The Supreme Court has upheld the constitutional validity of laws enacted by the States of Tamil Nadu and Karnataka prohibiting online betting and wagering on games played with stakes, observing that betting on games of skill does not enjoy constitutional protection merely because the underlying activity involves skill.
The Bench of Justice JB Pardiwala and Justice R Mahadevan held that State legislatures are fully competent to regulate and prohibit betting and gambling activities under Entry 34 of List II of the Seventh Schedule to the Constitution, which deals with “betting and gambling”. The Court clarified that while games predominantly involving skill may receive constitutional protection, wagering or betting conducted on such games stands on a different footing and falls within the regulatory domain of the States.
Allowing appeals filed by the States of Tamil Nadu and Karnataka, the Court set aside judgments of the Madras High Court and the Karnataka High Court, which had earlier struck down provisions aimed at regulating online gaming platforms offering games such as rummy and poker for stakes.
The litigation arose from challenges to the Tamil Nadu Gaming and Police Laws (Amendment) Act, 2021, the Tamil Nadu Prohibition of Online Gambling and Regulation of Online Gaming Act, 2022/2023, and the Karnataka Police (Amendment) Act, 2021. Through these enactments, both States sought to address online betting and wagering activities conducted through digital platforms, mobile applications and internet-based gaming services. The amendments removed earlier statutory exemptions available to games of skill when played for stakes and brought such activities within the scope of penal regulation.
The High Courts had held that games such as rummy and poker are games of skill and therefore could not be treated as betting and gambling under Entry 34. Consequently, the impugned provisions were declared unconstitutional. Reversing those findings, the Supreme Court held that the High Courts had adopted an unduly restrictive interpretation of the constitutional entry, effectively curtailing the legislative competence of States in an area specifically assigned to them by the Constitution.
The Court rejected the reasoning that the constitutional expression “betting and gambling” should be interpreted narrowly as “betting on gambling”. It observed that such an interpretation amounts to rewriting the constitutional text and is inconsistent with the legislative intent underlying Entry 34.
According to the judgment, the distinction between a game of skill and a game of chance becomes irrelevant once wagering enters the equation. The Bench observed that both betting and gambling involve staking money or property on an uncertain outcome and carry similar social and economic consequences. Therefore, even where the underlying game predominantly involves skill, the activity of betting on the outcome remains a form of gambling enterprise that can be regulated or prohibited by the State.
The Court further held that online gaming companies cannot claim protection under Article 19(1)(g) of the Constitution, which guarantees the freedom to practise any profession or carry on any trade or business. It ruled that once an activity falls within the category of betting and gambling, it becomes *res extra commercium*, meaning an activity outside the sphere of constitutionally protected trade and commerce. Consequently, the challenge based on violation of the right to carry on business was rejected.
Addressing arguments based on proportionality and manifest arbitrariness, the Court observed that where no fundamental right exists in the first place, the question of examining whether a restriction is proportionate does not arise. It held that betting and wagering activities are not entitled to constitutional protection merely because they are connected with games of skill.
The Bench also relied on debates of the Constituent Assembly while interpreting Entry 34 and observed that the framers of the Constitution clearly intended to permit State regulation of betting activities even when associated with games involving skill. The Court noted that historical constitutional materials indicate that games such as rummy, though recognised as skill-based games, could nevertheless be subjected to regulation or prohibition when played with stakes.
Apart from Entry 34, the Court held that the impugned legislations could also be sustained under Entry 1 of List II relating to public order. It observed that online betting and gambling have increasingly generated concerns relating to addiction, financial distress, indebtedness and even suicides, thereby affecting public tranquillity and societal welfare. The Court noted that the States had placed substantial empirical material before it demonstrating the adverse social consequences associated with online wagering activities.
In particular, the Court referred to findings contained in the Justice K Chandru Committee Report relied upon by the State of Tamil Nadu, which documented the harmful effects of online betting and gaming addiction. The Bench held that the legislation bore a direct and proximate nexus with the object sought to be achieved and was supported by adequate legislative material.
Concluding that States are not powerless to address emerging harms arising from online betting in the digital era, the Court held that if wagering on games of skill poses a threat to public welfare, legislatures are fully entitled to enact prohibitory measures. It therefore upheld the validity of the impugned enactments and reversed the judgments of the Madras and Karnataka High Courts that had restrained authorities from enforcing the statutory provisions against online gaming operators.
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