States Can Regulate Or Ban Online Gaming With Stakes Even If Games Involve Skill; Interpretation Of 'Betting' Cannot Be Limited To Games Of Chance: Supreme Court

"The finding in the impugned judgments that the expression 'betting and gambling' ought to be interpreted as 'betting on gambling' is a clear Constitutional aberration, tinkering with the Constitution or actually rewriting the Constitutional text which Courts are not legally entitled to do, " Supreme Court, in a landmark ruling, held that State Legislatures possess the absolute competence under Entry 34 of List II to regulate or prohibit betting and wagering on any game, regardless of whether it is a game of skill or chance.

A bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed that once money is staked on the outcome of a game, the activity falls within the rigors of "betting and gambling" and loses constitutional protection as it becomes res extra commercium.

The appeals were filed by the States of Tamil Nadu and Karnataka against judgments of the Madras and Karnataka High Courts, which had struck down legislative amendments banning online games like rummy and poker when played for stakes. The High Courts had primarily held that "betting" cannot be divorced from "gambling" under Entry 34 List II, meaning States could only regulate betting on games of chance, while games of skill remained protected business activities.

The primary question before the court was whether the expression "betting and gambling" in Entry 34 List II must be read conjunctively to exclude games of skill. The court also examined whether staking money on a game of skill converts it into a gambling enterprise and whether such activities can be justified under "public order" and "public health" entries.

Entry 34 List II Not Restricted To Games Of Chance

The Supreme Court rejected the narrow interpretation adopted by the High Courts that Entry 34 List II only pertains to games of chance. The bench noted that the "founding fathers of the Constitution clearly intended even Rummy, a game of skill, to be regulated and even be prohibited, when played with stakes." The court emphasized that the conjunction "and" between betting and gambling does not limit the State's power only to "betting on gambling."

"Betting and gambling" are set expressions that must be interpreted liberally to confer wide jurisdiction on State Legislatures.

The court observed that the words used by the Constitution makers were deliberately kept broad enough to take shape and get moulded by the "tides of time." It held that shrinking this entry to regulate only games of chance would violate the express scope of the entry and the wisdom of the framers. The bench noted that "betting and gambling" is a common usage expression across the world and within various legislations.

Staking Money On Skill Games Amounts To Betting

The bench clarified that while a game of skill played without stakes is protected, the moment stakes are introduced, the nature of the activity changes from a societal perspective. It held that "both betting and gambling involve the aspect of staking," and in the absence of staking, an activity can never constitute gambling. Therefore, introducing stakes in any game, including skill-based games, amounts to betting and gambling under the law.

Merely because a game involves skill does not grant immunity to the act of placing bets or stakes on its outcome.

Drawing a distinction, the court noted that in both Rummy (skill) and Teenpathi (chance), persons staking on the uncertain outcome equally risk and "take a chance" on their unknown victory. The bench further observed that even in skill games, the outcome among multiple players remains an uncertain future event that can never be predicted with absolute certainty by a common person, making the act of staking essentially a bet.

No Fundamental Right In 'Res Extra Commercium' Activities

The court held that once an activity is classified as a "betting and gambling" enterprise, it becomes res extra commercium (outside the scope of trade and commerce). Consequently, online gaming companies cannot claim protection under Article 19(1)(g) of the Constitution of India. The bench stated that "no one can claim a fundamental right in operating an activity which is extra commercium," effectively removing the basis for testing such laws on the touchstone of proportionality.

Activities that are inherently pernicious or dangerous to public morality do not enjoy constitutional protection as legitimate trade or business.

The bench relied on the principle that the State has a compelling interest in preventing "moral and material abandonment" and mental degradation caused by gambling addiction. It compared the State’s power to prohibit betting to its power to regulate or prohibit intoxicating drinks or harmful drugs in the interest of public health and safety, fulfilling the duties enshrined in the Directive Principles of State Policy.

High Courts Misapplied RMDC And K.R. Lakshmanan Precedents

The Supreme Court held that the High Courts had misinterpreted the landmark decisions in RMDC-I, RMDC-II, and K.R. Lakshmanan. The bench clarified that those cases were decided in specific factual contexts where the State had already carved out exceptions for games of skill. Those judgments did not restrict the legislative competence of the State to remove such protections if the activities began posing significant social problems.

Past judicial exceptions for games of skill were based on specific statutes and do not permanently bind the State’s sovereign legislative power.

Referring to RMDC-I, the court noted that the Bench therein was cognizant that while games of skill may be excluded from "gambling," they would still be covered under "betting" as staking money on a future uncertain outcome. The court also distinguished K.R. Lakshmanan by noting it was decided in the context of regulated physical horse-racing clubs, which differ significantly from the "veil of invisibility" in the online gaming landscape.

Online Gaming Poses A Serious Threat To Public Order

The Court held that States also derive competence from Entry 1 List II ("public order") to enact such bans. It noted that widespread online gaming addiction has led to unsustainable debt, financial distress, and suicides, which "rippled violently" through society. The bench observed that any activity which disturbs the "even tempo" of community life and affects large sections of the public falls squarely within the realm of public order.

The "even tempo" of life is disrupted when online platforms induce the youth to squander money, leading to social and economic disorder.

The Court underscored the "Midas touch" of digital platforms that turn every mobile phone into a virtual gambling house. It accepted the State’s contention that online gaming involves pseudo-random generators and algorithms that can be manipulated by AI, making regulation nearly impossible and justifying a total ban to protect vulnerable populations, especially children and the unemployed youth.

The Supreme Court allowed the appeals by the States of Tamil Nadu and Karnataka, setting aside the orders of the Madras and Karnataka High Courts. The bench declared Part II of the 2021 TN Amendment Act and the Schedule to the TN Online Gambling Act 2022/23 to be intra-vires the Constitution. The Court concluded that States are at liberty to define and classify gaming activities to achieve public welfare goals, and such policy decisions do not suffer from manifest arbitrariness.

Date of Decision: 27 May 2026