German market cast into doubt with landmark court ruling
New case law means players do not have to repay credit card debts incurred on unlicensed gambling sites
A Munich court has ruled that credit card gambling debts are not necessarily enforceable, a decision that that could hamper future payment transactions in the country.
The case was brought by Landesbank Berlin against a visa credit card holder who claimed he was not obliged to repay credit card debts because they had been incurred while using an egaming site that was not licensed in Germany.
However, the judge found that the charges were clearly identified as gambling related, with a special code (7995), included an additional charge that was specifically for gambling related services (in this case betting, gaming and lottery).
As such, the bank involved was aware of the nature of the transaction and its illegality.
The judge said: “The court cannot recognise any wrongful action on the behalf of the defendant. Rather, it is the plaintiff who behaves in an abusive manner if it clearly violates a legal prohibition … the purpose … [of which] … is to protect the defendant from the dangers of gambling,”
The court dismissed the Landesbank Berlin case on this basis and reports say that the bank has not launched an appeal against the ruling, meaning that this will now enter German law.
Christoph Engelmann, senior associate at DLA Piper, said: “Even though the decision does not directly deal with the regulatory powers of the gambling authorities, it could reinforce the view held by regulators that third parties (such as banks and payment service providers) could be held accountable when foreign egaming site operators are not within reach. This could add to an already harsher stance against unlicensed egaming sites that was (in part) forced by the decisions of the Federal Administrative Court of October 2017.”
The ruling potentially opens the door to thousands of similar claims by German players and costing German banks thousands of marks in unpaid credit card debts.
Regulus Partners analyst Paul Leyland said banks would be “very wary of this ruling and even more likely now to block ‘visible’ German gaming transactions”.
Leyland added: “The fewer mainstream banking options available to operators and customers, the less developed a mass market can be.”