EU and Malta Brace for Legal Dispute Regarding Gaming Regulations

In a significant development, a dispute between Malta and Germany over online gambling regulations is set to be heard by the European Court of Justice (ECJ) in Luxembourg. The case, identified as C-440/23, is poised to have far-reaching implications for European operators.

At the heart of the dispute is Malta's Bill 55, a law passed in June 2023, which protects Maltese-licensed operators against foreign claims related to gambling losses. This bill, according to the Malta Gaming Authority (MGA), reflects established principles, including the authority of courts to reject foreign judgments when they clash with public policy.

The case involves a German lawyer who is seeking repayment of gambling losses for a player. However, the Maltese court handling the dispute has referred the question to the ECJ for guidance, transforming a private debt case into a test of principle.

The European Commission has launched infringement proceedings against Malta, arguing that Bill 55 is contrary to the EU principle of mutual recognition of judgments. The Commission maintains that country-level restrictions violate the case law of the CJEU and create a barrier to market access and trade.

In response, the MGA argues that it is Germany's restrictive market rules that clash with European law, citing the EU's freedom to provide services. The Maltese operators argue that a claim for reimbursement due to illegal gambling does not constitute an abuse of EU law, a stance supported by Nicholas Emiliou, representing Malta.

The opinion of the Advocate General, while non-binding, could significantly influence the case. The Advocate General's recent advice has been one of restraint and has left key questions open, implying that the case will take years more before resolution.

The verdict of the ECJ will mark the next chapter in an increasingly tense relationship between Malta and Brussels regarding the future of online gambling. A broad ruling could impact European operators, potentially setting a precedent for how EU countries handle online gambling disputes.

Meanwhile, Emiliou added that attempts by providers to defend themselves against such claims on the grounds of abuse are likely to fail. The lawyer has launched proceedings against two Maltese-licensed operators, asserting that the contracts with German customers were void because the firms were not authorized to operate in Germany.

The question of whether the German ban on online gambling violates EU law is purely hypothetical, as long as the ECJ has not yet clarified this issue. However, the Malta Gaming Authority maintains that Bill 55 reflects established principles, including the authority of courts to reject foreign judgments when they clash with public policy.

A narrow ruling might limit the implications to the dispute at hand. But for many, this case represents a crucial test of the EU's commitment to its principles of free trade and the freedom to provide services. As the case unfolds, the eyes of the European online gambling industry will be on the ECJ.