A pivotal lawsuit in Germany aimed at reimbursing gambling losses has been referred to the European Court of Justice (ECJ). The Federal Court of Justice of Germany (BGH) was initially scheduled to decide on whether unregulated operators should refund player losses earlier this month. However, this hearing was canceled after the defendant, an Austria-based sports betting operator, withdrew its appeal.

Last week, a regional court decision on player reimbursement lawsuits mandated that all German civil courts, including the BGH, must either suspend proceedings or submit them for review. This action, spearheaded by the German law firm Hambach & Hambach, ensures that online sports betting and casino issues related to EU law will now be heard by the ECJ. The European court will ultimately make the final ruling on these cases.

The BGH has faced criticism for its perceived reluctance to refer cases to the ECJ. During a March ruling on a sports betting case, the BGH neither suspended nor submitted a referral, which some saw as a hesitation to seek an overarching EU law decision. This could have led to ongoing legal confusion without a decisive EU court ruling until regional courts intervened.

Potential Precedent of Reimbursement Rulings

Claus Hambach, partner at Hambach & Hambach, along with senior associate Phillip Beumer, cautioned that a decision to reimburse players could establish a problematic precedent in Germany.

“Mass media reports have already picked up on the above note by the Federal Court of Justice,” stated Hambach & Hambach. “According to representatives of the ‘player claim industry’, this might now result in a deluge of complaints and court cases.”

They warned that such an outcome could be driven by significant advertising and media coverage, indicating that financiers appear ready to continue backing these claims, potentially extending to sports betting losses, not just casino losses.

Hambach & Hambach expressed concern that reimbursing players might inadvertently bolster the black market. “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.”

Challenges with the Black Market in Germany

A 2023 study by the University of Leipzig highlighted the prevalence of offshore operators in Germany’s online gambling market, revealing that nearly half of all online gambling occurs with these unlicensed entities. The channelisation rate in Germany’s online gambling space stands at just 50.7%, with the study estimating that the black market accounts for three-quarters of online revenue. This situation results in the state missing out on hundreds of millions in tax revenue.

In response, both the German Online Casino Association (DOCV) and the German Sports Betting Association (DSWV) have urged the German gambling regulator (GGL) to make onshore operators more attractive to bettors. By improving the appeal of regulated platforms, these associations hope to draw players away from the black market and ensure that gambling activities contribute to the national economy.

As this lawsuit progresses to the European Court of Justice, its outcome could significantly impact the regulatory landscape for online gambling in Germany and potentially across the European Union. The final decision by the ECJ will be crucial in shaping the future of player reimbursements and the fight against the black market in the gambling industry.

Source: “Germany loss reimbursements lawsuit to be sent to European court”. iGamingBusiness. May 20, 2024.

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The United Kingdom’s new Criminal Justice Bill is set to provide the Gambling Commission (UKGC) with extra powers, allowing it to request the blocking of unlicensed gambling websites. While yet to be passed, the bill is gaining traction as the UK seeks to empower law enforcement bodies, allowing them to tackle crime and fraud.

What That Means for the Gambling Industry

The bill has already passed its first and second readings and is now being discussed before undergoing a third reading. Following that, the bill will go to the House of Lords and, if approved, will finally be signed into law.

Under the new proposal, the UKGC will be able to request IP and domain name providers to block access to websites that violate or might violate British law. At the moment, the commission must request such actions under a voluntary suspension model that has proved to be inefficient, especially for sites outside of the UK.

As a result, the UK seeks to enable agencies, such as the UKGC, to apply for court orders, which can be served even to foreign companies.

Minister Philp Says the Bill Would Bring Much-Needed Change

Under the new Criminal Justice Bill, unlicensed operators and crypto casinos risk getting blocked. As reported by Next.io, Chris Philp, the United Kingdom’s Minister for Policing, said that these new rules will allow any UKGC member of at least the level of executive director to make applications for court orders.

Philp said that this is an important step in the crackdown on foreign companies that steal a market share from their legal competitors and do not respond to requests to cease their unlicensed activities.

Philp said that he hopes everyone can agree that this is a necessary measure, arguing that it would also help to tackle online crime as a whole.

In the meantime, the UKGC just handed a £6 million fine to Gamesys, which violated the country’s social responsibility and anti-money laundering protocols. The commission, which continues to closely monitor the market, concluded that Gamesys conducted inadequate customer due diligence and was over-reliant on third-party regulation.

In other news, the UK continues to discuss the ongoing gambling reforms, especially the controversial affordability checks. While yet to be implemented, the checks have agitated many bettors who believe that the measure would infringe on their privacy. As a result, the UK Petitions Committee will discuss Nevin Truesdale’s recent anti-affordability checks petition.

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After it rejected a proposal for a series of measures aiming to protect gamblers from spending more than they can afford at the start of the year, the Department of Justice in Ireland has announced that it was ready to help the Gambling Regulation Bill progress in its 2023 Justice Plan.

Over 140 Actions Part of the 2023 Justice Plan

The Justice Plan for 2023 was officially released on April 6 and it introduces more than 140 headline actions that would help build safer and more powerful communities in the country.

The plan consists of a series of updated actions in fields like anti-social behavior, policing, and family and civil law, among others. It is based on the previously recorded progress under the Justice Plans released in the past two years.

As the third and also the last installment of plans meant to explain the goals belonging to Ireland’s 2021-2023 statement of strategy, the 2023 Justice Plan continues last year’s Plan that originally introduced the Gambling Regulation Bill.

As explained by the country’s Minister of State for Law Reform James Browne T.D., the Bill represents one of the top priorities that would ensure progress in the current year.

The Gambling Regulation Bill Aims to “Meet the Challenges of Gambling Responsibility“

Browne called the Bill which was originally published last December an important milestone as well as much-anticipated legislation needed to “meet the challenges of gambling responsibly in 21st century Ireland.”

The minister added that the 2023 Justice Plan plans on seeing the Bill advance through Oireachtas, which is the country’s Parliament. This would help set up the Gambling Regulatory Authority of Ireland, which would be called Údarás Rialála Cearrbhachais na hÉireann.

As a main goal, the Bill would display the necessary framework for a “robust regulatory and licensing regime for the gambling sector in Ireland”.

Provided the Bill would pass, it might ban all forms of promotional activities related to gambling. Plus, operators would be forbidden to use free bets as stimuli to convince new players to join them and gamble for real money.

DoJ to Offer Management Services for Establishing the Regulatory Authority

The Department of Justice has announced it was prepared to show its support for the successful implementation of the Gambling Regulation Bill in the following months.

Namely, DoJ will help introduce a complex system for regulations and licensing designated for the gambling sector in the country by offering the necessary management services that would set up the Gambling Regulatory Authority.

The Authority will be responsible for the implementation and close supervision of the laws of the Gambling Regulation Bill.

The same department will also help establish the new chief executive officer Designate of the Authority while overseeing the Bill’s ongoing progress on its path toward “enactment and commencement later this year”.

Last September, Minister Browne appointed Ms Anne Marie Caulfield as the new CEO Designate of the Gambling Regulatory Authority with the intention of facilitating the preparatory work in advance of the establishment Gambling Regulatory Authority of Ireland.

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