Tamil Nadu Ban On Online Rummy, Poker Overturned By Madras High Court

As the online money gaming sector faces pressure, companies are exploring various strategies, including cashbacks and subscription models.

The verdict reaffirms the Supreme Court's earlier delineation between skill-based and chance-based games.

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The Madras High Court nullified the ban imposed by the Tamil Nadu government on online rummy and poker. The decision, rendered on Thursday, received widespread approval from experts and online gaming associations. Analysts contend that the ruling not only supports the distinction between games of skill and chance but may also fortify the industry's stance against Goods and Services Tax (GST) notices.

Payal Thaker, Partner in Indirect Tax at BDO India, emphasised that the court's verdict, while specific to regulating online games in Tamil Nadu, reaffirms the Supreme Court's earlier delineation between skill-based and chance-based games.

"This judgment will significantly impact the position taken by online gaming companies in treating games of skill and chance differently for GST purposes. It will empower these companies to bolster their defence against substantial GST demands issued for previous periods," Thaker explained.

Roland Landers, CEO of All India Gaming Federation (AIGF), stated, "We are truly grateful for this landmark decision by the Hon'ble Madras High Court upholding the difference between games of skill and chance in line with over six decades of jurisprudence on the subject. By reiterating that online rummy and online poker are games of skill, this decision by the Madras High Court is yet another validation of what the online skill gaming industry has always maintained in relation to online skill games being a legitimate business activity protected under the Constitution of India. This also adds to a long line of judgments from the Supreme Court, Karnataka, Kerala, and Madras High Courts upholding the legitimacy of such games."

AIGF, representing over 100 online gaming companies, expressed optimism that the court's decision would significantly boost the sector, offering investors and the gaming community greater certainty. The verdict is seen as a positive step for the industry, especially considering the challenges posed by the recent implementation of a 28 per cent GST from October 1.

As the online money gaming sector faces pressure, companies are exploring various strategies, including cashbacks and subscription models, while reducing advertising expenditures to counteract the impact of the new tax regime.