CJEU rules that online gambling licences carry no cross-border protection

The Court of Justice of the EU (CJEU) ruled on 16 April this year that online gambling operators licensed in Malta have no defence against prohibitions, contract nullity or consumer restitution claims under German law – a judgment with significant consequences for how operators approach EU market access.

The case, FB v European Lotto and Betting Ltd & Deutsche Lotto-und Sportwetten Ltd, arose from two Malta-licensed online gambling operators offering slot-machine games and betting on lottery draw results to players in Germany, where these services were prohibited. 

A German-resident player who lost stakes between 2019 and 2021 assigned his restitution claims to a third party, who pursued them before a Maltese court. The referring court asked the CJEU whether EU law precluded the prohibition itself, the recognition of its legal consequences despite a subsequent legislative reform, the nullity of the gambling contracts and a consumer restitution claim. 

The court ruled in favour of Member States' regulatory autonomy on all four issues.

Licence no defence

First, the CJEU held that Member States may prohibit specific categories of online gambling regardless of licences held in other Member States.

Online games of chance are services under article 56 of the Treaty on the Functioning of the European Union (TFEU). A Member State may require operators to comply with its own restrictions, provided those are non-discriminatory and proportionate. Consumer protection and the protection of public order are recognised as overriding reasons in the public interest capable of justifying such restrictions. In the absence of EU-level harmonisation in the sector of games of chance, each Member State determines, in accordance with its own scale of values, the level of protection it seeks.

The CJEU emphasised two points of particular practical significance. It underlined that the mere fact that an operator lawfully offers services in one Member State, subject to statutory conditions and controls there, cannot be regarded as a sufficient assurance that consumers in another Member State will be protected. Even where two Member States pursue similar or even identical objectives, the level of protection sought and the means of achieving it likely to differ; the potential difficulties in assessing the professional qualities and integrity of operators cannot necessarily be regarded as having been ruled out.

It also emphasised that the characteristics specific to online gambling justify treating it differently from gambling in physical establishments. Those characteristics include permanence of access, player isolation and anonymity, absence of social control, potentially unlimited frequency, and attractiveness to young and vulnerable persons. A prohibition on online games of chance may therefore be regarded as proportionate even where similar games remain authorised offline or where other categories of online gambling are permitted under distinct regimes.

Accordingly, considerable player demand for online slot machines, the availability of similar games (including lotteries) in physical establishments or online sports betting, or the fact that the operator's home-state legislation pursues the same objectives, are all insufficient to demonstrate that such a prohibition is inconsistent or disproportionate.

Article 56 of the TFEU does not preclude a Member State from prohibiting the organisation of online casino games and secondary lotteries where its objective is to channel gambling into orderly and supervised environments and to counteract the development and spread of unauthorised gambling on parallel markets, even where the operator holds a licence issued by another Member State.

Reform is no refuge

Second, the CJEU held that a subsequent legislative reform does not retroactively undermine the earlier prohibition. The court ruled that the replacement, from 1 July 2021, of the Germany’s general prohibition by a system of prior approval does not, in itself, affect the proportionality and consistency of the earlier regime.

A policy of controlled expansion may itself be consistent with the objectives of combating fraud and addiction and channelling players towards authorised operators. The introduction of a transitional period during which certain offers were tolerated likewise does not preclude drawing the legal consequences of the prohibition that was in force at the material time.

Article 56 of the TFEU does not preclude the recognition of the legal consequences of a prohibition on online casino games merely because that prohibition was subsequently replaced by a system of prior approval.

Void by law

Third, the CJEU held that gambling contracts concluded in breach of a national prohibition may be declared void. Where Article 56 of the TFEU does not preclude the underlying prohibition, the nullity of a contract whose subject matter is illegal under that legislation is the necessary consequence of the contract's illegality, not a separate restriction requiring independent justification. 

The validity of the contract and the consequences of its nullity are governed by the applicable national law (here, German law under the Rome I Regulation).

Article 56 of the TFEU does not preclude a finding that a contract concluded between a consumer residing in one Member State and an operator offering online betting services on lottery draws from another Member State is void, where, under the legislation of the first Member State, the grant of a licence for the organisation of such betting is excluded for private operators.

Restitution claims

Finally, a consumer may bring a restitution claim and this does not constitute an abuse of EU law. The claim for restitution of lost stakes is based entirely on national law, not EU law. While it cannot be ruled out that the player was fully aware of the prohibition and its consequences, any finding of bad faith is a matter for the applicable national law and does not, in itself, establish an abuse of rights within the meaning of EU law.

Article 56 of the TFEU and the principle prohibiting abuse of rights do not preclude a consumer who has participated, from the Member State of his or her habitual residence, in online games of chance by an operator not holding a licence issued by that Member State but by another Member State, from bringing a restitution claim  against that operator for recovery  of stakes wagered, under a void  gambling contract, under the applicable contract law.

Practical implications

For online gambling operators active in EU markets without local authorisation, the judgment carries a number of significant practical implications.

• No cross-border licence shield. Being licensed and supervised in one Member State provides no defence against prohibitions, contract nullity, or restitution claims in another. Compliance must be assessed market-by-market.
• Material civil liability exposure. Consumers can recover lost stakes under the law of their habitual residence. With restitution litigation already well-established in several EU jurisdictions, operators face significant and growing exposure across multiple markets.
• Choice-of-law clauses offer limited protection. A contractual choice of the operator's home-State law will not deprive consumers of the mandatory protections of their own national law under the Rome I Regulation.
• Transitional periods do not cure prior exposure. Where a Member State replaces a prohibition with a licensing regime, operators who deferred local authorisation or relied on a period of regulatory tolerance remain fully exposed to restitution claims, contract nullity, and administrative sanctions for the entire period during which they operated without a valid local licence.

Osborne Clarke comment

This judgment consolidates the EU's fragmented approach to online gambling regulation: no harmonisation and broad Member State discretion. For operators, the message is clear: a single-jurisdiction licensing strategy carries material legal and financial risk. 

The ruling will likely prompt operators active across EU to review their regulatory exposure market-by-market, assess the enforceability of their contractual frameworks under each jurisdiction's mandatory rules, and evaluate their contingent liabilities from potential restitution claims.