Online Fantasy Sports Gaming not termed as Gambling/Betting and GST applicable on Service fee charged by Online Platform

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Criminal PIL dismissed by the Hon’ble Bombay HC, holds that Online Fantasy Sports Gaming (“OFSG”) does not term as Gambling/Betting as games played on an online platform, amount to games of skill and not a game of chance. Further, GST is not applicable on the entire deposit/amount pooled in by players in an escrow account but only the ‘service fee’ charged by the platform for the services provided by it.


Mr. Gurdeep Singh Sachar (“the petitioner”) seeks directions to initiate criminal prosecution against M/s. Dream 11 Fantasy Pvt Ltd. (“the respondent or the company”) for allegedly conducting illegal operations of gambling/betting/wagering in the guise of Online Fantasy Sports Gaming (“OFSG”) , which as per the petitioner shall attract penal provisions of Public Gambling Act, 1867, and Further the petitioner has  alleged evasion of GST payable by the company  by violating the provisions of Goods and Service Tax Act and the Rule 31A of Central Goods and Services Tax Rules, 2018 (“CGST Rules 2018”)

Issues Involved:

  1. Whether the activities of the respondent amount to ‘Gambling’ \ ‘Betting’?
  2. Whether there is any merit in the allegation of violation of Rule 31A (3) of CGST Rules, 2018 and erroneous classification?

Petitioner’s Interpretation of Law:

The petitioner has placed the details and manner of selecting virtual teams and playing free or paid online fantasy games on the internet on the website of the respondent. The players can create different virtual teams for playing fantasy games. For understanding and getting know-how of the game, the option to play for free is also available on the website. The fantasy games are such that after some time people tend to pay with their hard-earned money, instead of playing for free.

Further, entering in various contests and putting alleging bet money in them, the player receives a tax invoice in which tax is being charged only on the amount received and retained by the respondent towards platform fee say 20%, and not on the entire money which is put a stake by the player. For the balance 80% amount only “acknowledgement” is given. Admittedly, this “acknowledgement” amount collected from each player is pooled in as Escrow Account and their contribution ultimately gets distributed amongst the players themselves as price money immediately upon conclusion of the game, as a result of which, some players get more than their contribution, and some lose money.

According to the petitioner, since these activities are nothing but ‘gambling’ or ‘betting’ even if this acknowledgement amount is separately kept in an Escrow account and not retained by the respondent, GST would be payable even on this amount. However, since GST is not being paid on this “acknowledgement” amount by the respondent and since the activities such as those being conducted by the respondent, are nothing but ‘betting’ or ‘gambling’, the same according to the petitioner shall be governed by Rule 31A(3) of CGST Rules, 2018.

Observation and findings:

The said Schedule III referred in Section 7(2) of the Act reads as under –

SCHEDULE III [See Section 7] Activities or transactions which shall be treated neither as a supply of goods nor a supply of services 1…..

 6.Actionable claims, other than lottery, betting and gambling.”

Thus, the activities mentioned in Schedule III under the CGST Act are not taxable as the same is neither ‘supply’ of goods nor ‘supply’ of services. The entry in schedule III relevant for the instant case is Entry 6 which includes actionable claims, other than lottery, betting and gambling. Therefore, this activity or transaction pertaining to such actionable claim can neither be considered as supply of goods nor supply of services and is thus clearly exempted from levy of any GST.

Further it was observed that, the CGST Act itself does not allow the imposition of Tax on such ‘actionable claim’ in relation to the OFSG of the respondent, it being other than lottery, betting and gambling, the said Rule 31A(3) of CGST Rules 2018 cannot be read in such a manner so as to override the parent CGST Act. The said Rule 31A (3) reads as under:-

31A. Value of supply n case of lottery, betting, gambling and horse racing.- (3) the value of supply of actionable claim in the form of chance to win in betting, gambling or horse racing in a race club shall be 100% of the face value of the bet or the amount paid into the totalisator.” Since the actionable claim in the Online Fantasy Sport Gaming of the respondent No.3 are amongst such actionable claims as per Schedule III and Section 7(2) of the Act, which are not considered as ‘supply of goods’ or ‘supply of services’, Rule 31A has no application. Moreover, actionable claim referred to in Rule 31A is limited to only activities or transactions in the form of chance to win in “lottery” or “betting” or “gambling” or “horse racing in a race club”.

Thus, Rule 31A  of CGST Rules 2018 which is restricted only to such four supplies of actionable claim, has no application in this case.


The Hon’ble Bombay HC vide Criminal Public Interest Litigation Stamp No.22 Of 2019 dated April 30, 2019 observed that the entire case of the Petitioner is wholly untenable, misconceived and without any merit. It can be seen that success in Dream 11’s fantasy sports depends upon user’s exercise of skill based on superior knowledge, judgment and attention, and the result thereof is not dependent on the winning or losing of a particular team in the real-world game on any particular day. It is undoubtedly a game of skill and not a game of chance.

Citation: [TS-496-HC-2019(BOM)-NT]