Malta’s Superior Court Throws Out Austrian Loss Claims in Landmark Ruling

The Maltese Supreme Court has backed the Malta Gaming Authority by rejecting Austrian Loss Claims from two gamblers who claim the MGA operators were operating illegally in Austria (Image from fabrikasimf on freepik.com)

The conflict between local gambling regulations and European Union (EU) law remains a contentious legal battle, as evidenced by a couple of recent court cases held in Malta’s Superior Court.

The court recently ruled against judgments made by Austrian courts calling for two Malta-regulated online casino operators to reimburse losses to two Austrian residents.

Austrian laws state that only domestic online casinos licensed under the Glücksspielgesetz (GSpG) that adhere to strict local gambling laws can supply gambling services to Austrians.

Therefore, the Austrian judgment claimed the two MGA operators were operating illegally within the country and should be forced to refund the losses to the two individuals.

However, the Maltese Superior Court responded that it is illegal for Austria to prevent the free movement of services under EU law and demand the operators return the losses.

The landmark ruling has led to calls for the European Court of Justice to step in and create a more cohesive cross-border gambling regulatory framework across the European Union, as ultimately, both sides have a point.

The Austria vs Malta Cases In Question

The first of the two cases involved Philippe Wahl, who lost €38,325 in under two weeks in 2020 at the European Lotto and Betting Limited-operated Lottoland. The other is surrounding Gerhard Posch, who lost around €40,000 at TSG Interactive Gaming Europe back in 2017. An Austrian court advised both that they could recover their losses as the operators acted against Austrian law.

However, thanks to Bill 55, 2023 amendments to Maltese laws that were designed to protect the Malta Gaming Authority against “unfounded legal claims” and what’s known as “legal forum shopping”, the MGA brought the case to a local court. Those amendments to Maltese law were designed to prevent any action against MGA-regulated operators from legal action filed by courts outside of Malta.

The Maltese Superior Court concluded that the Austrian rulings were illegal under the Treaty on the Functioning of the European Union (TFEU), and the operators were within their right to offer services within Austria. Under the TFEU, European Union companies can perform their services in any other EU-member state.

What is legal forum shopping? It is a tactic whereby claimants strategically choose a court or jurisdiction to file their complaint that will provide the most preferable outcome.  In this case, the two Austrians knowingly gambled at MGA-regulated online casinos believing they stood a good chance of recouping their money should they lose. Would they have complained had they won?

Malta’s Tough New Stance Following Previous Rulings

The gaming industry is big business for Malta, contributing around 12% of the country’s economy. Understandably, the country is trying to protect current operators it licenses and show potential operators that it will have their backs against what it deems unlawful claims.

The MGA has faced previous conflicts and claims from EU states with their own local laws, such as Germany, the Netherlands, and Sweden. In those cases, the operator has often been forced to repay losses.

One example is Bet-at-Home, a since-wound-up Malta-based operator ordered to pay back €2.8 million to a self-confessed gambling addict from Austria.

What are the Implications of this Ruling?

The Maltese Superior Court’s ruling is the culmination of an ongoing battle between national casino regulations and laws and the EU model that allows free movement of services.

Those against the ruling will claim the country’s protectionist laws will harm the legal cooperation and mutual respect of courts across the European Union. On the flip side, the Maltese courts and those in favour of the ruling will maintain that without a unified EU-gambling policy, the country is well within its rights to protect its economic interests through the principles of EU service freedom.

Ultimately, we can expect further regulatory conflicts like this one until the European Court of Justice (ECJ) comes up with a universally accepted framework for cross-border gambling.