points based on real-world athlete performance. While skill is involved in team selection, the Centre contends that users ultimately wager on events they cannot control, much like betting on how many goals Lionel Messi might score in a match.

Skill vs. Chance: Why the Debate Matters

The legal and commercial stakes of this semantic difference are enormous. In Indian law, the classification of a game as one of skill or chance can determine whether it’s legal or prohibited, taxed lightly or punitively, and regulated or left largely unmonitored.

Games of skill rely on a player's knowledge, strategy, and experience—think chess, bridge, or even esports. On the other hand, games of chance hinge on randomness and luck—like dice games, roulette, or lotteries. Fantasy sports have traditionally fallen into a gray area, often considered skill-based due to the need for strategic decisions and understanding of sports analytics.

Legal Precedents and International Comparisons

Indian courts have historically favored the “dominance test,” assessing whether skill or chance is the predominant factor in a game’s outcome. For instance, the Supreme Court ruled that rummy is a game of skill, citing its reliance on memory and strategy. Similarly, horse racing has been deemed skill-based, due to the knowledge required about horses and race conditions.

Yet the Centre's submission attempts to bypass these precedents by focusing solely on the betting act, not the nature of the game. Citing examples from international sports betting, the government argues that no matter how skillful a player’s predictions are, the inability to influence outcomes is what defines gambling.

Implications for Fantasy Sports Industry

Should the Supreme Court endorse the government’s view, fantasy sports platforms could face retroactive and future taxation at the 28% GST slab, a move that would substantially raise operational costs and could dampen user engagement.

Moreover, it would place fantasy games under the broader regulatory purview of gambling, potentially subjecting them to state-specific prohibitions, advertising bans, and stricter scrutiny on user behavior and inducements.

The Centre also raised concerns over platform-led inducements, stating that promotional rewards and aggressive marketing may contribute to addictive behavior, especially among young users.

Understanding the Core Concepts: Skill and Chance

Blurring the Line: Games with Hybrid Elements

Most modern games are not purely skill- or chance-based. Poker, for instance, involves both probability calculations and psychological strategy, yet card draws are still random. The legal status of such games often depends on jurisdiction and regulatory interpretation, with courts worldwide applying varying dominance tests.

As noted by legal platform Lawpath, “the presence of skill doesn't negate chance, but classification hinges on which element predominates.”

Legal and Social Impact: Beyond the Courtroom

The implications extend far beyond taxation:

India: Skill games are largely exempt from gambling laws, while games of chance are often banned.

Germany: Poker is restricted as gambling; however, tournaments of skill-based games like skat are allowed.

United States: Legal interpretations vary from state to state, leading to inconsistent classification of poker and fantasy games.

Socially, skill-based games promote cognitive development, strategic thinking, and educational use, whereas chance-based games risk addictive behaviors and financial loss due to the unpredictability of outcomes.

High-Profile Cases and Judicial Debate

Dream11: Indian courts have upheld fantasy sports as games of skill, citing reliance on statistical knowledge and decision-making.

Rummy vs Teen Patti: The Supreme Court recognized rummy as a skill game due to its strategic complexity, unlike Teen Patti which is largely luck-driven.

Poker: Media outlets like The New York Times and platforms like LegalKart highlight ongoing disputes over whether poker is skill-centric or governed by chance.

Bottomline & Debate: Legal Definitions at a Crossroads

The Centre’s submission may well reset the legal and financial trajectory of India’s burgeoning online gaming sector. By collapsing the distinction between games of skill and gambling, the government is not only seeking increased tax revenue but also asserting regulatory clarity.

However, the Supreme Court’s ruling will determine the fate of innovation, investment, and user engagement in this space. A decision aligning with the Centre’s view could tighten the noose on fantasy platforms, changing the rules for businesses that have so far thrived on legal ambiguity.

Whether India leans toward conservative regulation or continues to differentiate between skill and chance may define its standing in the global gaming economy for years to come.