The year 2023 was a tumultuous one for the online real money gaming industry, with the sector hit with a 28% GST on initial deposits from 1st October, 2023, besides facing tax notices of over Rs. 2.5 lakh crores from July 2017, with the department claiming tax (along with interest and penalty) on 28% of each contest entry fee or bet placed. Cases related to retrospective taxation have reached the door of the apex court and are likely to be heard soon.
Apart from GST-related issues, the industry also had to face headwinds with TDS-related changes, with removal of the Rs. 10,000 threshold for winnings and new method of calculation of TDS on net winnings.
Full clarity on regulation at the central-level for online skill-gaming industry also did not come through in 2023, with the notified Information Technology (IT) Amendment Rules for online real money gaming remaining in stillborn stage, with Self-Regulatory Bodies (SRBs) not notified by the Ministry of Electronics & Information Technology (Meity). The central government has now formed a Group of Ministers (GoM) led by Union Home Minister Amit Shah to have a relook at the entire regulatory framework of online gaming in the country.
The process of notifying rules for online gaming and formation of SRB thus turned out to be a colossal waste of time, resources and money, both for the public exchequer as well as online gaming companies, who engaged a motley group of consultants, lawyers, policy, research and lobbying firms to ensure adequate representations being made for finalisation of the IT Rules as well as pushing for industry friendly SRBs.
Besides, clarity from the Supreme Court on whether state-level bans on online games played for stakes are constitutional or not, and whether the centre or states have power to regulate the sector is also pending.
Amidst all this haze, top senior counsels of the country will play a pivotal role in ensuring much-needed clarity for the online gaming sector.
Here are the 5 senior advocates who through their arguments in the Supreme Court are likely to decide the fate of the online real money gaming industry in 2024:
1) N. Venkatraman, Additional Solicitor General (ASG) of India
N. Venkatraman is the ASG for the government of India and handles all crucial tax litigation for the Modi government. Venkatraman is single-handedly responsible for aggressively pursuing retrospective tax notices and cases against online real money gaming companies, who he believes are engaging in nothing but ‘gambling and betting’. He contends that the moment stakes are wagered on a game, even a skill-based game becomes wagering and betting.
The ASG appeared unsuccessfully in the challenge to the Rs. 21,000 crore GST showcause notice to Gameskraft Technologies in the Karnataka High Court, but single handedly managed to get a stay from the Supreme Court on the Karnataka High Court judgment quashing the GST showcause notice.
Venkatraman has indicated that he will be appearing in the dozens of writ petitions filed by online gaming and casino companies challenging GST showcause notices in various courts and plans to club and contest all such cases in the Supreme Court. It remains to be seen whether Venkatraman can alone match the might of dozens of top senior counsels appearing for various gaming companies and industry bodies.
2) Harish Salve, Senior Counsel & King’s Counsel (UK)
Harish Salve is one of the country’s most high-profile lawyers who represents leading business conglomerates and individuals. Although, he is now based in London, he regularly appears in the Indian Supreme Court and High Courts. Salve is representing casino operator Delta Corp Limited, online poker company Adda52 as well as rummy companies Head Digital Works and Play Games24x7 and online gaming industry body E-Gaming Federation in the retrospective GST notices issued to these firms.
Salve has placed unique arguments before the Goa bench of the Bombay High Court and Supreme Court contending that taxation on betting and gambling does not fall within the ambit of GST, besides challenging the constitutional validity of GST provisions taxing actionable claims on other grounds.
3) Dr. Abhishek Manu Singhvi, Rajya Sabha MP & Senior Advocate
Congress Rajya Sabha MP and senior counsel Abhishek Manu Singhvi has represented several online poker and rummy companies for the last decade in many landmark cases in High Courts and Supreme Court. Singhvi now represents the biggest online RMG company in India, Gameskraft Technologies in all their key litigations.
He is appearing for Gameskraft in the challenge to the Rs. 21,000 crore GST showcause notice besides pending appeals in the Supreme Court against the laws passed by the Tamil Nadu and Karnataka governments banning all online games played for stakes.
4) Kapil Sibal, Rajya Sabha MP & Senior Advocate
Kapil Sibal, one of the high-profile lawyers in the country is appearing for the Tamil Nadu government against online rummy companies. Sibal vociferously but unsuccessfully contended in the Madras High Court that online rummy is different from the version of the game played physically, and that online rummy played for stakes is akin to gambling and betting, resulting in massive addiction and social problems.
Sibal is going to represent the Tamil Nadu government in the Supreme Court against two Madras High Court decisions that struck down two successive laws passed by the state government banning online rummy and poker when played for stakes. Sibal has also appeared for the Andhra Pradesh government in their Special Leave Petition (SLP) against the High Court decision classifying rummy as a game of skill, even if played for stakes and directing formation of a committee to examine the skill involved in online rummy.
5) Mukul Rohatgi, Former Attorney General of India & Senior Advocate
Mukul Rohatgi, like Singhvi has been a long-time lawyer for several RMG companies including Dream11, Head Digital Works, Play Games24x7, Junglee Rummy etc.
Rohatgi has also successfully argued that the laws passed by the Tamil Nadu, Karnataka and Kerala governments banning online rummy or other games for real money are unconstitutional and manifestly arbitrary.
Rohatgi is expected to appear on behalf of some online rummy companies in Supreme Court appeals by the Tamil Nadu and Karnataka governments against High Court orders striking down online gaming ban laws. Besides, Rohatgi is also expected to appear on behalf of the All India Gaming Federation (AIGF) in the Gameskraft GST matter in the apex court and on behalf of Dream11 in the appeal by the Maharashtra government in a GST-related matter.
