The long-standing legal battle of Austrian courts to enforce national laws and rules on foreign-licensed operators has reached a significant turning point.

This morning, the Court of Justice of the European Union (CJEU) provided a preliminary determination  on the dispute between Austria Supreme Court and Malta referred for arbitration to the European Commission (EC).

The legal challenge was initiated in 2022 by an Austrian player who sued the Maltese business Titanium Brace Ltd – the placeholder name for a defunct licence of DACH market operator DrückGlück (drueckglueck.com).

The case spans over twenty years of regulatory and legislative changes in European gambling and member state law. However, the original challenge remains, as the plaintiff seeks to hold foreign-licensed operators accountable for offering unregulated gambling across borders.

Austrian courts uphold that the plaintiff has a right to reclaim losses, as the player had sued the former Maltese licence that had no authorisation to provide online gambling services in Austria.

However, citing Maltese law, Titanium Brace denied any payout, stating that its authority and compliance were accountable to the jurisdiction of Malta.

The case has been closely monitored by legal observers, who deem it a test for the CJEU to interpret EU single-market freedoms and member state autonomy over gambling regimes.

Following an extended review, the CJEU views that under the EU’s Rome II Regulation, local laws are applicable as a “non-contractual obligation”.

As such, the interpretation deems that liabilities can be claimed in the member state where the damage occurs, regardless of the licensing parameters of a business.

In online gambling cases, “the damage arises where the player resides, as that is where the financial loss and consumer protection interests manifest.”

Accordingly, the CJEU held that Austrian law would apply to the case, allowing the player to pursue claims under “domestic tort law”. However, the Court noted that if a tort is closely aligned to another member state, judges may apply that country’s law instead.

“The law applicable to a non-contractual obligation arising out of a tort or delict shall be the law of the country in which the damage occurs.

“In games of chance organised in another Member State without the necessary national licence, the law applicable to that damage is, in principle, that of the Member State in which that person has their habitual residence.”

With regard to the long-standing dispute, the CJEU deems that Austrian laws are applicable, due to the condition that Austria has specific consumer protection rules , a determining factor that could be referenced against Titanium Brace.

The CJEU underscores that its ruling is a preliminary matter, as the arbitration aims to interpret EU law – the CJEU does not decide legal outcomes. To proceed with settlements, Austrian courts must apply the CJEU’s interpretation when ruling on the actual case.

Fragmented Europe

Though preliminary, the CJEU determination will have significant ramifications for wider challenges against Malta-licensed operators and its courts.

Similar disputes over player loss claims have been submitted by German courts, most notably a 2023 case (C-440/23) involving a customer in Hesse seeking to recover losses from Lottoland as an unlicensed operator. The challenge was referred to the European Court of Justice by the Regional Court of Gießen.

The German case has since received an Advocate General opinion favourable to Malta, stating that “claims for restitution of stakes under national law do not fall foul of the EU doctrine of abuse of rights.”

The Advocate General reasoned that “restitution claims are governed by national contract and civil law, not by EU market freedoms such as the freedom to provide services, and thus do not inherently constitute abuse of EU law.”

Malta stands by Bill 55

The conflicts have spanned significant changes in national legislation on gambling across multiple EU member states. In 2023, Malta’s government proceeded to codify Bill 55, endorsed by the Ministry of Finance and the Malta Gaming Authority (MGA), as Article 56A of the Gaming Act.

The amendment allowed Maltese courts to refuse recognition or enforcement of foreign judgments against Malta-licensed businesses, provided that the disputed gambling activities were lawful under Maltese regulation.

Upon its introduction, the Maltese government was requested to explain Bill 55 to the EC, as the member states of the Netherlands, Germany, and Austria raised objections.

Malta was accused of effectively shielded online gambling operators from legal responsibility and undermined enforcement of national authorities.

The government justified the measure as necessary to protect the integrity of its licensing regime and uphold EU principles of service freedom, arguing that Malta’s remote gaming framework should not be undermined by conflicting national laws elsewhere in Europe.

Malta maintains the provisions of Bill 55 within its Gaming Act. The government cites that, to date, no Maltese court has applied or enforced its protections in cross-border disputes concerning online gambling conflicts.