At the heart of the case is whether popular titles such as fantasy sports and online rummy should be treated as games of skill or as gambling. The verdict, expected later this year, will determine whether startups face nearly $20 billion (approximately ₹1.5 trillion) in retrospective tax claims from the Directorate General of GST Intelligence (DGGI) and whether the industry comes under a unified national law or remains subject to a patchwork of state-level rules.
But the hearings have also revealed a deeper problem: the industry’s inability to present a united front. Divisions between fantasy-sports operators such as Dream11, rummy and poker platforms such as Gameskraft, and companies straddling both camps such as Games24x7 have weakened their case.
Industry divided over legality
India’s online gaming industry generates about ₹10,000 crore in annual revenue, according to industry estimates. The sector is split between fantasy sports platforms, rummy and poker operators, and gambling or horse-racing ventures.
Sporta Technologies, which runs Dream11, offers fantasy sports where users pay to assemble virtual teams and win if their players perform in real games. Gameskraft Technologies runs online versions of rummy, while Games24x7 operates across both categories.
The Supreme Court case, led by Justice Jamshed Burjor Pardiwala, consolidated more than 100 cases involving over 90 companies, casinos, and turf clubs. Over five months, the two-judge bench held 31 days of hearings totalling about 100 hours before closing arguments on 12 August. A ruling is expected later this year.
The proceedings followed more than two years of legal battles over state-level bans, appeals, and successive tax demands by the DGGI. Most high courts so far have found that fantasy sports and rummy require skill and are distinct from gambling.
Still, the hearings laid bare rifts.
A senior advocate representing a real-money gaming startup told Mint that the challenges “go all the way back to fundamental discord between the various parties.”
He described six broad groupings, including fantasy gaming firms such as Dream11; gambling and horse-racing ventures; rummy and poker platforms such as Gameskraft; and three sets of startups divided by whether they want strong regulation, no regulation, or a middle ground. “The polarization in the industry is too high,” he said.
Dream11 declined to comment. Queries to Gameskraft and Games24x7 went unanswered at the time of publishing.
These divisions, five other senior lawyers involved in the hearings told Mint, are central to the sector’s fate. For example, during one session, senior counsel Arvind Datar, representing one of the 95 total parties from the online gaming industry, argued that fantasy sports involve skill and are not gambling. No other parties flagged fantasy games separately, underlining divisions within the industry.
Mint has seen a copy of the written submissions made by online gaming firms.
By contrast, N. Venkataraman, in arguments before the Pardiwala bench, contended that while rummy and poker involve skill, fantasy sports do not require actual knowledge of the game and instead rely on “placing their hopes and dreams on athletes that do.” An emailed query to Venkataraman did not receive an immediate response.
“It is only natural that companies involved in the hearing will look to protect their own interests, which went on to expose the divides across the entire industry,” one of the five lawyers, cited earlier, said.
Fantasy-sports lawyers have long argued that assembling virtual teams requires skill. But states such as Tamil Nadu and Karnataka have compared the practice to online gambling and sought to ban it.
One of the lawyers said the “biggest reason why the case got escalated to this level is because the industry could not come to a consensus on regulation, taxation or legal issues to begin with.”
Regulation remains elusive
In 2023, the Centre amended the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules to bring online gaming under a framework for approving titles permitted in India. The rules proposed a self-regulatory body (SRB), but rival companies objected to each proposal, leaving the industry unregulated.
Mint reported in February that the Ministry of Home Affairs later considered central regulation but delayed further action pending the Supreme Court outcome.
“Through the course of the hearing too, the justices hearing the case also noted that there is discrepancy even in the industry’s understanding of which titles involved skill, and which largely relied on chance. This could eventually be detrimental to the overall industry, even though startups fundamentally offer differing games,” another lawyer, representing one of the startups, said.
In his submissions, Abhishek Manu Singhvi argued that the industry’s net revenue in FY25 was just over ₹10,000 crore ($1.1 billion) far below the DGGI’s tax claim of nearly $20 billion.
Two lawyers noted that solicitor general Tushar Mehta, representing the DGGI, argued that the industry’s inability to define “skill” versus “chance” could undermine its case for favourable treatment.
“In the long, if the startups themselves cannot show their willingness to be governed by a common framework—something that the cryptocurrency industry is trying hard to do, the sector’s regulatory challenges will only increase going forward,” a third lawyer said.
