Malta courts will not enforce Austrian refund judgements

The Maltese Civil Court has issued a significant ruling determining that it will not enforce judgments made by Austrian courts favoring players seeking refunds for gambling on websites that lacked local licensing.

On February 27, the Maltese court upheld the position of operators licensed in Malta who had conducted business within Austria’s regulated market without holding a local license. The verdict concluded that the prior Austrian judgments contradicted Maltesian public policy.

The online gambling sector in Austria is currently dominated by the state monopoly, Casinos Austria, with its Win2Day platform being the only officially licensed online gambling product available in the country.

The Austrian market, alongside Germany, has been marred by numerous high-profile claims wherein players sought to recover losses from offshore operators, deemed illegal under local laws. While some players have successfully reclaimed losses from these unlicensed operators, others have faced legal challenges, having to return winnings accrued from operations classified as illegal. Notably, many of these operators are licensed in Malta.

Overview of the Malta Judgment

This recent ruling arises from a 2020 case involving a player who lost €38,325 (approximately $39,845/£31,653) through European Lotto and Betting Limited, also known as Lottoland, a Malta-licensed operator. An earlier Austrian court had adjudicated that the player could recover their losses, citing the illegality of the operator within the national framework. However, this case was subsequently appealed to the Maltese court by the Malta Gaming Authority (MGA).

Maltese judiciary rationale was supported by Article 56 of the Treaty on the Functioning of the European Union (TFEU), which permits services, including online gambling, to traverse EU member states. This legal provision serves as a primary source of community law, establishing fundamental legal principles for both the EU and Malta.

Furthermore, the Maltese court posited that Austria’s federal legislation governing games of chance and its online gaming monopoly violate TFEU stipulations. Consequently, the Maltese court opted not to enforce the Austrian judgments, as they were deemed inconsistent with Maltesian public policy.

Davinia Cutajar, legal partner at WH Partners representing the MGA, emphasized the ruling’s significant implications for the gambling sector, asserting that it “reinforces the autonomy of Maltese regulatory bodies and the jurisdictional authority of Maltese courts over gambling-related issues.” She also pointed out that the compliance of Austria’s monopolistic model with EU law has been called into question multiple times.

In communications with industry outlets, Cutajar noted that several rulings from the Court of Justice of the European Union (CJEU) have substantiated the argument that Austria’s monopoly framework infringes upon Article 56 of the TFEU.

Nigel Birrell, group CEO of Lottoland, hailed the recent Maltese decision as a landmark outcome, reinforcing the operator’s stance on these legal matters.

Examining Past Austrian Decisions

The landscape in Austria has evolved significantly, particularly following the 2021 decision by the Austrian Supreme Court, declaring that foreign igaming entities operated illegally within its territorial limits. This ruling deemed player contracts invalid, leading players to seek the recoupment of their losses.

This legal shift also affected Betclic Everest’s subsidiary, Bet-at-home, which was mandated to return €2.8 million in player losses nearly three years post their market exit in August 2024.

Additionally, last year saw another case in which an Austrian player was required to repay winnings to an unnamed unlicensed operator after the courts determined both parties had violated Austrian gambling laws, thereby rendering their contract void. Essentially, this ruling established that both the player and the operator knowingly engaged in illegal operations, with the player also responsible for the operator’s incurred court costs.

Towards a Liberalized Austrian Online Gambling Market

Looking ahead, the nature of player disputes like those observed between Austria and Maltese operators may diminish as the Austrian government appears poised to dismantle its entrenched online casino monopoly. Casinos Austria, which has held a 15-year exclusive license for online gambling, sees its license set to expire on September 30, 2027. Austrian authorities are anticipated to initiate the licensing tendering process within this calendar year.

Simon Priglinger-Simader, vice president of the Austrian Betting and Gaming Association, expressed renewed optimism for potential liberalization within the online gambling sector, indicating a shift from the monopolistic framework.

In December, Maarten Haijer, Secretary General of the European Gambling and Betting Association (EGBA), urged Austria to reconsider its approach to online gambling. “Evidence from across Europe is compelling: multi-licensing significantly benefits the regulated market, safeguards consumers, and generates substantial tax revenues,” Haijer asserted.