Several companies offered sports betting for years before 2020 without the required license. Are players entitled to a refund? The Federal Court of Justice turns to Luxembourg.
Time and again, once unlucky players go to court to reclaim losses from illegal sports betting. Before 2020, many providers lacked the required license from the German authorities for years. After numerous German courts dealt with such player lawsuits, many plaintiffs had hoped for a clarification by the highest court. But the Federal Court of Justice (BGH) is referring the case to the European Court of Justice (ECJ). What question does it ask the judges in Luxembourg? And what does that mean for gamblers? The most important questions and answers:
Since when are sports betting allowed in Germany?
Until mid-2012, apart from isolated cases of old GDR licenses, only state-run providers were allowed to organize sports betting in Germany, says lawyer and gambling law expert Lennart Brüggemann. In order to dry up the black market, the federal states introduced a new state gambling treaty in 2012 that also allowed for private providers. But for eight years, no interested private provider was granted a license, says Brüggemann. The reason for this was concerns raised by the administrative courts about the official procedure.
Providers therefore remained in a legal limbo for years. It was not until 2020 that the first ones received a license. The following year, the current State Treaty on Gambling came into force, which officially legalized sports betting under certain conditions.
What is the specific case about?
The BGH is dealing with a man’s lawsuit against the betting provider Tipico (case number I ZR 90/23). He had participated in sports betting from 2013 to 2018 and lost more than 3,700 euros, which he is demanding back. In his opinion, the sports betting was illegal and the betting contracts invalid because the provider did not have the necessary permission. Tipico had applied for a license but did not receive it until 2020. The litigation funder Gamesright bought the right to sue from the original plaintiff. Most recently, the Ulm Regional Court declared that although Tipico had violated provisions of the State Treaty on Gambling in the version valid at the time, the betting contracts were nevertheless valid.
What did the BGH decide?
The Karlsruhe Senate has suspended the proceedings. The ECJ is to clarify whether the freedom to provide services under EU law of a provider based in another EU country – in this case Malta – prevents the reimbursement of losses from unlawful sports betting. The question arises whether sports betting contracts are void if the provider applied for a German license but the procedure for doing so was carried out in violation of EU law.
What does this mean for players?
From their lawyers’ point of view, it’s just a matter of waiting: The ECJ submission will only delay a fundamental ruling in favor of the players, but will not prevent it, says lawyer Claus Goldenstein, whose law firm says it represents more than 4,500 clients in similar lawsuits. “Affected gamblers should not let this unsettle them and should reclaim online betting losses as quickly as possible in order to prevent existing legal claims from becoming time-barred.” Gamesright explained: “Even though we have not received a final decision today, we are confident that the clarification at European level will provide the necessary legal certainty for all parties involved.”
What are the providers hoping for?
The opposite outcome, of course. Tipico points out that the ECJ has already clearly ruled in a criminal case that the lack of a German license due to a non-transparent award process cannot be used against providers licensed in the EU. “We are very confident that the ECJ will confirm this in this specific case,” explains Tipico lawyer Ronald Reichert. The German Sports Betting Association also expressed itself “confident that the ECJ will decide in favor of the providers and the European freedom to provide services.”
What is the BGH’s position on the case?
The BGH is more on the side of the players. The presiding judge, Thomas Koch, is also stressing that the Senate is basically inclined to regard sports betting contracts without a license as void, even if the providers have already applied for a license. In making this assessment, the previous case law of the ECJ was also taken into account.
What impact would a ruling in favor of the players have?
A consumer-friendly ruling could trigger an even bigger wave of lawsuits than there already are. Thousands of cases are pending in German courts. This is partly because several companies offered sports betting years ago in a legally unclear situation. On the other hand, law firms and companies have specialized in this type of lawsuit – like Gamesright. A ruling in favor of the players could encourage many of those affected to reclaim their losses, says co-founder Hannes Beuck. “We assume that after a positive ruling we can achieve faster and higher repayments.”
How common are sports betting today?
According to the Gambling Atlas, five percent of the population took part in sports betting in 2021 – a doubling within two years. Gross gaming revenue from sports betting was 1.4 billion euros in 2022. By comparison, it was 4.1 billion euros for lotteries and 4.8 billion euros for slot machines. The growth in sports betting has been strong since legalization in 2020, it continues. According to the Joint Gambling Authority of the States (GGL), 30 sports betting providers now have a license.
Source: Stern
