Landmark German Court Decision Is Potential Game Changer for Gambling Debts

Justitia statue in Frankfurt, Germany

Since the introduction of online gambling to the world about two decades ago, one of the main issues has been dealing with payments. This applies to operators paying out winnings and players using credit with online operators and failing to pay what is due. A recent German court ruling could lead to significant changes in dealing with gambling debts.

Details of the case

A court in Germany has ruled that the debts of a gambler are to be written because the operator did not have a license to operate in Germany. The decision could have a knock-on effect on similar cases around the globe.

Landesbank Berlin took the legal action because a customer refused to clear credit card debt that had piled up on an online casino platform that was not named.

A strong defense was put up by the defendant at the trial in the Munich District Court.

The defendant claimed that the bank had no legal right to collect the debt because gambling at online casinos is not legal in the country.

The defendant won the case because the court agreed that the bank could identify the transaction as being related to online gambling and therefore there was a legal obligation to block it from going through in the first place.

The claim was subsequently dismissed, meaning the bank had to swallow the debt in addition to the legal costs of the case. The decision sets a precedent for similar cases around the world.

It may be a slippery slope for online operators who are operating in countries where their services are supposed to be illegal. The easy solution for them would be to ban credit cards from being used to play on their sites.

It is likely that banks in Germany will step up their identification processes and quarantine any payments that involve gambling-related activities. This will minimize exposure to this type of risk, but the same might not be true for countries outside of Germany.

The fewer mainstream banking options available for players using online gambling sites, the less a chance these operators have of being successful, so they may give up catering to these countries. This would, of course, be a win for the authorities who don’t want any online gambling.

Regulus Partners analysts believe that this issue could be discussed in a major way elsewhere, saying: “Critically, this risk is global and contagious, not localized. Online gambling-related payment issues are likely to be a key problem in the US, for example.”

Online gambling in Germany

Germany didn’t regulate online gambling until 2008. There was no mention of online gambling until the 2008 Interstate Treaty on Gambling was passed.

This led to the current ban on online gambling. Horse racing and sports betting are the only types of online gambling allowed, and licenses are available only for entities that are owned by the state. The country has 16 states, some of which have tried to offer various online gambling options.

At one stage in 2012, Schleswig-Holstein exited the treaty and gave licenses to more than 30 operators. However, this lasted for only a year or so before a new governor came in and reversed the stance on this issue. Those licenses lasted for six years, which allowed the operators to continue operating without risking regulatory actions.

Currently, there is a wide-ranging debate among the 16 states about possible reform of gambling laws.

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