A lawsuit in Germany looking to reimburse gambling losses has been referred to the European Court of Justice (ECJ).
The Federal Court of Justice of Germany (BGH) was due to hear whether unregulated operators should have to refund player losses earlier this month. However, the hearing was cancelled because the defendant, an Austria-based sports betting operator, withdrew its appeal.
A decision last week at a regional court on player reimbursement lawsuits has mandated that all German civil courts will be obliged to suspend or submit, including the BGH. The proceeding was led by German law firm Hambach & Hambach.
As a result, online sports betting and online casinos problems relating to EU law will be heard by the ECJ. The European court will then make the final decision on such cases.
The BGH, meanwhile, has been criticised for what some have seen as hesitation to submit a referral to the ECJ. This is because it neither suspended nor submitted during a March ruling in a sports betting case. This risked further future legal confusion as an overarching EU law decision would remain absent until the regional courts’ involvement.
Reimbursement could set dangerous precedent
Hambach & Hambach partner Claus Hambach and senior associate Phillip Beumer believe a ruling to reimburse players could set a troubling precedent in Germany.
“Mass media reports have already picked up on the above note by the Federal Court of Justice,” Hambach & Hambach states. “According to representatives of the ‘player claim industry’, this might now result in a deluge of complaints and court cases.
“This could indeed be possible due to massive advertising and media reports. This reflects that financers seem to be ready to continue financing such claims now even for sports betting losses and not only casino losses.”
Hambach & Hambach is concerned that if players are refunded, it will only serve to further increase black market popularity.
“Germany’s massive black market will even grow further. If players are reimbursed for losses with unlicensed operators, this will only incentivise them to bet with unlicensed operators as the case law basically established betting without a risk of loss.”
Black market problems in Germany
A 2023 University of Leipzig study revealed nearly half of all online gambling in Germany occurs with offshore operators.
The channelisation rate in Germany was found to be just 50.7% in the online space. The study approximated that three-quarters of online revenue is accumulated by the black market. As a result, hundreds of millions in tax is missed out upon by the state.
In response, the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) both called on the German gambling regulator (GGL) to encourage players towards onshore operators by making them more attractive to bettors.