Supreme Court delivers two blows to online fantasy gaming industry

Bengaluru/Chennai: The Supreme Court delivered two rulings on Wednesday that together could wipe out what remains of the online fantasy gaming sector in India. First, it upheld a retrospective 28% GST on online fantasy gaming and betting companies. Then, it ruled that states can criminalise online games played for money.

The bench of Justices JB Pardiwala and R Mahadevan settled a question the industry had fought for years. Can skill-based games where money is staked be taxed differently from gambling? The court said no. Once money is staked on an uncertain outcome, the game’s nature does not matter, it said.

That single finding reinstates backdated tax demands against Dream11, Delta Corp, Gameskraft and others. The total liability exceeds Rs 1 lakh crore. Interest and penalties push it higher still.

“This creates an immediate, steep financial burden that cannot be passed on to consumers,” said Saurabh Agarwal, tax partner at EY India.

The damage reaches further back than many expected. Nitin Vijaivergia, partner at Price Waterhouse & Co LLP, noted the ruling applies even before October 2023, when the law was amended. Companies also now face a 40% GST rate introduced in September 2025. “The gaming industry faces substantial challenges,” he said.

Sajan Poovayya, a senior advocate who argued against the levy in the Supreme Court, said, “Today’s verdict is personally disappointing.” The debate over fair taxation of skill-based digital businesses, he added, “is far from over.”

For many in the industry, there may be no debate left to have.

One gaming executive, speaking anonymously, called it “a death knell to the industry.” Companies were already unable to pay salaries, the person said. “Whatever is left will be severely impacted.”

A founder who had been trying to pivot his 800-person company said only around 80 employees remain. “This ruling will get every last penny we have left,” the person said. “We cannot service even 10% of this tax demand.”

Most companies have been fighting demands through court petitions. Little or no tax has actually been paid yet. That changes now. For many, the only path left is voluntary liquidation.Get the latest lifestyle updates on Times of India, along with Bakrid wishes, messages and eid 2026