Germany to decide on reimbursing illegal gambling losses

Germany is on the verge of a controversial court ruling that could change the face of gambling. The Federal Court of Justice of Germany is set to hear a case on whether a casino player is entitled to reimbursement for losses at unlicensed casinos.

The case follows a previous one brought forward by the plaintiff that was dismissed by the Lower Court of Dresden in 2023. The plaintiff is demanding the repayment of losses of 11984.89 and interest.

The basis of the claim is that the operator did not have proper authorisation from the German government therefore agreeing to them and the player void.

The defendant in the case is an Austria-based sports betting operator that was offering betting services in 2018. During this time, the betting provider did not have permission to offer betting services to German players.

Claimed Breaches by Defendant 

The plaintiff’s case is based on two breaches of Germany’s State Treaty for Online Gambling 2012. The two breaches are from Section 4 Paragraph 5 No.2 and Section 4 Paragraph 5 No.5.

Paragraph 5 No.2 covers maximum monthly stakes per player while Paragraph 5 No.5 separates sports betting from other gambling.

The plaintiff claims the defendant breached the Treaty by offering a cash-out function which is non-permissible under the Treaty.

Potential Consequences of the Ruling

Ruling in the plaintiff’s favour may set a risky precedent for Germany.

Hambach & Hambach partner Claus Hambach and senior associate Phillip Beumer said, “The Federal Court of Justice, Germany’s highest Civil Court, has recently published an extensive note, outlining its preliminary view that players could in principle be entitled to be refunded their losses from participating in sportsbook offers.”

“Until the end of 2020, not a single licence had been issued. Due to this note by the Federal Court of Justice, reimbursement is now more probable under specific circumstances,” they added.

The rulings would also face challenges in execution.

“The majority of operators are not based in Germany and they do not have assets in Germany that could factually be enforced,” Hambach & Hambach explains.

It would also push more players toward black market operators which would be detrimental to the government of Germany.

“It is not in Germany`s interest!” says Hambach & Hambach. “The main reasons are three-fold. 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 established betting without a risk of loss”.

According to Yield Sec, the illegal gambling market has grown by 11% and already has a 47% share of the gambling market. Three-quarters of gambling revenue is lost to the black market meaning the government misses out on a lot of tax revenue.