A lot has happened since our last update: On 1 January 2023, the responsibility for the entire gambling licensing process in Germany related to (online) gambling has been transferred to a newly formed "Joint Gambling Supervisory Authority". Thus, companies will have to deal with one authority now rather than 16 separate regulators from the various German Federal States. However, while this facilitates matters to some extent, a lot of legal questions are still unsolved:
I. Relevant changes to the structure of German gambling authorities
Since 1 January 2023, the responsibility for granting online gambling licenses in Germany was passed from the 16 Federal States to the newly formed joint gambling supervisory authority in Halle (the "GGL"). The requirements for obtaining a license to offer online sports betting, virtual slot machines and online poker are very similar and only vary in specific points. The most important aspects of the common requirements can be found here. While the GGL has been in operation since 1 July 2022 focusing on enforcement measures such as prohibition orders, IP blocking and the blocking of payment service providers, its powers have been significantly widened since. With a few exceptions, the GGL shall ensure uniform application and enforcement of German gambling law, and gambling operators do no longer need to bother dealing with authorities from different Federal States. The GGL can also initiate criminal investigations with the public prosecutor's office.
II. Licensing procedure
The German Interstate Treaty on Gambling ("ISTG 2021") has allowed private operators to apply for licenses to offer sports betting, virtual slot machines (online simulations of terrestrial slot machine) and online poker since the year 2021. However, different requirements apply to virtual simulations of certain casino games (such as Black Jack and Roulette) and live broadcasts of casino games conducted terrestrially with the possibility of participation via the internet. The possibility for obtaining a license for these specific online casino games will be subject to separate laws of the individual Federal States. The Federal States can decide whether they will grant licenses for these online casino games to private operators or only allow state operators. However, unlike the licenses for i.a. virtual slot machines and sports betting which can be granted to an unlimited number of operators, there are limitations if the Federal States decide to grant online casino licenses to private operators.
Furthermore, not all Federal States have yet declared their final decision whether it should be possible for private operators to apply for an online casino games license. The federal states Schleswig-Holstein and North Rhine-Westphalia have already stated that they are planning to issue licenses to private operators and will grant 4 (Schleswig-Holstein) or 5 (North Rhine-Westphalia) licenses.
III. Recovery claims
A growing number of players keeps on trying to claim back their lost stakes from private gambling operators. With operators that have offered games of chance without a proper license, German law players argue that they deserve compensation for lost stakes due to unlicensed gambling activities of these operators. The operators on the other hand argue that players are not eligible for compensation, having willingly participated in the unlicensed gambling offerings.
A final and binding high court decision on this question is yet to be issued. However, in 2022 the Federal Court of Justice in Germany (the "BGH") ruled that payment service providers are not liable for repayment of online gambling stakes (BGH, judgment dated 13.09.2022 - XI ZR 515/21). The potential unlawfulness of the gambling therefore should not be at the expense of the payment service provider.
With respect to player recovery claims against online gambling operators, the decisions of the German courts tend to differentiate between slot games and sport bets.
1. Slot games
Regarding slot games there has been a recent trend in favor of players, with the courts granting compensation for their losses. However, the Higher Regional Court Braunschweig has submitted a decision (Judgment dated 23.02.2023 - 9 U 3/22) regarding a recovery of payments for slot games to the Federal Court of Justice (File number: BGH IV ZR 99/23). A ruling is expected for 2024 at the earliest. This decision could bring legal clarity with regard to lawsuits concerning stakes for slot games.
2. Sports betting
Regarding sports betting there are a few court rulings granting payments to players (e.g. Regional Court Köln, Local Court Essen), while other court rulings have rejected respective player claims (e.g. Regional Court München, Regional Court Regensburg, Local Court Euskirchen).
IV. Maltese Bill 55 and its impact on Germany
The parliament of Malta has approved the passing of "Bill 55". The bill allows and obliges Maltese Courts to refuse the recognition and enforcement of foreign judgements awarding damages to plaintiffs following recovery claims. Thus, a decision of a German court granting a repayment of stakes by players would not be enforceable vis á vis Maltese operators.
Bill 55 invokes the Freedom to Provide Services principle, one of the key principles of the European Union. The Maltese legislator argues that if gambling operators are licensed under Maltese law, they should be able to freely offer their services across the European Union.
In the view of the German gambling authority GGL, Bill 55 is in breach of EU law. However, GGL intends to await developments and a likely legal review at EU level.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
