The Supreme Court on Wednesday upheld the constitutional validity of the levy of 28% Goods and Services Tax (GST) on the full face value of bets placed through online gaming platforms, ruling against online gaming operators in the high-stakes Gameskraft dispute.

A Bench of Justice J.B. Pardiwala and Justice R. Mahadevan held that the GST levy on online gaming, fantasy sports and casino operators is backed by statutory authority under the GST framework and does not violate the constitutional scheme governing indirect taxation.

Rejecting the gaming companies’ argument that they merely act as intermediaries or facilitators, the Court held that online gaming operators are in fact suppliers of actionable claims, making them amenable to GST.

A key issue before the Court was whether online games involving an element of skill could be distinguished from betting or gambling for GST purposes. The Court held that once money is staked on uncertain outcomes, even skill-based games acquire the character of betting and gambling for the purpose of taxation.

The Bench also upheld the constitutional validity of the relevant CGST Rules that permit taxation on the entire face value of bets, rather than merely the platform fee or commission earned by gaming operators.