What are the differences between a game of skill and a game of chance?

The winnings from games of skill attract 18 per cent of Goods and Services Tax (GST), while winnings from games of chance mandate paying 28 per cent GST

On Sunday, the Supreme Court of India (SC) upheld an earlier decision by the Punjab and Haryana High Court stating that fantasy sports are a game of skill and not chance. In July 2021, another SC bench upheld the legality of fantasy sports.

What is a game of skill?

A game of skill requires a player's skill and mental or physical strength to win. It does not depend on sheer luck. The players use several strategies to emerge victorious. Usually, the player with better skill or experience wins the game.

It also requires constant practice to improve in these games.

What is a game of chance?

Here, the win depends on the luck of the player. In online gaming, a random number generator produces a sequence of random numbers that finally choose the winning number. Each player largely has the same chance of winning despite their experience or skill.

These are easier to play than the games of skill as they do not require any technical knowledge. Lottery and roulette are some examples of such games.

What is the controversy?

There are different laws and attitudes towards the two types of games in India. The winnings from games of skill attract 18 per cent Goods and Services Tax (GST). On the other hand, winnings from games of chance mandate paying 28 per cent GST.

People have varied opinions on whether fantasy games should be categorised based on skill or luck. However, the SC has made it clear that it involves a certain skill level in playing these games.

Online Rummy, poker and e-sports have also been categorised as games of skills in India.

The discussions around the issue have increased in the past few months because, by 2023, the sector's size is expected to reach $2 billion. Also, there are over 400 gaming start-ups in India.

What does the law outside India say?

In the US, there are specific legal standards for defining a game as a game of chance or skill. Despite the skill required, poker has been categorised as a game of skill in the country as it involves a level of randomness.

In the EU, some countries like Malta allow games of all types. While others, like Cyprus, only permit betting, casino games and poker.

In the UK, gambling is 100 per cent legal as long as the provider is licensed under the Gambling Act of 2005.