BGH strengthens the rights of players in foreign online sports betting

BGH strengthens the rights of players in foreign online sports betting

In a recent decision, the Federal Court of Justice (BGH) has strengthened the rights of players who have participated in foreign online sports betting. In the ruling of 22.03.2024 (Ref.: I ZR 88/23), the BGH clarified that players can reclaim their lost stakes if the provider did not have the required license in Germany. This decision could have far-reaching consequences for the sports betting industry and increase the pressure on foreign providers to apply for a license in Germany. At the same time, the ruling creates more clarity for consumers and strengthens their position against providers who operate without a valid license. It remains to be seen how the industry will develop in response to this decision and whether there could be a consolidation of the market.

Background to the case

In this case, the plaintiff had participated in online sports betting with an Austrian provider and now demanded a refund of his stakes. The Dresden Higher Regional Court ruled in favor of the plaintiff in the lower court, whereupon the provider lodged an appeal with the BGH. The case raises fundamental questions about the relationship between national gambling law and the freedom to provide services in the EU. While providers often rely on licenses from other EU countries, Germany has its own regulations to protect players and curb gambling addiction. The BGH now had to decide whether the German regulations are compatible with EU law and what the consequences are for the parties involved.

Violation of the Interstate Gambling Treaty

In its ruling, the BGH found that the Austrian provider had violated the provisions of the State Treaty on Gambling (GlüStV) of 2012 in force at the time. This leads to the nullity of the gaming contract, so that the stakes paid must be repaid to the plaintiff. Specifically, the provider had violated the ban on events under Section 4 para. 4 GlüStV 2012 and the internet ban under Section 4 para. 5 GlüStV 2012 by offering sports betting via the internet without a German license. These provisions are to be regarded as a statutory prohibition within the meaning of Section 134 BGB and therefore lead to the invalidity of the contract. The BGH thus confirmed its previous case law, according to which the organization and brokering of public games of chance on the Internet without official permission is prohibited under the GlüStV.

Consequences of the BGH decision

The BGH’s decision has the potential to change the sports betting industry in the long term. Experts are expecting a wave of lawsuits from players who want to reclaim their losses from the past. In particular, providers that operated in a legal grey area between 2012 and 2021, when the German sports betting market was gradually liberalized, could now be confronted with claims for repayment. For players, the decision means more legal certainty and better opportunities to defend themselves against dubious providers. At the same time, the pressure on politicians and authorities to push ahead with the regulation of the gaming sector and ensure fair competition is likely to increase. The legitimate interests of all parties involved must be taken into account and an appropriate balance must be struck between player protection, market freedom and fiscal objectives.