India’s rapidly growing skill-based online gaming industry is undergoing a major shift following the government’s introduction of a new Goods and Services Tax (GST) law. This revised tax structure impacts platforms offering games like poker, rummy, and fantasy sports — changing how they operate and how players engage with real-money games.
What Is the New GST Law About?
The updated GST regulation, recently passed by the GST Council, introduces a 28% tax on the full face value of player deposits in online gaming, casinos, and horse racing. Previously, only the platform fee or commission was taxed at 18%. Now, the entire entry amount — not just the earnings or fees — is being taxed.
What makes this more concerning for many is that the law treats both skill-based and chance-based games the same when it comes to taxation.
Why Skill-Based Games Are Caught in This Change
Games like poker, rummy, and fantasy sports are considered skill-based because they involve logic, strategy, and practice rather than pure luck. Until now, they were largely viewed separately from gambling by the public and legal systems.
However, under the new GST law, there’s no longer a distinction. Platforms that have spent years promoting responsible and skill-based play are now being taxed just like gambling apps.
“We’ve always worked hard to stay compliant and promote fair gameplay. This move punishes the very companies trying to do things right,” said the co-founder of a real-money gaming startup.
Comparison Table: Old vs New GST Law on Skill-Based Online Games
| Aspect |
Before (Old GST Regime) |
After (New GST Law - 2025) |
| GST Rate |
18% |
28% |
| Tax Applied On |
Platform fee or commission only |
Total player deposit (face value) |
| Skill vs Chance Distinction |
Considered separately by law |
No distinction — both taxed the same |
| Impact on Entry Fee |
Players paid lower entry costs |
Entry fee increases due to higher tax burden |
| Effect on Prize Pool |
Larger prize pools, more competitive payouts |
Reduced prize pools due to upfront taxation |
| Industry Sentiment |
Supportive, growth-focused |
Cautious, potential revenue and user drop |
Economic Impact on the Industry
The economic ripple effects of this change are significant:
- Player participation is expected to drop, as the tax increases the cost of playing.
- Investors may hesitate, fearing a less predictable regulatory environment.
- Gaming startups could face survival challenges, especially those with tight margins.
Some reports predict that India’s $2.5 billion skill-gaming market could shrink by nearly 30% in the next year due to reduced revenue and user engagement.
What Does This Mean for Players?
For everyday players, the biggest change is in how much of their deposit actually goes toward gameplay. For example, if a player deposits ₹100, ₹28 now goes directly to taxes. That leaves just ₹72 to enter contests or compete for prizes.
This means smaller prize pools, fewer big wins, and likely lower player retention, especially among casual gamers.
Industry Reactions and Legal Challenges
Several major organizations in the online gaming space, including the All India Gaming Federation (AIGF), have spoken out against the law. They argue that the blanket 28% tax is unfair to skill-based games and will stifle innovation.
Petitions have already been filed in various High Courts, asking for a clear separation between games of skill and games of chance. Industry leaders are also requesting that only the platform fee be taxed, not the full player deposit.
Looking Ahead: What’s Next for the Sector?
Despite the current hurdles, India’s online gaming space isn’t backing down. Many platforms are exploring alternative models such as:
- Lower-entry fee games to keep players engaged
- Expansion into international markets with more stable regulations
- Non-cash reward systems to maintain interest while reducing tax obligations
There is also hope that the GST Council will revisit the law and introduce more nuanced taxation, better suited to the realities of skill-based platforms.
Final Thoughts
This new GST law marks a defining moment for India’s online gaming industry. While the government’s intention to improve regulation and increase tax revenues is understandable, grouping skill-based games with gambling may end up doing more harm than good.
A more balanced approach — one that supports legitimate platforms and distinguishes between skill and chance — could ensure continued growth in this dynamic sector.
The new GST law imposes a 28% tax on the full face value of deposits made for online games, including both skill-based and chance-based platforms.
Yes, under the new GST law, skill-based games such as rummy, poker, and fantasy sports are taxed at 28% on the total deposit amount, with no distinction from gambling.
Platforms may see reduced player engagement, smaller prize pools, and potential revenue losses due to the higher upfront tax burden.
Industry players argue that skill-based games should not be taxed the same as gambling, and this blanket taxation could hurt innovation and fair-play platforms.
Legal petitions are in progress, and the industry is hopeful that the GST Council will consider a more balanced taxation approach distinguishing skill from chance.
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