Directorate General of Goods and Services Tax Intelligence (HQS) & Ors. Vs Gameskraft Technologies Private Limited and Ors. (Supreme Court of India)
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The Supreme Court held that the Madras High Court and Karnataka High Court had adopted an unduly narrow interpretation of Entry 34 of List II, thereby restricting the powers intended to be conferred on State Legislatures to regulate or prohibit betting and gambling. The Court observed that even where games involve substantial skill, States are not powerless to regulate them if betting on such games poses serious threats to public welfare, public order, or public health. Betting on games of skill does not enjoy constitutional immunity merely because the underlying game is skill-based.
The Court clarified that earlier decisions such as RMDC-I, RMDC-II, and R. Lakshmanan did not determine the scope of the expression “betting and gambling” under Entry 34. It rejected the view that “betting and gambling” should be interpreted as “betting on gambling,” holding that such an interpretation would amount to rewriting the constitutional text. According to the Court, while games of skill may not fall within the expression “gambling,” betting on games of skill remains within the legislative competence of States under Entry 34.
The Court further held that the constitutional protection available to games of skill cannot automatically extend to betting or wagering on such games. Once betting and gambling enter the picture, the nature of the underlying game becomes less relevant because the common features of monetary staking, uncertainty, addiction, and the desire for gain become predominant. Activities falling within “betting and gambling” are considered res extra commercium and therefore do not enjoy protection as a fundamental right under Article 19 unless the legislature specifically creates an exception.
The Court also ruled that the State’s power to regulate an activity includes the power to prohibit it, subject to constitutional limitations where applicable. It found that the impugned amendments did not arbitrarily expand the scope of gaming but merely brought all forms of betting and gambling within their ambit, an area in which States possess legislative competence. Consequently, a total prohibition on such activities would not fail the test of proportionality.
Addressing online money gaming, the Court noted concerns relating to addiction, financial losses, suicides, public tranquility, and public health. It observed that online money gaming has normalized and increased access to betting and gambling, thereby affecting public order and public health. The Court also noted that the Tamil Nadu legislation was supported by empirical findings contained in the Justice Chandru Committee report regarding the harms associated with betting linked to online gaming.
Accordingly, the Supreme Court allowed the appeals filed by the States of Tamil Nadu and Karnataka, set aside the judgments of the Madras High Court and Karnataka High Court, and upheld the validity of the challenged provisions of the Tamil Nadu and Karnataka legislations regulating and prohibiting betting and gambling activities.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
