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Reimbursement of gambling losses at online casinos

By Benedikt Quarch and Leonhard Knöller

This article is dedicated to the legal disputes in Germany surrounding the reimbursement of gambling losses at online casinos. On the one hand, this topic is of particular importance and topicality because hundreds of thousands of players and gambling addicts have lost enormous amounts of money when playing in online casinos. On the other hand, this topic shows how only the interaction of lawyers, litigation funders and legal tech companies is able to actually bring about relevant civil law consequences when a state ban is violated.

The basic problem

In order to get a feeling for the basic problem with online casinos, we ask you to first imagine the following (real) scenario: Please imagine that there is always the possibility of turning your home into a casino. The casino comes to you via the internet whenever you want it - morning, noon, evening, night, 24 hours a day and 7 days a week.

It usually has a dark and slightly sleazy website with a real casino flair. In contrast to conventional casinos, the state also cannot fully control whether player protection is actually observed. At the same time, you can bet or lose as much money at this online casino as you want. If you are still thinking "so what?" please imagine that your friend, relative or yourself are addicted to gambling. What impact would such an online casino have on you, your family and friends? To be very clear, online casinos can destroy the lives of gambling addicts and their families. The scenario is real and it happens up to hundreds of thousands of times a year.

The ban in the (German) State Treaty on Gambling

Due to this background, it is all too understandable that the German State Treaty on Gaming [1] (GlüStV) banned virtual slot machines, online poker and roulette (at least) until June 30th, 2021. Specifically, this ban can be found in Section 4 Paragraph 1 of the German State Treaty on Gaming, which was in force until June 30th, 2021: “Public games of chance may only be organized or brokered with the permission of the competent authority of the respective country. Organizing and brokering without this permission (unauthorized gambling) as well as participating in payments in connection with illegal gambling are prohibited” (freely translated from German into English). According to § 1 of this German State Treaty on Gaming, among other things, this prohibition should protect potential players from this to ruin him- or her-self (and possibly his/her family too) financially with just a few clicks.

The ban as a blunt sword

Despite this law, the German state has not been able to restrict the range of illegal online casinos for years. On the contrary, the number of illegal online casino providers continued to grow and some gambling companies were able to record billions in profits from the illegal online casino market, among other things. The ban therefore degenerated into a purely theoretical construct for years. We believe that this was not due to bad law or the incompetence of the German state, but because the inhibitions for consumers - who have lost money playing on online casino platforms - to take action against online casino companies were often too high.

The jurisprudence is quite clear

The first legal proceedings with a positive outcome for the consumer only came about with the help of lawyers, litigation funders and legal tech companies. Since around the beginning of 2021, a number of courts have therefore decided on complaints from users of such online casinos. In the meantime, a veritable wave of lawsuits has arisen. In each case, the “subject of the action” was that the users reclaimed their lost stakes from the online portals.

In the meantime, there has also been a clear trend in case law: According to this, users of these online casinos can usually claim back their lost stakes from the respective gambling company if the gambling took place in Germany in the period from July 1st, 2012 to June 30th, 2021 (with the exception of Schleswig Holstein) in virtual slots, online poker and roulette, i.e. exactly at the time when online casinos were prohibited by law; or if the respective casino providers do not have a valid license also after June 30, 2021.

Substantive legal justification of the claim or how users can get their stakes back

In terms of substantive law, the consumer's claim for repayment of the lost stakes against the respective online casinos follows from German unjust enrichment law. In this respect the entitlement to repayment of lost stakes results from the so-called “principle of enrichment law” (“bereicherungsrechtlicher Grundsatz”), which is set out in the German Civil Code (Bürgerliches Gesetzbuch, BGB). After that, to put it simply, the person who takes something from someone else (e.g. the gambling company that receives the stake from the user) without having the right to do so (e.g. the legal prohibition) must return it (= stake) to the other party (=player).

