Austria: Illegal online casinos may reclaim winnings paid out
The gambling was illegal, the winnings genuine. But now the player has to give it back. Because the gambling was illegal.
(Image: Netfalls Remy Musser/ Shutterstock.com)
An Austrian player must reimburse a Maltese online casino for winnings already received because the casino does not have a license in Austria. This was the final decision of the Austrian Supreme Court (OGH) (Ref. 8 Ob 21/24g). Without a license, gambling contracts are absolutely null and void, which is why they must be reversed in both directions.
Previously, it was only made clear in Austria that players could reclaim losses suffered by unauthorized gambling providers. If players could reclaim their illegal losses but keep their illegal winnings, participation in illegal games would be risk-free. According to the Supreme Court, this would make participation in illegal gambling all the more attractive and would pose a risk of addiction. It refers to the reversal provision in Section 877 ABGB: "Anyone who demands the rescission of a contract for lack of consent must, on the other hand, also return everything he has received from such a contract for his benefit."
"The possibility for the organizers to refuse to pay out the promised winnings or to reclaim what has already been paid deprives the players of the prospect of being able to keep the hoped-for winnings," writes the Senate of Judges, "As soon as this becomes generally known among the players, the undesirable business model as a whole is thus deprived of its basis." Whether the casino knows that the games are considered illegal in Austria is irrelevant: "In view of the regulatory purpose of the Austrian Gaming Act, their knowledge or negligent ignorance of the illegality of their offer is irrelevant."
This is because the purpose of the Austrian Gaming Act is not only to protect players, but also to generate as much revenue as possible for the state and "to prevent the criminality associated with illegal gambling. (...) an essential regulatory purpose of the Gaming Act (is) to be seen in the fight against money laundering and terrorist financing."
The enclosed monopoly
Austria has a monopoly on gambling; the Republic has only granted a single license for online gambling (to Österreichische Lotterien GmbH, a subsidiary of Casinos Austria AG). Nevertheless, several foreign providers advertise their online games of chance in Austrian media, pay taxes on their Austrian gambling revenues to the Republic of Austria and refer to licenses from their country of domicile, often Malta.
Nevertheless, according to the established case law of the Austrian Supreme Court, these online games of chance are illegal in Austria and the underlying contracts are absolutely void pursuant to Section 879 of the Austrian Civil Code (ABGB) (this does not apply to sports betting). Players can therefore reclaim their losses (winnings less stakes). Thousands of Austrians have filed such claims, an average of five per day. The limitation period in Austria is 30 years, not just three years as in Germany, meaning that almost the entire era of online gambling can be brought before the courts.
In the case now decided by the Supreme Court, the player initially sued the Maltese provider for repayment of alleged losses. The defendant gambling provider responded with a counterclaim: the player had actually deposited EUR 21,928 between May 22, 2020 and July 27, 2020 and received EUR 29,090.71, i.e. made a profit of EUR 7,152.71. As the player claimed that the underlying gambling contract was void, she had to return her winnings. The Austrian withdrew her complaint, but the ball was already rolling.
Player must return winnings
In the first instance, she was able to defend the claim, but the second instance ruled in favor of the casino. The woman appealed to the Supreme Court, which confirmed that the player must return her winnings. Plus interest and legal costs. The casino's action is therefore not an abuse of law. As the Supreme Court is a supreme court, this means: rien ne va plus.
It will be of little consolation to the Austrian player who lost before the Supreme Court that she saved herself a small part of the sum due to an accounting error by the casino lawyer. The lawyer submitted the invoice for his services to the court with 20 percent Austrian VAT. However, as he was working for a Maltese company, he should have charged the (lower) Maltese VAT, explained it and backed up the tax rate with documents. Because he did not do this, the Supreme Court did not award the casino any compensation for the VAT on the legal fees.
