Gaming Report: Tamil Nadu Takes Aim at Online Gambling Ads & ASG Seeks July 15 Hearing in GamesKraft GST Case

India’s online gaming landscape faces a two-pronged challenge. In Tamil Nadu, the Tamil Nadu Online Gaming Authority (TNOGA) is cracking down on online gambling advertisements to protect consumers from potential harm. Led by retired IAS officer Md Nasimuddin, the TNOGA is enacting measures aligned with the state’s stringent Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022.

Meanwhile, a legal battle with nationwide implications is heating up. Additional Solicitor General N. Venkatraman is pushing for a July 15 hearing in the GamesKraft GST case before a three-judge Supreme Court bench. This hearing has the potential to streamline proceedings and pave the way for an expeditious final resolution on the contentious issue of retrospective GST taxation on online gaming platforms in a dispute that has the RMG industry on its hinges!

Tamil Nadu Intensifies Efforts to Curb Online Gambling Advertisements

The Tamil Nadu Online Gaming Authority (TNOGA) is taking a firm stand against promoting online gambling and gaming of chance within the state. On May 2, the TNOGA chairperson, retired IAS Officer Md Nasimuddin, released a statement announcing proposed stringent measures to restrict advertisements that could potentially fuel participation in online gambling activities. This initiative seeks to minimize the adverse effects associated with such activities.

These measures are in direct alignment with the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Games Act, 2022, enacted to regulate all online gambling in the state. The Act carries substantial penalties for those found in violation:

• Individuals: Individuals involved in online gambling or gaming of chance face potential imprisonment for up to three months, a monetary fine of up to ₹5,000, or both.
• Financial Institutions: Financial institutions and payment gateways are strictly prohibited from facilitating any transactions related to online gambling or gaming of chance.
• Advertisers: The Act specifically prohibits the advertisement of online gambling services or games of chance within the state across all forms of media, including electronic channels. Entities or individuals found engaging in such advertising could face imprisonment for up to one year, a fine of up to ₹5 Lakhs or both. Repeat offenders are subject to even harsher consequences, with potential imprisonment ranging from one to three years and fines between ₹5 Lakhs and ₹10 Lakhs.

To further bolster consumer protection, the Central Consumer Protection Authority has issued directives prohibiting advertisements promoting illegal activities or services. Working with the Consumer Protection Act of 2019, these directives hold individuals, celebrities, advertising agencies, producers, and social media platforms responsible for ensuring compliance.

The Tamil Nadu government’s multi-pronged approach demonstrates a strong resolve to address the risks associated with online gambling. However, these measures come at the expense of other online games of skill.

ASG Seeks July 15 Hearing in GamesKraft GST Case, Supreme Court to Address Complex Legal Questions

A legal battle with far-reaching consequences for India’s booming online gaming sector is set to reach a critical turning point. Additional Solicitor General N. Venkatraman has pressed the Supreme Court for a July 15 hearing in the GamesKraft GST case, immediately following the court’s reopening, seeking a swift resolution to a complex issue with the potential to significantly impact the industry’s future. The hearing would take place before a three-judge bench headed by the Chief Justice.

While July 15 falls on a Monday – a day typically reserved for miscellaneous matters – the ASG urged the court to use this date to streamline the case and pave the way for the final hearing. This involves resolving procedural matters like scheduling, allocating time for arguments, and other logistical issues. Senior Advocate Harish Salve is expected to represent one of the petitioners.

At the heart of the case lies a fundamental question: Can the government retrospectively impose GST on the full value of bets on online gaming platforms? The staggering ₹1.20 Lakh Crores demanded from nearly 99 gaming firms has ignited a fierce legal battle.

In April, the Supreme Court took the crucial step of consolidating 27 writ petitions from nine different state High Courts—all challenging the retrospective GST imposition. The Centre championed this move, seeking a unified approach to the complex legal questions raised by the issue.

The stakes are high, with major players like Dream 11, Games 24×7, and Head Digital Works among the key petitioners. The Supreme Court has also sought a formal response from the Directorate General of Goods and Services Tax Intelligence, signalling the significance of this case.

The Karnataka High Court’s earlier decision to quash a ₹21,000 Crore GST notice has added fuel to the debate. The court’s ruling that online rummy could not be classified as betting or gambling has set a precedent that could significantly influence the Supreme Court’s verdict.

The outcome of this case will redefine the financial landscape for the entire Indian online gaming industry. A ruling favouring retrospective taxation could wipe out the industry, while a favourable verdict for the gaming companies could foster a more sustainable and predictable business environment.