A Landmark Hearing at the European Court of Justice: Implications for Germany’s Player Losses Model
A recent hearing at the European Court of Justice (ECJ), initiated on April 9, signals a potential overhaul of the framework governing player losses in Germany. This proceeding comes as a pivotal moment for the thousands of players who have pursued claims against gambling companies in a legal landscape that remains murky.
In recent years, German and Austrian courts have addressed more than 20,000 cases from players wanting to reclaim their gambling losses dating back to the prior State Treaty on Gambling, which was enacted in 2021. However, a new set of challenges has emerged, as these disputes have been escalated to the ECJ, raising pressing questions about whether German gambling regulations are at odds with European legislation.
Initially filed in 2018, these cases have scrutinized Germany’s gambling laws established under the earlier treaty. Over time, many of them have either been resolved or settled.
Pathway to the ECJ: What Has Led to This Moment?
In 2022, several cases reached the Federal Court of Justice (BGH) in Germany, including a notable case involving the local operator Tipico. This case is among the four currently awaiting a verdict from the ECJ.
Claus Hambach, a prominent lawyer at Hambach and Hambach, suggests that the referral of such cases to the ECJ was a predictable outcome. "There were early indicators pointing toward the necessity for these referrals due to the evident inconsistencies in German regulations," he noted. He also highlighted that German civil courts often neglected the relevance of European law in their arguments. A Maltese court’s previous referral to the ECJ prompted German courts to follow suit, demonstrating a shift toward recognizing the EU’s legal framework.
The complexity of German gambling legislation, coupled with a lack of structured licensing prior to the 2021 treaty, has exacerbated these issues. A critical point of contention has been the 2012 edition of the State Treaty on Gambling, which imposed a prohibition on offering sports betting without a license—raising questions about the validity of related contracts and player claims.
As these cases have progressed, a new argument has surfaced: whether German gambling laws conflict with European principles that ensure freedom of service across the EU’s member states.
Current Arguments Before the ECJ
One of the ongoing cases now under ECJ scrutiny originated from Malta and was heard earlier this month. Key defendants, European Lotto and Betting Ltd., alongside Deutsche Lotto-und Sportwetten Ltd., challenge the rationale behind local market regulations that ban online casinos licensed exclusively in Malta.
While the immediate focus is on Germany, legal experts like Hambach contend that the implications could resonate throughout Europe, particularly if the ECJ supports the notion that operators licensed in Malta should have the right to conduct business across EU borders, irrespective of local laws.
Notably, a Maltese court recently ruled that it would no longer recognize Austrian court judgments concerning player losses, thus posing significant consequences for operators who have engaged with the Austrian market without local licensing. This ruling further strengthens the position of Malta-licensed companies at the EU level.
As the ECJ deliberates, Hambach expressed concern over the anxiety gripping litigation financing firms that have supported many of these player loss claims. A critical opinion from the Advocate General is expected on July 10, with a final ruling anticipated within six months. Such a decision could radically transform the financial framework upon which these litigators have built their operations.
European Lotto and Betting Ltd., which operates as Lottoland, has refrained from commenting on the ongoing proceedings.
Potential Consequences for the Player Losses Model
According to Hambach, several cases intended for regional courts have been withdrawn to continue to the ECJ, as litigation financiers have aimed to avoid an unfavorable ruling at a higher judicial level. "There was a strong inclination to keep these cases from reaching the ECJ, given the previous favorable outcomes for players in many German courts,” he explained. However, increasing hesitation has arisen as courts begin to pause proceedings in anticipation of the ECJ’s ruling.
István Cocron, a Munich-based lawyer who began representing players in 2019, noted that early victories in regional courts had galvanized litigation financiers to enter the market. Yet, amidst the growing uncertainty surrounding the outcomes of these cases, some financial backers have or are planning to exit the German landscape.
This evolving situation will undoubtedly spark further dialogue regarding the EU’s stance on gambling regulations and the complexities attributed to the absence of a unified approach across member states. The ruling may ultimately shape the trajectory of gambling law within Europe, illustrating the delicate balance between national regulations and EU legislation.