Austria: Illegal online casinos may reclaim winnings paid out
Page 3: The German legal situation regarding illegal gambling
Only those who are determined to enter an illegal online casino can still hope to successfully sue for reimbursement of their losses in the German courts. (Whether they then manage to collect the judgment is another matter). But watch out! This does not necessarily apply to all German courts.
The civil law provisions relating to the nullity of contracts and, where applicable, their rescission also differ between Austria and Germany, as does the case law. In Germany, this is also influenced by standards and decisions that do not exist in Austria (for example, the German Act to Combat Illegal Employment and the diesel scandal cases). German law punishes participation in illegal gambling under criminal law (Section 285 of the German Criminal Code) if it is intentional; in Austria, on the other hand, only commercial participation is relevant under criminal law (Section 168 (2) of the Austrian Criminal Code), and even then an administrative criminal law provision in the Gambling Act expressly takes precedence over criminal law.
In both civil law systems, void contracts open up the possibility of rescission. However, unlike in Austria, there is a fundamental exception in Germany: if the party making the payment knew (or should have known) that it had no legal basis, it cannot reclaim its payment. Nor can he reclaim his payment if it was illegal or immoral(Section 817 BGB sentence 2). This, one might think, would make the claims of German players impossible, as Section 285 of the German Criminal Code criminalizes participation in illegal gambling. And illegal payments are not allowed to be reclaimed under enrichment law.
Giessen Regional Court triggers series of lawsuits
Nevertheless, the Regional Court (LG) of Giessen awarded a claim against an online gambling provider to a plaintiff at the beginning of 2021 (Ref. 4 O 84/20). Although the court found that the contract between the player and the online casino was void, the judge expressly did not apply Section 817 sentence 2 of the German Civil Code. The purpose of the State Treaty on Gambling 2011 was to protect players; refusing to reclaim gambled deposits due to criminal activity on the part of the player undermined this protection. Therefore, the provision in the BGB should be removed.
The Munich Regional Court I, which two months later still used the traditional case law (case no. 8 O 16058/20), took a different view: It applied section 817 BGB sentence 2 and denied the player compensation. Because he had gambled illegally, he was not entitled to claim anything back. And should this standard not be applicable, the reclaiming of the loss would still be ruled out, namely as a breach of good faith (Section 242 BGB), especially as the player had acted on his own initiative.
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However, the Giessen decision set a precedent, and several German courts subsequently ordered online gambling providers to reimburse gambling losses. This line of jurisprudence followed the established case law of the Federal Court of Justice (BGH) in illegal employment cases prior to 2014. Under German law, such contracts for work and services that are intended to evade VAT are void in their entirety (whereas in Austria, only the part relating to tax evasion is void). Nevertheless, the BGH allowed enrichment law claims by undeclared work contract partners by declaring section 817 BGB sentence 2 inapplicable in order to avoid injustice.
However, the BGH changed its line of case law in 2014: Since then (case no. VII ZR 241/13), the BGH has recognized the provision in the BGB, meaning that neither the undeclared worker nor their client can assert claims. According to the BGH, this is the only way to achieve the purpose of the Act to Combat Illegal Employment. Applied to illegal online gambling, this would mean that the casino could, in principle, refuse to make repayments with reference to the illegal gambling. (This BGH ruling is virtually the opposite of the current OGH ruling, according to which both parties can insist on reversal). The Gießen Regional Court (and the courts following it) are unlikely to have taken this case law into account in 2021.
Giessen Regional Court reverses
In 2022, the BGH issued another decision that may be relevant here (case no. XI ZR 515/21): If a contract violates a prohibition law, this generally only leads to the nullity of the legal transaction if the prohibition is directed against both parties to the contract. However, the Interstate Treaty on Gambling is a unilateral prohibition. Only if a unilateral prohibition could not be given effect through administrative or criminal law measures would it exceptionally render the prohibited contract null and void.
The Regional Court of Giessen also agreed with this in April 2023: "It is precisely not the purpose of the State Treaty on Gambling 2011 to generally protect players from the risk of loss," it said (case no. 5 O 189/51), "otherwise no form of gambling should be permitted." After all, the player is at risk of financial loss with every game of chance, regardless of its legality. The online ban could have been made effective through penalties, so it was not necessary to declare the gambling contracts concluded in violation of the ban null and void. As the contract thus remained valid, the Hessian player was unable to request a reversal under the law of unjust enrichment and was left with his losses. Just like his colleague at Munich Regional Court I two years earlier, but with a completely different reasoning.
