Fantasy sports as a game of skill kept pooled stakes outside GST supply and defeated gambling allegations.

Online fantasy sports were treated as a game of skill because success depended predominantly on user judgment, knowledge and attention rather than chance; the activity therefore did not amount to gambling or betting. Once characterised that way, the pooled amount in escrow was treated as an actionable claim within Schedule III and outside the scope of supply, so the definition of consideration did not apply and Rule 31A(3) did not extend to fantasy sports or override the parent Act. The platform fee classification was also upheld, and the GST misclassification and evasion allegations failed.

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Issues: (i) Whether the online fantasy sports activities conducted by the respondent amounted to gambling or betting. (ii) Whether there was merit in the allegation of violation of Rule 31A(3) of the Central Goods and Services Tax Rules, 2018 and consequent GST misclassification or evasion.

Issue (i): Whether the online fantasy sports activities conducted by the respondent amounted to gambling or betting.

Analysis: The activities were examined on the basis of their essential character and the manner in which the game was played. The Court relied on the settled distinction between games of chance and games of skill, and accepted the earlier view that success in the respondent's fantasy sports depended predominantly on user skill, judgment, knowledge and attention. It was held that the result did not depend upon the winning or losing of any particular real-world team, and that the activity was protected as a game of skill rather than falling within gambling or betting.

Conclusion: The respondent's online fantasy sports activities did not amount to gambling or betting.

Issue (ii): Whether there was merit in the allegation of violation of Rule 31A(3) of the Central Goods and Services Tax Rules, 2018 and consequent GST misclassification or evasion.

Analysis: Once the activity was held not to be gambling or betting, the pooled amount in the escrow arrangement was treated as an actionable claim falling within Schedule III to the Central Goods and Services Tax Act, 2017, and therefore outside the scope of supply. The definition of consideration was held inapplicable because it operates only in relation to supply of goods or services, and Rule 31A(3) was held not to override the parent Act or extend to fantasy sports. The service classification adopted for platform fees was also found not to be erroneous.

Conclusion: There was no merit in the allegation of GST violation, misclassification or evasion.

Final Conclusion: The petition was found to be wholly untenable and the challenge to the respondent's online fantasy sports operations and GST treatment failed in its entirety.

Ratio Decidendi: An online fantasy sports format that is predominantly determined by skill, judgment and knowledge is not gambling or betting, and the pooled stake in such a non-gambling actionable claim falls within Schedule III of the GST law so as to remain outside taxable supply.

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