Following the suspension of a case by the German Federal Court of Justice (BGH) in January 2024 (Case No. I ZR 53/23) in light of a pending case before the European Court of Justice (ECJ) (Case No. C-440/23), the BGH has now referred another case regarding online sports betting losses to the ECJ (decision of 25 July 2024 - Case No. I ZR 90/23). The BGH seeks clarification from the ECJ on whether the EU law-guaranteed freedom to provide services of a sports betting operators from another EU member state precludes the reimbursement of losses from unlicensed online sports betting.
Background
The defendant, based in Malta, offered sports betting through a German-language website without possessing the required German license under the 2012 State Treaty on Gambling ("ISTG 2012"). Although the defendant had applied for a license under the ISTG 2012, it was not granted until 9 October 2020 as part of a new licensing procedure due to the fact that the licensing procedure was contrary to EU law. The claimant, who participated in sports betting with the defendant from 2013 until 9 October 2020, is now seeking reimbursement of his losses amounting to EUR 3,719.26.
Legal Proceedings
Both the District Court and the Regional Court dismissed the claimant's claim for reimbursement of the losses. The claimant then filed an appeal to the BGH. The BGH has now suspended the proceedings to obtain a preliminary ruling from the ECJ.
Key Legal Issues
In its decision of 25 July 2024, the BGH stated that offering sports betting without a license in principle violates section 134 of the German Cicil Code (“BGB”), leading to the nullity of the contracts and a reimbursement claim by the claimant. The BGH tends to affirm the nullity of contracts in such cases to protect the public from the dangers of public gambling. The BGH sees civil nullity not as a punishment but as a protective measure. With its referral the BGH seeks to know from the ECJ whether this nullity also applies when the operator had applied for a license, but the licensing procedure was carried out in violation of EU law. The referral to the ECJ is based on a previous ruling (Case No. C-336/14, "Ince"), in which it was decided that no criminal sanctions may be imposed if a Member State refuses to fulfil an administrative requirement in violation of EU law. The ECJ must now decide whether this principle also applies to the civil nullity of contracts.
Additional Notes
The BGH has also suspended two parallel cases concerning the reimbursement of losses from sports betting. In one of these cases, there was also a violation of substantive gambling law (including the EUR 1000 limit).
Conclusion
This referral decision has far-reaching implications for the legal situation regarding the recovery of losses from participation in online sports betting in Germany and the interpretation of the freedom to provide services within the EU. If the ECJ concludes that, in line with the Ince ruling (Case No. C-336/14), no civil nullity of contracts results, it could finally clarify that players have no claim for reimbursement of losses from online sports betting.
For further information or inquiries, please do not hesitate to contact us.
Source: Press release from the BGH dated 25 July 2024.
