German courts are continuing to rule in favor of German residents against offshore casino operators, in some cases ordering that those offshore platforms pay back losses that players have suffered. While these offshore operators are seeking to resist these rulings, the CJEU has made some recent rulings that seem to favor the German courts.


If you are following news of the European online casino sector, it's likely you would be aware, at least tangentially, of the ongoing conflict between German regulators, courts and players, and offshore casino platforms that offered services to German players in the past. While this legal struggle is ongoing and has no clear end in sight, some recent rulings by the Court of Justice of the European Union (CJEU) seem to favor the position of German courts, which could have long-term consequences for cross-border online gambling in the wider EU, and could be expensive for operators that run offshore platforms in the region.


Let's take a closer look at what exactly this legal conflict is all about, what the recent CJEU rulings are and what they mean, and at some of the other details around this ongoing situation.

German Restrictions Conflict with Maltese Licenses


At the root of this issue is the conflict between online casino restrictions in Germany and the freedom implicit in licenses issued by the Malta Gaming Authority (MGA). Malta has made a name for itself over the past two decades as a home for online casino operators to establish themselves, acquire licenses and offer their services across borders to other locations in the world, the EU included.


This ethos comes into direct friction with Germany, as well as other regions in the EU, which, until it changed its regulatory legislature in 2021, had a near-blanket ban on online casino activities. Since that change, online casino gaming in Germany is legal and regulated, and players are able to choose from the best rated German online casinos when they want to play casino games online. But before 2021, platforms that offered services to German players, or allowed German players access, were in contravention of German law.


The question then becomes, which law should be upheld? Are the licenses issued by the MGA correct in allowing operators to ply their trade across the wider EU? The Maltese government and regulators certainly seem to think so. They are claiming that the EU's guiding principles of the freedom to provide services across borders, covered by Articles 49-66 of the Treaty on the Functioning of the European Union (TFEU), protect the actions of their operators. German players, regulators and courts think differently. And, it would appear, so does the CJEU.

The CJEU Weighs in, Favoring German Law


Earlier this year, the CJEU ruled in a way that supports the German courts and their rulings in favor of German players who are seeking restitution for losses incurred under a voided contract. Despite the EU law around freedom of services, the CJEU stated that these laws do not "preclude a Member State from prohibiting certain services provided online and authorized in other Member States".


The CJEU went on to elucidate that, especially in the case of an activity like gambling, which has the potential to pose social and economic risk to residents, member states are well within their rights to restrict such activities, even if the EU as a whole, and EU law, permits them.


The CJEU also stated that Germany's change in regulatory stance in 2021, nor its allowance of land-based casinos, in any way overturns its previous prohibitive stance on online gambling. So what does this mean for the ongoing legal dispute?

All Contracts Can be Considered Void


The main contention of the legal dispute is that the offering of online gambling services to German players by offshore operators was illegal. This means that the contract between player and operator, under which the player would put up a stake and risk it in order to potentially win, can be considered void, as these contracts were illegal. In such cases, the contract legally never existed, and players might be able to recoup losses they suffered when using said platforms.


There have already been a slew of cases in which German courts have ordered international operators, many of them based out of Malta with licenses issued by the MGA, to pay back players equal to the amount they have lost, in some cases going back multiple years. In interesting an wrinkle, this means that player winnings could also be deemed voided and ordered to be returned to the operators, but few such cases have yet to arise.


An argument was made that players who knowingly engage in illegal activities, in order to then seek reimbursement later, are acting in bad faith. Unfortunately for the operators, filing a claim to seek reimbursement is not an abuse of EU law, even if the players were aware of the illegal nature of the contracts they were engaging in.

What Does This Mean?


For the future of German regulatory restrictions, these rulings unequivocally support them. The rulings by the CJEU have also set the precedent that certain types of digital services can indeed be restricted by EU member states on the consumer side, which could have effects later.


As for making it more likely for German players to receive the reimbursements that German courts have ordered from offshore operators, these rulings, while moving the needle in that direction, might not quite achieve this. Malta has recently introduced new legislation, such as Bill 55 , in order to protect operators from the judgments of courts outside Malta.


This situation seems far from being over, but the CJEU has definitively ruled in favor of the German consumers.