From Skill to Stakes: How Junglee Games and Gameskraft reshape India’s online gaming laws

The twin judgements—State of Tamil Nadu v Junglee Games India Pvt. Ltd. (2026) (“Junglee”) and Directorate General of GST Intelligence v Gameskraft Technologies Pvt. Ltd (2026) (“Gameskraft”)—have reconfigured the legal understanding of online gaming laws in India. 

Junglee Games, delivered by Justices J. B. Pardiwala and R. Mahadevan, is a ruling on the competence of state legislatures to ban real-money gaming, including games of skill under Entry 34 of the State List. 

Gameskraft, delivered the next day by Justice Mahadevan, is a fiscal ruling validating the 28% GST levy on all online gaming transactions as actionable claims arising from betting and gambling. 

In this article, we examine the two holdings from the standpoint of the long-running debate on games of skill versus chance. This will also be relevant considering the pending constitutional challenge to the Union’s Promotion and Regulation of Online Gaming Act, 2025 (PROGA), which came into force on 1 October 2025.

Background

Indian Courts have maintained a mindful distinction between games of chance and skill since 1957 when State of Bombay v. R.M.D. Chamarbaugwala was decided. According to judicial precedents, games in which skill predominates over chance cannot be treated as gambling and are constitutionally protected as legitimate trade under Article 19(1)(g). At different points in time, different games have been examined on this test where horse-racing, rummy and poker were classified as games of skill. Accordingly, games of skill, even if played with money stakes, were constitutionally immune from gambling prohibition statutes.

Most recently, the Madras High Court in 2023 clarified that online rummy and poker too qualify as games of skill. Similarly, the Karnataka High Court in 2022 struck down a legislation banning all forms of online gaming involving the risk of money. It reasoned that the ban violated the right to equality under Article 14, as it imposed an absolute embargo on all games of skill. The online gaming industry built its entire legal architecture on this immunity.

The online gaming industry saw an exponential growth driven by increased smartphone usage and internet penetration. Online real money gaming (ORMG) companies offering online rummy, poker and other fantasy sports came under renewed scrutiny. The industry’s growth was accompanied by concerns regarding addiction, mental health harms and financial losses among users, triggering government action. 

State interventions and HC rulings

The Tamil Nadu Gaming (Amendment) Act, 2021 inserted Section 3-A to the Tamil Nadu Gaming Act, 1930 to explicitly prohibit online wagering on rummy, poker, or any other game. Subsequently, the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022 was enacted to place specific restrictions on games of skill, expressly listing poker and rummy in a Schedule as prohibited games of chance. Similarly, the Karnataka Police (Amendment) Act, 2021 amended the Karnataka Police Act, 1963 to prohibit online games “involving betting or gambling,” removing the pre-existing skill-game exemption. 

The state amendments were struck down by the Madras and Karnataka High Courts. It was ruled that betting and gambling in Entry 34 is confined to games of chance. Further, the medium of play (online vs. offline) does not alter a game’s nature. The Union government enacted PROGA before the Supreme Court could hear the state amendment appeals. PROGA imposed a comprehensive ban on all ORMGs through Sections 5, 6, and 7. It defined “online game” and “online money game” in Sections 2(f) and 2(g) in terms that explicitly negate the skill-chance distinction. Petitions challenging PROGA before multiple High Courts were later consolidated before the Supreme Court in September 2025.

SC ruling in Junglee games 2026

The Supreme Court in Junglee Games observed that the Madras and Karnataka High Court had made “an egregious error” by narrowly interpreting Entry 34. It rejected the High Courts’ reading of the conjunction “and” in the phrase “betting and gambling”, as mentioned under Entry 34. The High Courts had treated it as limiting betting to gambling activities and therefore to games of chance. The Supreme Court stated: Both the High Courts failed to take into account the power intended to be bestowed upon the State Legislature under the said Entry by the framers of the Constitution.” 

