Madras high court upholds Tamil Nadu’s online gambling act, exempts games of skill

The Madras High Court supports the Tamil Nadu Prohibition of Online Gambling Act, 2022, but restricts its prohibitory measures solely to games of chance

   
madras high court on online gaming

In a significant ruling on November 9, 2023, the Madras High Court maintained the validity of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022. However, the court clarified that the act’s restrictive provisions would only be applicable to games of chance, exempting games of skill such as rummy and poker.

This decision marked the second time the Madras High Court struck down the law attempting to ban online real money games like rummy and poker. The initial ban came into effect in April following the assent of the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Bill by the state governor RN Ravi.

The Division Bench, led by Chief Justice Sanjay V. Gangapurwala and Justice P.D. Audikesavalu, emphasized the state’s failure to demonstrate how games like rummy and poker, acknowledged as games of skill by the Supreme Court, would transform into games of chance when played online. The court dismissed the state’s concerns regarding the use of bots by online gaming companies as baseless, noting that the 2022 Act exclusively pertains to online games and not offline games.

Payal Thaker, Partner, Indirect Tax, BDO India, shared insights on the ruling, stating, “This is a welcome decision, following the principle laid by the Supreme Court creating a distinction between the game of skill and that of chance. For the historic period, RMG companies had taken a stand to pay GST @18 per cent only on the platform fee in case of game of skill thereby distinguishing it from the game of chance which was subject to GST @ 28 per cent on the entire amount,”

Thaker highlighted the potential positive impact on pending GST notices and cases related to differential tax amounts, expressing hope that the Supreme Court would maintain its stance on treating games of skill and chance independently for GST levy.

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