Can GST Apply to Entire Bet Value in Casinos or Gaming? Supreme Court Weighs In
The GST on bet value in casinos and online gaming platforms is now under the Supreme Court’s lens. At the heart of the case is whether GST should be levied on the entire face value of the bet — or only on the platform’s commission or margin.
This legal battle could redefine the way online games, casinos, and fantasy sports platforms are taxed in India under the GST regime.
What Is the Issue?
The key legal question is:
Can the total bet amount be treated as the value of supply under Section 15(1) of the CGST Act, 2017?
Here’s what’s being argued:
- Casinos and platforms say: They don’t earn the whole bet value; only a margin or commission.
- GST Department says: The full face value of the bet is liable to GST at 28% under the amended Schedule III (w.e.f. 01.10.2023).
Why Is This in the Supreme Court?
This stems from the Karnataka High Court’s 2023 decision in favour of Gameskraft Technologies Pvt Ltd, an online gaming platform.
- The High Court ruled that skill-based online games aren’t gambling and can’t be taxed at 28% on total bets.
- The GST Department appealed against this to the Supreme Court.
The case has now been clubbed with other similar cases involving casinos in Goa and Sikkim, where petitioners argue that:
- They facilitate games but do not receive the full bet as income.
- GST should apply only on the supply of service (i.e. platform fee or commission).
What Does Section 15(1) of CGST Act Say?
“The value of a supply of goods or services shall be the transaction value… actually paid or payable for the said supply…”
Petitioners argue that the bet is not a price paid for a supply — it’s merely a stake among players.
- In peer-to-peer games like poker, the casino only takes a cut from the pot.
- In house games like roulette, the casino wins only if all players lose.
Thus, the bet amount is not always income — it’s often passed on to the winner.
Breakdown: Types of Casino Games & GST Impact
| Type of Game | Who Keeps the Bet? | GST Applicability Argument |
|---|---|---|
| Player vs. Player (e.g., Poker) | Winner gets the pot; casino takes a small rake | Only rake should be taxed, not full bet |
| Player vs. House (e.g., Roulette) | House may win or lose | Tax should apply only on net earnings |
What About the Sale of Chips?
The Court also raised this:
Can the purchase of chips in a casino be treated as the value of supply?
The response:
- At chip purchase, there’s no guarantee of supply — only potential participation.
- No right to win is created at that stage.
- Therefore, it’s akin to advance money, not consideration.
Why This Matters for Online Gaming Platforms
The outcome of this case will impact:
- Online real-money games, including rummy, poker, fantasy sports
- Casino operators across India
- Valuation under GST — gross bet vs. platform fee
- Retroactive GST demands – many platforms have received show cause notices going back several years
Legal Timeline Snapshot
| Date | Event |
|---|---|
| 2023 | Karnataka HC rules in favour of Gameskraft |
| Jan 2024 | SC stays all similar GST show cause notices |
| July 2025 | SC hears arguments from casinos and gaming lawyers |
| Ongoing | Final judgment awaited — likely to set a precedent |
Expert View
Tax Consultant’s Take (Efiletax):
GST valuation under Section 15 requires real supply and consideration. Betting stakes, which often change hands among players, don’t neatly qualify as ‘consideration’. A safer and fairer GST base would be the platform fee or margin retained, not the full pot.
Taxing the entire bet may amount to taxing player-to-player stakes, which violates the principle of taxing only the supply component.
Government’s Position
As per Notification No. 06/2023-CTR (effective 1 October 2023), the government amended GST rates to apply 28% GST on full face value of bets for gaming and casino services. This is now facing judicial scrutiny in the Gameskraft case.
Summary
Supreme Court is examining if GST can be levied on full bet value in casinos and online gaming. Petitioners argue that only the platform’s margin qualifies as supply under Section 15(1) of the CGST Act.
FAQs
Q1. Does GST apply on online gaming?
Yes, 28% GST applies on real-money games post-October 2023. But the legal basis of taxing full bet value is under challenge in the Supreme Court.
Q2. What is Section 15(1) of CGST Act about?
It defines transaction value for GST purposes — only the consideration actually received for a supply can be taxed.
Q3. Will there be refunds if Court rules against the government?
It’s unclear. Refunds would depend on the retrospective nature of the ruling and how it interacts with Section 54 of CGST Act.
Final Word
This is a landmark case. The Supreme Court’s decision on GST on bet value will have deep consequences for both casino operators and India’s fast-growing online gaming industry.
Until then, platforms should keep detailed records and consult tax experts to avoid aggressive GST demands.
Need help navigating GST for your gaming or entertainment business?
👉 Talk to Efiletax today for end-to-end GST compliance, legal support, and representation.