Questions & Answers - Hope for sports betting losers
Since around mid-2012, it was only allowed for state providers, except for a few old DDR licenses, to organize sports betting in Germany, according to lawyer and expert on gambling law, Lennart Bruggemann. To dry up the black market, the German states introduced a new gambling treaty in 2012 that also included private providers.
"The problem was that it took over eight years to issue a single sports betting license to interested private providers," Bruggemann said. The reason was concerns from administrative courts about the bureaucratic procedure. Providers remained in a legal limbo for years. The first licenses were only granted in 2020. The currently valid gambling treaty, which officially legalized sports betting under certain conditions, came into effect in 2021.
What is the matter in this specific case?
On Thursday, the Federal Court of Justice (BGH) is dealing with a man's lawsuit against the betting provider Tipico. The man had participated in sports betting with Tipico from 2013 to 2018 and lost over 3,700 Euro, which he now wants back. He argues that the sports bets were invalid and the betting contracts were ineffective because the provider did not have the necessary authorization from the German regulatory authority at the time. Tipico had applied for such a license but only received it in 2020. Negotiations for a settlement failed, so now the BGH has to decide. It is unclear whether a judgment will be handed down on Thursday.
What are the chances of success for the plaintiff?
So far, the plaintiff has had no success with his lawsuit. The Landgericht Ulm argued that Tipico had violated provisions of the 2012 gambling treaty, but the betting contracts were still effective. However, a hint given by the court in early April suggests that the Senate may have considered that another provider had violated regulations of the gambling treaty, and the contracts between the provider and the player may therefore have been null and void. The court concluded that the plaintiff should have a claim for repayment.
Even though this ruling was not a judgment but only a preliminary assessment to help the parties prepare for the oral hearing, experts believe it may represent the planned judgment in the case. However, this judgment never came about, as the provider withdrew its appeal. Gambling advocates saw this as an admission of guilt and criticized the provider for trying to prevent a fundamental ruling in favor of players.
What impact could the BGH ruling have?
Thousands of similar cases could be affected by the BGH ruling, as many players have filed lawsuits against betting providers for losses incurred before the legalization of sports betting in 2021. The outcome of the case could set a precedent for the validity of betting contracts entered into before the new gambling treaty came into effect. The BGH is expected to issue its ruling on Thursday, but its exact content remains uncertain.
A consumer-friendly judgment of the Federal Court of Justice (BGH) could potentially unleash an even greater wave of lawsuits than there already are. Thousands of similar proceedings are already running in German courts. This is also due to the fact that law firms and some companies have specialized in this type of lawsuits. The companies act as intermediaries, connecting players with lawyers and assuming the costs of legal proceedings in exchange for a success fee. The company Gamesright, for example, currently finances approximately 1500 similar lawsuits against sports betting providers, according to its own statements. A judgment in favor of the players could have a significant impact, says Co-Founder Hannes Beuck. "We assume that the majority of affected players, who are still waiting and observing, will demand their money back. So far, only a small fraction of the affected players have done so."
How common are sports betting today?
According to the current gambling atlas, five percent of the population participated in sports betting in 2021 - a doubling within two years. The gross player revenues from sports betting were estimated to be 1.4 billion Euros in 2022. For comparison: At lotteries, they were 4.1 billion Euros, and at gaming machines, 4.8 billion Euros. The growth in sports betting has been strong since their legalization in the fall of 2020. According to the Joint Gambling Authority of the States (GGL), 30 providers of sports betting currently hold licenses.
Would a BGH judgment be the last word on the matter?
Perhaps not, as the European Court of Justice (ECJ) could still address the issue. For instance, the Landgericht Erfurt announced in April that it would raise several questions about sports betting with the judges in Luxembourg. "After the BGH, it's the ECJ," said the leading attorney for Tipico, Ronald Reichert. The legal questions would definitely be clarified by the ECJ. The BGH has not considered an ECJ reference necessary so far. The relevant questions have been answered, it was stated in April.
- The man's lawsuit against Tipico, which revolves around sports betting activities from 2013 to 2018, hinges on the argument that the bets were invalid due to Tipico not having a valid license from the German regulatory authority at the time.
- The Federal Court of Justice (BGH) in Karlsruhe is set to decide on the case on Thursday, with the potential impact affecting thousands of similar cases in Germany.
- The German states had previously Introduced strict processes for issuing sports betting licenses, leading to a legal limbo for providers, and it took until 2020 for the first licenses to be granted.
- A consumer-friendly judgment from the Federal Court of Justice (BGH) could trigger a wave of lawsuits from consumers seeking reimbursement for losses incurred before the legalization of sports betting in 2021.
- Although sports betting is now legal in Germany and has grown significantly since its legalization, with over 30 providers holding licenses, concerns about the validity of bets before the 2021 treaty come into play in some cases.
