Gamblers do not have to repay credit card transactions for illegal gambling: German court

In a significant development, a German court in Munich has ruled that gamblers who used credit cards to perform gambling activities with an illegal online gambling website need not have to repay the credit card companies for these specific transactions. The court is basically putting the onus checking the legality of the transaction and the license of the gambling company on the financial institutions that offer credit cards.

The District Court of Munich ruled this when dismissing a case filed by Landesbank Berlin against a Visa credit card holder. The card holder had claimed that he was not liable to pay his debts because they had been incurred while playing on an online gaming site that was not legally licensed in Germany.

Landesbank has not filed an appeal against the judgment, meaning the ruling is here to stay.

Germany’s online gambling laws are complicated. Broadly speaking, online gaming is illegal, although the country retains a monopoly on lottery games and a semi-monopoly sports betting. This has been challenged several times by the European Commission, the governing body of the European Union.

The country’s Interstate Gambling Treaty of 2012 dictated that online casino gaming would remain illegal unless individual states pass laws to regulate it. Schleswig-Holstein was the only German state to legislate to license online gaming, in 2012, but it repealed the law the following year after a change in government.

Many online gaming operators based within the EU view Germany as a grey market because they believe its internal gambling laws violate European laws on free cross-border trade between EU member states.

As recently as 2016, the Court of Justice for the European Union ruled that Germany could not impose penalties on online gambling companies operating without a German license because it was not possible for a company licensed in other EU member states to obtain a license.

But the news that German citizens can take out credit with gambling sites that are licensed in EU member states, although not in Germany, and then refuse to pay them back, is likely to give operators pause for thought, whether the German court’s ruling is illegal under EU law or not.

The court in Munich applied Federal Court of Justice (Germany’s highest court) case law when it ruled that the onus is on the banks to refuse payments to unlicensed online gambling companies.

Further, it said, the transactions in the Landesbank Berlin case would have flagged up a special code to the bank that identified them as an online gambling payment. The court found there was no question the bank had failed to spot this code because it added its own special commission for “casino sales.”

“The court cannot recognize 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,” said the ruling.

Source: Casino.org