28% GST on casino bets unfair, operators tell Indian court
The Supreme Court of India on 23 July 2025 resumed final hearings in the high-stakes Goods and Services Tax (GST) case involving online gaming, casinos, horse racing and lotteries. The matter is being heard by a division bench of Justices J.B. Pardiwala and R. Mahadevan and includes 93 related cases, collectively known as the Gameskraft batch.
Casino operators challenge face value taxation
Senior Advocate Tarun Gulati concluded his submissions on behalf of casino operators. He argued that a bet placed in a casino represents a “chance to win” as well as a “chance to lose,” and therefore cannot be taxed as an actionable claim with a specific value.
Gulati stressed that the entire face value of a bet should not be treated as taxable consideration. He explained that when a player places a bet, no real value is transferred to the casino.
He also referred to the recommendations made by the Group of Ministers (GoM) constituted by the GST Council. According to him, the GoM had found it unfeasible and undesirable to apply GST on the full face value of bets placed in every round, especially in the context of casinos.
Rule 31A was not meant for casinos
Following Gulati, Senior Advocate Gopal Sankaranarayanan also appeared for casino petitioners. He argued that Rule 31A of the Central Goods and Services Tax (CGST) Rules was originally created to deal only with betting and gambling in horse racing.
Sankaranarayanan pointed to the introduction of Rule 31C on 1 October 2023, which established a separate method of valuation for online gaming and casinos. This, he said, showed that casinos were not intended to be covered under Rule 31A before that date.
He also described Rule 31A as arbitrary and confiscatory. His submissions aligned with the broader arguments made by other senior lawyers representing different sectors impacted by the GST levy.
Sankaranarayanan submitted a consolidated note of the arguments made on behalf of the casino industry.
Background of case
The case gained national attention in 2022 after the Directorate General of GST Intelligence issued a ₹21,000 crore tax notice to Gameskraft Technologies. Authorities accused the company of misclassifying games such as rummy as games of skill rather than gambling, thereby avoiding GST.
In 2023, the Karnataka High Court quashed the notice, holding that rummy is a game of skill and not gambling. However, the Supreme Court later stayed the High Court order and began hearing the case for final adjudication.
Since then, tax authorities have filed 158 similar cases against various entities, including operators of offline casinos. Combined, these cases involve claims totalling over ₹1.53 lakh crore.
The Supreme Court began final arguments in the case in May 2025 and held 12 days of hearings up to 22 May. The current phase of final hearings resumed this week. The matter will continue on 24 July 2025, with more arguments expected from other stakeholders in the online gaming and gambling sectors. The verdict is likely to have a significant impact on how GST is applied across India’s growing real-money gaming industry.
