Date: 23.05.2024

by Kajetan Sawicz

German Gambling Loss Refund Case Escalates to European Court of Justice

A groundbreaking legal case in Germany, questioning the obligation of unregulated gambling operators to reimburse player losses, has advanced to the European Court of Justice (ECJ).

Case Background and Legal Implications

Originally set for a national verdict, the BGH was compelled to change course when the defendant retracted their appeal.

This led to the referral of the case to the ECJ, aligning with a directive from a regional court to pause or refer related cases, and situation has captured the attention of the media and legal experts, foreseeing a potential wave of similar legal actions across Germany.

The proceedings, spearheaded by law firm Hambach & Hambach, could ignite a flurry of claims, attracting financial backers interested in funding cases not only against casino losses but also sports betting losses. The extensive media coverage adds to the momentum, increasing public and legal scrutiny.

Risks of Encouraging the Black Market

Legal experts Claus Hambach and Phillip Beumer have voiced concerns that ruling in favor of reimbursements might inadvertently bolster the black market.

They argue that such a precedent could encourage gamblers to patronize unlicensed platforms without fear of financial loss, thus undermining regulatory efforts and consumer protection in Germany’s gambling industry.

Challenges Posed by Offshore Gambling

Research from the University of Leipzig in 2023 highlights a significant challenge: nearly half of Germany’s online gambling activities occur through offshore operators. This not only leads to considerable tax revenue losses but also strengthens the black market, which captures three-quarters of online gambling revenue.

In response, industry associations like the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) urge regulatory bodies to enhance the attractiveness of licensed offerings.

Future Implications and Industry Outlook

As the case moves forward in the European Court of Justice, its outcome is anticipated to have broad implications for the regulatory landscape across Europe.

This pivotal decision will influence how member states manage unlicensed gambling operators and protect players, potentially setting a precedent for the responsibilities of gambling operators and the rights of consumers within the European Union.