Player Refund Saga Set for Major Test in Europe's Top Court

The first of three pivotal cases, which could wreck or restart thousands of German player refund claims, will be heard next month at Europe’s highest court.

The Court of Justice of the European Union (CJEU) is set to hear case C-440/23 on April 9, after a hearing involving Lottoland and a player attempting to reclaim grey-market losses in Germany was referred to the EU’s highest court in 2023.

Although it concerns the German legal system, the case was referred by a judge in Malta, where the ruling had been transferred following an initial court victory for the gambler in Germany.

The key issue being considered is whether Germany’s former ban on online casino gambling was compliant with EU legislation.

That regulatory regime has since been replaced with an interstate treaty that regulates and licenses most forms of online casino games, but a finding that Germany was in breach of European law in the past would significantly dent the many player claims currently on hold in the country, lawyers say.

Thousands of cases are pending in courts across Germany, waiting for the outcome of C-440/23 and potentially two further referrals to the CJEU.

A finding in favour of the industry “would have an essential impact on the outcome of the player claims”, said Christian Reidel, a salary partner with Hambach & Hambach law firm in Munich

“As a result, the gambling contracts could not be considered void and the player claims would have to be dismissed. New cases would probably be stopped immediately. Litigation financiers who have invested large sums in these proceedings could end up empty-handed,” he told Vixio GamblingCompliance.

Unpredictable Outcome

However, Reidel and other legal experts who spoke to Vixio were at pains to point out that the outcome of the case is very difficult to call.

“A prediction of the decision, even shortly before the date, is only speculation. It remains to be seen which line of argument the CJEU will follow. Often there have been surprises that no one expected,” noted Alicia Pointner, an attorney at the Hamburg office of law firm Melchers.

Even a definitive ruling one way or the other does not necessarily present a clear path forward, lawyers cautioned.

“The CJEU’s rulings often leave a lot of room for interpretation and each side will try to interpret the CJEU’s statements in its own way,” said Reidel.

"If there is a negative decision [for the industry], it will not automatically mean players have a full victory here,” added Jan Feuerhake, a partner at Taylor Wessing in Hamburg.

Not least because two further cases are pending before the CJEU relating to player refund claims in Germany.

One case referred from the Federal Court of Justice and another two from the Regional Court of Erfurt will test different areas of law.

Neither of these has been scheduled for a hearing yet and is not expected to be placed on the docket before a decision is reached in case C-440/23, which is not expected until the autumn at the earliest.

Although the fate of the player refund saga in Germany could turn dramatically on the outcome of this case, there is already a sense from lawyers defending gambling operators that after a torrid few years, momentum may be turning in their favour.

Malta’s controversial Bill 55 is the primary reason for renewed optimism, and although the European Commission may yet declare it illegal, for now, it is providing an effective shield for Malta-headquartered companies to block player refund claims from other EU countries.

In February, two landmark decisions in Maltese courts rejected payouts mandated by rulings in Austria.

“In the beginning, there was a big incentive [for operators] to settle, but the situation has changed a lot,” said Feuerhake.

The industry’s chances are also much better at the European court level, where rulings have been made against national regulations on the grounds of free trade several times in the past, compared with courts in Germany, which have tended to rule against operators.

“If the CJEU considers the previous regulation as compatible with EU law, one argument against the player claims would no longer apply. However, from our perspective, this should not have a significant impact on the player claims,” said Reidel of Hambach & Hambach.

“Firstly, our law firm continues to win a considerable number of cases irrespective of EU law arguments. Secondly, the judgments are currently rather not enforceable in Malta, where most operators are based, due to the enactment of Bill 55 and the judgments by Maltese courts that have recently been rendered.”

Uncertainty Awaits

Still, the uncertainty surrounding how the CJEU will rule means that a variety of outcomes are possible.

That includes an admittedly unlikely scenario in which judges force the Bill 55 protections themselves to be dismantled.

Away from the optimism of attorneys representing the gambling industry, on the other side of the fence, opinions differ on just how damaging to player claims a pro-operator ruling in case C-440/23 would be.

“I’m not too worried about that case, as the CJEU and the [European] Commission have been made aware about the circumstances of how the case landed at the CJEU,” said Stefan Bohar of Austrian litigation financing company AdvoFin, which is behind many of the claims currently working their way through European courts.

Instead, said Bohar, the pending case referred to the CJEU by Germany’s Federal Court of Justice will be much more significant.

“That’s the one we are waiting for.”

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