Unlicensed Betting Shop Due to Union Reasons is Not Liable for Lost Sports Bets

Press release from the Higher Regional Court of Frankfurt am Main dated March 28, 2023

Frankfurt, Germany (March 29, 2023) — If a betting shop has not been granted a license with regard to concerns under Union law regarding the regulations on the granting of licenses for the organization of sports betting, although it has tried to do so, the betting shop acting without a license cannot be sanctioned. If a private individual concludes sports bets with such a betting agency, these are not void due to a violation of the law. The Frankfurt am Main Higher Regional Court (OLG) confirmed in a decision published today that the betting shop is not obliged to refund lost bets in this case.

The plaintiff sues the defendant betting agency for reimbursement of lost sports bets. From 2018 to 2020, he had placed sports bets in the defendant’s betting shops and on their German-language websites. He placed the online bets from home using his smartphone; his bets on the Internet amounting to a good €40,000 are offset by payouts of almost €5,000. At the time at issue, the defendant did not have a license to organize sports betting. She applied for a license. The Administrative Court of Wiesbaden had also obliged the competent authority to grant it. However, the process was stopped due to EU law concerns. In the meantime, the defendant has a concession.

The District Court dismissed the lawsuit. The Higher Regional Court also considered the appeal lodged against this to be unsuccessful. It confirmed that the betting contract concluded between the parties was not null and void due to a violation of the law by the betting agency operating without a licence. A Member State may not impose criminal sanctions for conduct that fails to comply with administrative requirements that are contrary to EU law. So be it here. The regulations in force at the time under the 2012 State Treaty on Gambling on the granting of licenses for the organization of sports betting were not transparent and therefore violated Union law.

In view of the fact that the provisions for obtaining a license that were in force at the time were contrary to the European Union, the defendant should not be subject to criminal or administrative sanctions. The lack of a license does not affect the effectiveness of the betting contracts with the plaintiff. This is required by the principle of the unity of the legal system. If a prohibition under public law (here the ban on the organization of games of chance without a license) is not effective in exceptional cases due to a violation of overriding Union law, the contract under private law (here between the betting shop and the plaintiff) also remains effective.

However, only those providers who – like the defendant betting shop here – would have done everything possible to obtain a sports betting license may invoke the infringement of the Union. In this respect, contrary to the plaintiff’s opinion, the district court did not “indirectly award every gambling offer without limits” to the defendant. The decision merely transfers the consequences of the illegality of the concession procedure at the time, which was determined by the court, to private law.

The plaintiff withdrew his appeal on this notice. The decision of the district court dismissing the action is therefore final.

Frankfurt am Main Higher Regional Court, the ruling of January 19, 2023, 8 U 102/22

Explanations:

The Higher Regional Court of Frankfurt am Main, 23rd civil senate, had dealt with the question of the refund of lost bets when participating in an online casino a year ago as part of a reference decision dated April 8, 2022, Az 23 U 55/21. There, the player’s claims against the Malta-based casino company were awarded.

The Senate distances itself from this decision and points out that according to the State Treaty on Gambling that was in force at the time in 2012, online sports betting would have been permitted in principle, but not online casino offers.

SOURCE: Frankfurt am Main Higher Regional Court.