However as already mentioned and despite the substantively clear legal situation, enforcing their rights vis-à-vis the gaming companies is usually problematic for the players or users. The individual player is confronted with companies that are based in other European countries (e.g. Malta or Cyprus) or outside of Europe (e.g. Curacao), some of which generate annual sales of several billion euros and also have access to professional legal defense. In order to create “equality of arms” in this respect, there are now numerous lawyers, litigation funders or legal tech providers who have specialized in the reimbursement of online gambling losses and support online players in asserting their rights in and out of court. Such support is also urgently needed, as enforcing the consumers’ rights is not as easy as it seems.

Two main legal problems

Going into all the details and problems would go beyond the scope here, which is why the following two “sticking points” should only be addressed as examples:

First of all, every court judgment is only useful insofar as it can also be enforced, i.e. the court judged claims too through can be set and the user actually gets his money back from the gambling company. However, decisions by German courts in the case of online gambling losses are usually extremely difficult to enforce. This raises the question of how a judgment by a German court against a gaming company based in Malta, Gibraltar, Cyprus or Curacao should be enforced. Of course, there are also cases where it is not even worthwhile for the user to take legal action, for example because the gaming company is insolvent, i.e. broke. In the "jungle" of thousands upon thousands of foreign online casinos, getting information about the solvency of gambling companies is just one more difficulty.

Another interesting question is which court has ultimate jurisdiction. In this respect, a distinction must first be made between complaints by consumers and lawsuits by litigation funders or legal tech companies. In the first case, the contractual place of jurisdiction under Art. 7 Para. 1 a) and/or Nr. 2 (“place of damage”) Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of the European Union (EuGVVO) or the consumer jurisdiction (“Verbrauchergerichtsstand”) under Art. 18, 17 Para. 1 c) EuGVVO should apply.

In concrete terms, this means that consumers can sue where they live (“Verbrauchergerichtsstand”) or where the contract is fulfilled or where the damage occurred (on their bank account), which in the present cases of reimbursement of losses from online gambling is also the consumer's place of residence. Most recently, the Higher Regional Court of Hamm [2] decided, in view of a decision by the European Court of Justice [3], that in this case also the consumer jurisdiction (“Verbrauchergerichtsstand”) under Art. 18, 17 Para. 1 c) EuGVVO should apply. The Higher Regional Court Hamm explained that the decisive factor for determining consumer status is not the type of assertion of the claims resulting from a contract - here by way of legal standing - but the objective of the contract (here with the respective online casino provider) when it was completed and implemented. Furthermore an assignment of claims alone cannot influence the determination of the competent court.

Conclusion: Better not play online gambling games

In summary, it can be stated that gambling losses from virtual slot machines, online poker and roulette can be claimed back from users in Germany if these losses occurred between July 1st, 2012 and June 30th, 2021; or if the provider does not have a valid license after June 30, 2021 in Germany. However, every Online-Casino player needs to be warned: if he/she is thinking of getting his/her stakes back, then he/she has to be aware that it can fail because the gambling companies are not available at all. Furthermore, special caution is required with regard to the question of the jurisdiction of the court. Over and beyond, once the consumer made it and has a verdict against the gambling company/companies, he/she still has to collect his/her money, which can pose further problems.

At the end, the example of online casinos shows the strength of the legal service society: the ban on online gambling, which the state was unable to enforce for almost ten years despite the law, ultimately only comes about with the help of lawyers, litigation funders and legal tech companies to legal consequences. In technical jargon, this is called “private enforcement”.



[1] The treaty applied to all German federal states with the exception of “Schleswig-Holstein”.

[2] OLG Hamm, 03/21/2023, I-21 U 116/2.

[3] EuGH, 01/25/2018, Rs. C-498/16 – Schrems/Facebook, ECLI:EU:C:2018:37, Nr. 25.


About the Authors:

Dr. Benedikt Quarch, M.A. (l) is co-founder of the RightNow Group, Forbes 30u30, Juve 40u40 as well as entrepreneur and lawyer by heart.

Ass. Jur. Leonhard Knöller, M.A. (r) is Executive Assistant at the RightNow Group.

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