On April 16, the European Court issued a ruling that is fundamentally shaking the business model of cross-border online gambling in the EU. In case number C-440/23, the court ruled that EU member states have the full right to prohibit certain forms of online gambling, even if the operator holds a legal license from another member state (such as Malta). More impactfully, the court also confirmed: gambling contracts signed during the prohibition period can be deemed invalid, and players have the right to bring civil lawsuits against operators under national law to recover lost bets. The core party in the case is a German player who, from June 2019 to July 2021, participated in virtual slot machines and lottery betting through two companies holding licenses from the Malta Gaming Authority—European Lotto and Betting and Deutsche Lotto-und Sportwetten—at a time when German law had a broad ban on online gambling, with the aforementioned products being prohibited. The player subsequently transferred the claim rights to a third-party company and filed a recovery lawsuit in a Maltese court. German courts had previously made rulings favorable to players in similar cases, but a large number of pending cases were on hold pending clarification from the European Court on core EU legal issues.
A Maltese license is not an EU pass, cross-border model suffers a heavy blow
During the trial process, the Maltese court submitted seven questions to the European Court, among which the core dispute was whether the comprehensive ban at that time in Germany violated the freedom to provide services guaranteed by Article 56 of the Treaty on the Functioning of the EU. Lottoland's defense was straightforward—the company held a legal license in Malta, an EU member state, and according to the principle of freedom of services, its products should be able to circulate freely in the German market. The European Court rejected this argument. The court explicitly pointed out that the online gambling sector has not yet achieved full coordination at the EU level, and member states still retain broad discretion to independently determine protection levels based on their own moral, cultural, and social considerations. The court particularly emphasized the inherent high risks of online gambling compared to physical casinos: continuous accessibility, player anonymity, lack of social supervision, almost unrestricted participation frequency, and special attraction to young and vulnerable groups.
Based on this, the court determined that the ban at that time in Germany, aimed at consumer protection, preventing gambling addiction, maintaining social order, and guiding gambling to regulated channels, constituted a legitimate restriction on the freedom of services. In the words of the court, a member state has the full right to prohibit the entry of legally licensed products from another member state into its market—a Maltese license is not an EU passport. The court further clarified that the legislative reform in Germany in July 2021, which shifted from a comprehensive ban to a licensing system, does not retroactively validate the legality of operations during the ban period, nor does it weaken the players' rights to claim losses from that period.
Confirmation of contract invalidity and civil claim rights
The European Court in its ruling provided clear support for players' rights to claim. The court pointed out that member states can not only implement bans but also have the right to recognize the legal consequences that come with the ban—including deeming gambling contracts signed in violation of the ban as invalid and allowing consumers to file civil compensation lawsuits accordingly. In response to the operators' defense that "players knowingly participating in gambling despite the ban constitutes an abuse of rights," the court explicitly responded: Merely participating in gambling activities itself is not sufficient to constitute an abuse of rights in the sense of EU law.
German professional gambling lawyer Thomas Dünchheim commented that this ruling would expose virtual gambling operators to recovery risks of millions of euros, marking a "critical moment" for the industry. Torsten Krause, a lawyer at LEO Law Firm, stated that the court has clearly denied the possibility for operators without a German license to overturn the German ban by invoking the principle of freedom of services, severely weakening the core defense arguments of many online gambling operators. It is noteworthy that the German Federal Supreme Court had previously at least suspended a retrial case involving banned online poker loss recovery, waiting for clarification from the European Court in case C-440/23. As the ruling is implemented, a large number of pending cases are expected to restart, and most are likely to result in rulings favorable to players.
PASA official website continues to track global gambling regulation and judicial dynamics, noting that this ruling by the European Court forms an increasingly clear legal thread with previous precedents. In January this year, the European Court had already ruled in case C-77/24 that claims for loss recovery against unlicensed online gambling operators apply the law of the player's country of residence and may hold company directors personally accountable. In March, Advocate General Emiliu expressed his opinion in another case involving Tipico, stating that unlicensed sports gambling operators might also need to refund player bets, with the final ruling expected within the year. From Malta to Germany, from Austria to the Netherlands, a judicial network around the compliance boundaries of cross-border gambling is tightening.
The struggle between billions of euros in exposure and Malta's 55th Law
The actual impact of the ruling is being quantified. Legal experts estimate that the potential total amount of player refunds in the German market alone could reach several billion euros. German and Austrian players had previously made similar claims against multiple Maltese-licensed operators. The Lottoland case's litigation process in Malta was initiated against this backdrop, and the European Court's preliminary ruling will have a binding effect on the final decision of the Maltese court.
An interesting variable is Malta's "Gambling Law Amendment" passed in 2023—commonly known as "Law No. 55." This law prohibits Maltese courts from enforcing foreign judgments regarding player refunds against gambling operators, seen as a legal shield for Maltese-licensed operators against cross-border claims. However, the European Court's ruling clearly stated that Maltese courts must consider this ruling when handling related cases, which to some extent weakens the protective effect of Law No. 55. The ruling also acknowledges that member states still have the right to deem gambling contracts that violate the ban as invalid and support player claims, meaning that even if operators receive judicial protection in Malta, their assets and enforcement risks within other member states cannot be completely isolated. For a large number of crypto-gambling operators based in Malta, if the Maltese framework can no longer protect them from civil liabilities in member states where their products are banned, their exposure to risk will be no different from that of traditional operators in the Lottoland case.
From the personal recovery of a German player in 2019 to the systemic ruling now shaking the entire EU online gambling landscape, the greatest legacy of case C-440/23 may be that it redefines "compliance" in judicial language—in the reality where EU gambling regulation is not yet fully coordinated, the decisive factor is not the source of the license, but the sovereign will of the target market.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel: https://t.me/pasa_news
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