The Pros and Cons of Court-Approved Gambling Loss Refunds

The German Federal Court of Justice (BGH) is on the verge of a decision that could revolutionise the unlicensed online gambling market.

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“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.”

On 2 May 2024, the court will announce whether German players can legally demand refunds for gambling losses, particularly in cases involving illegal online casinos, card rooms, and bookmakers.

 A Ruling Years in the Making

While this might appear to have cropped up out of nowhere, players have been driving this process for years. The first significant case of this nature was in 2021 when the Hambach & Hambach law firm brought an online poker loss reimbursement case before the Bonn Regional Court for €132,850.55 (plus interest). The case was dismissed as it was found that the player had willingly chosen to gamble online, which was illegal at the time.

The player appealed the ruling, which has subsequently been paused. The recent suspension rather than outright dismissal is due to the Court of Justice of the European Union (ECJ) reviewing whether or not the gambling legislation that was active at the time is contrary to EU Law.

This decision will significantly impact the legal rulings of future gambling loss refund cases. The Taylor Wessing law firm has noted that the ECJ decision will not be limited to online poker but will also impact cases where losses took place on games of chance like online slots, video poker, blackjack and more.

Austrian Gambling Site Under Review

In addition to the above case, the BGH is reviewing a new one. This case centres around unlicensed sports betting bonuses, deposits, and withdrawals offered to a German resident.

In addition to contravening the country’s bet limit regulations, the operator illegally offered real money withdrawals in Germany, all of which caused it to fall foul of Section 4, Paragraph 5, Number 2 and 5 of the State Treaty for Online Gambling.

Should this case meet the court's rigorous requirements, the player will receive a full refund of their losses, equating to €11,984.89 plus interest.

 Black Market Casino Beware

The severe structure of the German gambling legislation has protected unlicensed gambling providers till this point, as it was illegal for players to place bets on sporting events or place wagers at offshore casinos.

However, given that online gambling sites have been licensed since late 2020, the court is now able to address unscrupulous operators illegally targeting players to draw them away from licensed operators.

It will not be smooth sailing at first, given that enforcing a financial judgment against a gambling business without assets in Germany will require international support.

If the collaboration proves fruitful and players can legally claim cash refunds regardless of the site's location, it could significantly slow the expansion of the black market casino industry.

German Players Need to Tread Lightly

On the surface, what appears to be a death blow for illegal casinos and a breath of fresh air for licensed casinos could turn out to be a double-edged sword.

Hambach & Hambach warn of a potential negative shift in player behaviours:

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“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 basically established betting without risk of loss.”

With half of the region's gambling community already visiting unlicensed gambling sites, having a way to get free casino cash with court backing could see this number spike. Should the courts enforce these claims, it could result in a change in the Gambling Act, making it illegal for players to deposit at these venues.

This would allow existing cases to have a legal resolution but also restrict players from flooding the court system with countless cases every time they lose while gambling online.