The Court relied on T.T. Krishnamachari’s observation in the Constituent Assembly, where he explained that Entry 34 was precisely the provision empowering states to prohibit rummy when played for high stakes. This is because the staking element, not the nature of the game, was the regulatory trigger. The Bench noted that the intent behind the Entry was to also include games of skill when played for money. The Court also seemed to be in favour of giving wide interpretations to entries in the Seventh Schedule so that the legislative power of the State is not unnecessarily curtailed.

Precedents did not limit regulatory jurisdiction

The High Courts had relied on K.R. Lakshmanan v State of Tamil Nadu (1996) and R.M.D. Chamarbaugwala while striking down the amended legislations. K.R. Lakshman had upheld horse-racing as a game of skill. Referring to both of these judgements, the Supreme Court in Junglee Games noted that it did not restrict states from regulating betting on skill games. The legislature itself had carved out an exception for horse racing, and the case merely interpreted this protection provided. The Court then noted that Chamarbaugwala never addressed the scope of “betting” as distinct from “gambling” in Entry 34. It decided only whether the Prize Competitions Act, 1955, covered skill competitions. It did not, therefore, deliberate on the allocation of powers.

Importantly, the Court separates the ideas of betting and gambling, which although overlapping may not have identical scope. It noted: “While it may be true that games of skill may not get covered by the expression “gambling”, it is not correct to say that even “betting” on games of skill would be out of the competence of the State Legislature to legislate upon.”

Thus, while games of skill are correctly excluded from the category of “gambling,” betting involves the staking of money on an uncertain outcome. Therefore, the Court held that every game, including a game of skill, produces an outcome that is uncertain before it is played. An expert rummy player does not know whether they will win a given hand. In this way, the State government under Entry 34 has the power to regulate skill games when played with stakes.

Entry fee vs Stake 

The Court distinguished games of skill which involve an entry fee and prize money. In a prize competition, the entry fee would be for obtaining the right to participate in the competition. The entry fee cannot be construed as a stake amount placed on the unknown and uncertain outcome of the competition. This is because, in a skill-based competition, the prize money is never linked to the bet or stake amount. With utmost certainty, in a gambling adventure, the pool money assured to the winner is always linked to the bet or stake amount. A chess tournament therefore with a fixed registration fee and pre-determined prize money differs structurally from an online rummy platform where the prize pool is constituted entirely by aggregated player contributions. The former might, in principle, escape characterisation as betting; the latter cannot. 

The problem with Junglee Games is not that it treats wagering on skill games as “betting”. The real difficulty is that the judgement does not clearly explain where the line should be drawn. Once the focus shifts from whether a game is one of skill or chance to whether money is staked on an uncertain outcome, it becomes harder to see why other competitive activities involving entry fees, prize money and uncertain results are not also covered.

Extra-Commercial transactions and Article 19(1)(g)

In line with Chamarbaugwala, the Court noted that gambling activities are extra-commercial or Res Extra Commercium. No fundamental right, including freedom of trade under Article 19(1)(g), can protect an activity that falls outside the realm of commerce. Therefore, legislation banning “betting” cannot be tested under the proportionality framework as no fundamental right is engaged.

The Court’s refusal to apply proportionality review appears somewhat circular. The gaming companies argued that skill-based gaming is a legitimate commercial activity, not gambling. The Court’s approach leaves little room for a separate proportionality inquiry, as classifying online money gaming as betting effectively determines the Article 19 issue.

The Supreme Court also confirmed that States may invoke Entry 1 of the State List—public order—to regulate online money gaming as it normalises gambling and disturbs public tranquillity. Further, to tackle documented addiction, depression and suicides Entry 6 (public health and sanitation) could also be invoked. In light of the above, the appeals by Tamil Nadu and Karnataka were allowed.

Taxing Skill Games in GamesKraft

The judgement starts with acknowledging the Junglee Games ruling. GamesKraft held that the distinction between games of skill and chance retains legal relevance only when a legislature has made an affirmative statutory choice to protect skill games. This may have implications for the PROGA case where the statute has no carve-outs for skill games.

