Could the ECJ signal an end to player losses cases in Germany?
German and Austrian regional courts have processed upwards of 20,000 cases brought by players seeking to retrieve losses from gambling companies, prior to the current State Treaty on Gambling, which came into force in 2021. But today a number of these player losses cases have reached the ECJ, as they have raised broader questions of whether German regulations contradict European law.
These player losses cases, first brought to regional court in 2018, have questioned German gambling law under the previous treaty, but thousands have been settled either in or out of court over the years.
How have player losses cases progressed to the ECJ?
Last year a number of cases progressed to Germany’s Federal Court of Justice (BGH), including one case involving local operator Tipico. This is one of the four cases awaiting a European Court of Justice (ECJ) judgment.
The progression of cases to the ECJ is significant, but Claus Hambach, managing partner at German law firm Hambach and Hambach, believes there were always signs that cases would be referred to the ECJ eventually.
“From the very beginning, [there were] a lot of indications why cases should be referred because the inconsistency of the German regulation is rather obvious,” he tells iGB.
“The civil courts tried to reason and argue without considering European law and just ignored the necessity to make such referrals. And then two years ago, a Maltese court referred a German-related case to the ECJ. Only after that referral, German courts also referred questions to the ECJ.”
Part of the reason why cases have progressed to the European court is that German gambling law is hugely complex and, prior to the 2021 treaty, there was a lack of a licensing framework as the market was largely considered grey.
The argument in many cases has been whether the 2012 edition of the State Treaty on Gambling contained a level prohibition on sports betting without a licence. This meant offering sports betting could be considered a violation of the legislation and the sports betting contract between the player and the operator could be deemed as void.
Hambach says German gambling law is complex, particularly as states operate their own rules, as well as adhering to an overarching federal law.
As cases have progressed, the argument has shifted to whether German law contradicts a certain European law, which guarantees the freedom to provide services within the EU.
What is the latest argument to be heard by the ECJ?
One of the four pending cases was brought to the ECJ via a Maltese court. The initial hearing was held last week on 9 April. Defendants European Lotto and Betting Ltd and Deutsche Lotto-und Sportwetten Ltd raise questions on whether it is reasonable for locally regulated markets to prohibit online casinos licensed only in Malta.
While the current ECJ case relates specifically to Germany, Hambach says it could have implications for other European markets. That’s particularly the case if the ECJ sides with the claims that Malta-licensed operators should have freedom to operate across the EU, regardless of local regulations.
In February, a Maltese court ruled it would no longer enforce judgments on player losses made by Austrian courts. The case was also brought by European Lotto and Betting Ltd.
The ruling, delivered on 27 February, backed Malta-licensed operators that had done business in Austria’s market without a local licence. The court ruled that previous Austrian judgments were contrary to Maltese public policy.
Hambach believes the litigation financing companies funding many of the ongoing player losses cases are becoming anxious now that these cases are at a European level.
On 10 July the Advocate General will deliver his opinion on this case, at the ECJ’s Palais de la Cour de Justice in Luxembourg. The final ruling will occur up to six months later. It could dismantle the model these financiers have built to earn a percentage of the winnings won by players.
European Lotto and Betting Ltd, operating as Lottoland, declined to comment on the ongoing case when contacted by iGB.
Ultimately, Hambach says he is unsure how the court will rule. But it is clear the case is having an impact on the player losses case model which has riddled operators in Germany and Austria.
How could the current player losses case model be impacted?
Hambach says a number of cases were withdrawn from regional courts that intended to refer questions to the ECJ, as it would be in the financiers’ favour for them to reach that level.
“They tried every possible path to prevent a referral to the ECJ, because they don’t want it. In Germany they had a rather secure situation as many courts decide in favour of the players. But now many courts suspend the proceedings until the ECJ has decided. But they are also fearful of any [opposing] view by the ECJ and I think that fear is understandable,” he says.
Munich-based lawyer István Cocron was among the first to represent players in 2019. He says regional courts were largely ruling in favour of the players and the model was quickly picked up by litigation financing companies, which started offering to fund cases for a percentage of the winnings received.
But some of these financiers have already disappeared from the German market as uncertainty around the future of these cases has increased.
The case will surely raise further questions around the EU’s role in gambling law across Europe. There are no unified European regulations for gambling, beyond the rule requiring freedom of movement within EU member states.