For several years, the European gambling sector has been waiting for a decisive ruling from the European Court of Justice (ECJ) in Luxembourg on whether players can reclaim losses from operators licensed in one EU state but not in another. Throughout the past year, the ECJ has refrained from resolving this complex issue, merely clarifying certain legal tenets without establishing a pan-European solution. This has left national and regional courts in charge of interpreting their own gambling laws to address these cases, resulting in continued uncertainty for the industry. This ambiguity influences everything from player-loss claims in Germany and Austria to Malta’s controversial measures to shield its operators from foreign rulings. The fragmented nature of Europe’s gambling regulations is back under scrutiny as stakeholders question whether further harmonisation might be required to maintain market integrity.
Operators long hoped for a clear ECJ ruling that would address the compatibility of past regulations with EU law, which could clarify the legality of recovering player losses before modern licensing frameworks were in place. However, the court has opted for judicial caution, leaving many questions unresolved. Claus Hambach from the German law firm Hambach & Hambach expresses the prevalent frustration, noting the legal uncertainty persists, with national courts being tasked with resolving these issues. This cautious approach was evident in cases involving Austrian claims and Germany’s historical online gambling system, where the ECJ delineated the legal framework but refrained from dictating resolutions.
The reluctance of the ECJ stems from the lack of comprehensive harmonisation in gambling across the European Union, unlike sectors such as financial services or telecommunications. National governments retain control over licensing, taxation, and market regulations, leading to diverse political and economic interests. This complexity, particularly in Germany’s pre-2021 regime, highlights the challenges in aligning national regulations with European law. Soeren Alborn of Bird & Bird underscores the ECJ’s limited but valuable guidance within its jurisdictional constraints, as seen in the European Lotto and Betting case, confirming member states’ discretion to prohibit online gambling for reasons like consumer protection.
Despite this, significant uncertainties remain unresolved, particularly regarding Germany’s sports betting and online casino frameworks. Alborn suggests that further clarifications may arise, noting Germany’s Federal Court of Justice’s designation of an online casino dispute as a leading case, indicating potential referrals back to the ECJ. Thus, the litigation around Europe’s gambling sector is unlikely to conclude soon.
Germany remains central to this legal battle. Without a comprehensive ECJ ruling, German courts continue to generate diverse outcomes based on varying interpretations and circumstances. This fragmentation benefits both claimants and operators. For claimants, favorable rulings might spur more lawsuits, while operators can leverage procedural challenges and inconsistencies to contest claims. Hambach argues this works to the advantage of defendants, as courts dismiss claims based on jurisdictional issues, limitation periods, and other factors beyond European law. Alborn anticipates the resumption of suspended proceedings, with claimant law firms already marketing the relevance of ECJ rulings.
A burgeoning litigation industry has emerged amid this legal uncertainty. Michelle Hembury from Melchers Rechtsanwaelte anticipates sustained activity in player-loss cases, driven by a split between historical licensing disputes and newer claims related to regulatory breaches. Third-party litigation funding is crucial, enabling claims that might not otherwise reach court. These funders are attracted to the potential for significant recoveries, transforming a niche legal argument into a cross-border industry. However, the lack of definitive legal answers and concerns about enforcement may dampen the appeal of speculative mass litigation.
Malta illustrates the consequences of this uncertainty, having enacted Article 56A in its Gaming Act to limit the enforcement of foreign judgments against its operators. While supporters argue it protects against inconsistent rulings, critics believe it undermines European principles of mutual recognition. Maltese lawyer Terence Cassar suggests the issue is more political than legal, maintaining confidence in Malta’s position on enforcement. Meanwhile, Thomas Bugeja of Fenech & Fenech Law points out that Article 56A operates within a distinct recognition and enforcement sphere under Brussels regulations. National courts still apply their gambling laws, but enforcing these judgments in Malta remains complex, as shown by recent ECJ opinions highlighting the tension between domestic protections and mutual trust within the EU.
Beyond Malta, developments increase pressure on operators in multiple jurisdictions. ECJ rulings suggest growing legal exposure outside Malta, shifting the focus to the consumer’s jurisdiction rather than the operator’s base. This shift increases the likelihood of disputes being litigated locally, despite the cross-border nature of online gambling.
The ECJ’s Mr Green proceedings further illustrate the growing importance of enforcement issues. Hembury notes that while the ECJ clarified conditions for a European Account Preservation Order, it stressed that enforcement evidence must show intent to frustrate the process, moving disputes from gambling legality to broader concerns like cross-border civil procedure.
Amid these complexities, a consensus emerges: the current fragmented framework creates significant uncertainty. Hambach argues that incompatible national rules should not govern a single European market, while Cassar sees potential for regulatory convergence akin to the MiCA regulation for digital assets. Despite these calls, Alborn and Hembury caution that political and cultural sensitivities make harmonisation challenging.
The ongoing litigation underscores the limits of Europe’s courts in resolving gambling fragmentation. Although the ECJ has not mandated a restitution regime or provided definitive protection for operators, it has delegated responsibility back to national courts and legislators. This means continued litigation risks for operators, opportunities for claimant firms, and uncertainty for Malta regarding Article 56A. As Europe’s gambling market integrates further, the pressure for political intervention grows. Simon Priglinger-Simader of the German Online Casino Association warns that prolonged litigation may benefit unlicensed operators, challenging regulators and politicians to address the broader implications of this legal landscape. Ultimately, the task of bridging these gaps may rest with Europe’s political leaders.
4.6/5