On Fantasy sports

The Supreme Court clarified that it will not address whether fantasy sports constitute games of skill or games of chance under criminal law or in the context of freedom of trade/business. It then went on to decide if fantasy sports are within the ambit of betting and gambling. It further explored whether fantasy sports can be classified as actionable claim interests constituting taxable supplies within the GST framework. The Court has unravelled the issue, anchoring on the following aspects:

• Essential Character of Transaction Test: The transactional nature of the activity will not be impacted by the fact that the participants in fantasy sports might not always be the players of the actual game, even though they might have significant sporting knowledge, statistical analysis, strategic assessment, and predictive skills when selecting their virtual teams. This involvement does not diminish the core identity of the transaction when money or something of value is wagered on uncertain future outcomes with the expectation of potential monetary gain. 
• Transaction structure: Amounts paid by participants are not merely access charges or facilitative fees for the use of a technological platform, like an entry ticket. The amount forms part of the pool of all participants’ stakes, which will be distributed according to the prize structures. However, the recipient of the prize depends on uncertain future outcomes, even if the participant has made an exact prediction. 
• Participation and Outcomes: The participant predicts future contingencies and will only gain or lose money depending on the outcome, and the SC categorises such activity as possessing the essential characteristics of betting and gambling. Based on the outcome, the participant acquires contingent actionable-claim interests in relation to the prize pool. 

The Supreme Court concludes that the law on taxation remains the same for fantasy sports as for online games, if fantasy sports have pooled stakes and contingent prize structures. 

It appears that the Indian position is moving towards the Australian position that, even if there is any element of chance involved, it will be classified as a gamble regardless of skill involved. The issue of fantasy sports constitutes games of skill or games of chance under criminal law, or in the context of freedom of trade/business, will be an open-textured question that might be addressed in the future.

A Federal question emerges

While the two judgements technically preserve the chance-skill distinction, they effectively remove the practical significance of this distinction for large-scale and mass-market platforms. The focus of regulation is the bet, not the game. As a result, PROGA’s decision to disregard the skill-chance distinction in Sections 2(f) and 2(g) is not constitutionally unprecedented. It is consistent with the Court’s position that states may regulate wagering under Entry 34. The key question is whether the Union can do the same under a different legislative power. Further, the Court’s holding that a proportionality review is not applied to extra-commercial transactions will shield any challenges against PROGA. 

There is some concern, however, when it comes to legislative competence. The Court strongly reiterates that “betting and gambling” falls within the exclusive legislative domain of the states under Entry 34 of the State List. Although Gameskraft was decided in the GST context, it relied on Article 246A, a special concurrent taxing power created for GST and distinct from the power to regulate gaming. Against this backdrop, Junglee Games strengthens state authority over gaming regulation and makes the Union’s claim to regulate the same activity through broad Union List entries appear constitutionally less convincing. The Union assumed competence through multiple Union List entries. 

Sections 2(f) and 2(g) of the Act define online games and online money games in terms that eliminate the skill-chance distinction. While Sections 5, 6, and 7 ban all ORMGs, ‘social games’ and ‘e-sports’ are exempted despite involving skill and digital interaction, creating an internal inconsistency. 

In a way the Court’s noting that betting and gambling is a State subject under Entry 34 strengthens the pith and substance challenge to PROGA. PROGA’s true character is gaming regulation and the fact that gaming is conducted online does not automatically transform it into a communications, foreign trade or public interest industry matter. However, the res extra commercium holding eliminates Article 19(1)(g) as a ground of challenge for most gaming operators. If online money gaming is extra-commercial, operators have no fundamental right to challenge its prohibition, whether by state or Union law.

The debate now shifts to PROGA: Can the Union centralise control over online gaming or do constitutional limits on federal power stand in the way?

Dr. Sudhanshu Kumar is an Associate Professor and Harsha N is an Assistant Professor at NLSIU. The views expressed here are solely those of the authors and do not represent the views of NLSIU.