The Attorney General of the CJEU says that unlicensed betting operators may be required to refund the stakes lost by players.

A sports betting operator offering services in a national market without the required license could be obliged to refund the stakes collected from players, considers the Advocate General of the Court of Justice of the EU in the Tipico case. The exception could arise if the operator was unable to obtain the license due to deficiencies in the procedure and if the national authorities clearly communicated to them that the licensing obligation would not be enforced until a system compatible with EU law was introduced.

A sports betting operator that has provided services in a national market without the required license can be obliged, in principle, to refund the stakes collected from players, the Advocate General of the Court of Justice of the European Union assessed in the Tipico case. However, the opinion also outlines an exception: if the operator was unable to obtain the license due to deficiencies in the authorization procedure, and the national authorities provided them with precise, unconditional, and consistent assurances that the licensing obligation would not be enforced, the civil law consequences may no longer be proportional.

In short

The Advocate General considers that unlicensed betting operators may be obliged to refund the stakes lost by players.

The case concerns Tipico, a licensed operator in Malta, but which, during the relevant period, did not hold a German license.

Under German law, unauthorized offering of sports betting can lead to the nullity of contracts and the refund of stakes.

The freedom to provide services in the EU does not, in principle, eliminate the obligation to obtain a national license in the field of gambling.

The exception arises if the authorities have provided clear assurances that the obligation will not be enforced until the licensing procedure is corrected.

The case is based on an action brought by a German consumer against the Maltese operator Tipico, in which they seek the recovery of the stakes wagered and lost on the company's German website between 2013 and October 9, 2020. During that period, Tipico held a Maltese license but did not have the German license required by national legislation for offering sports betting in Germany.

According to the applicable German law at the time, unauthorized offering of sports betting renders contracts concluded with customers null and constitutes an unlawful act, which may generate rights to refund or compensation in favor of affected consumers. From this perspective, the consumer's claims against Tipico appear, in principle, to be well-founded.

The operator, however, argued in defense that it was unable to obtain the German license due to deficiencies in the licensing procedure. In this context, the Federal Court of Justice in Germany asked the Court of Justice of the EU to clarify whether, in such circumstances, national civil courts are obliged, under the principle of supremacy of EU law and the freedom to provide services, to set aside the entire German licensing regime and, consequently, to reject the claims made by the consumer.

Advocate General Nicholas Emiliou proposes a nuanced solution. He points out that when a member state requires a license for the provision of certain services on its territory, and this requirement is, in itself, compatible with the freedom to provide services guaranteed by EU law, national authorities, including courts, have the right to enforce this obligation against an operator that has provided services without the necessary license. Courts can, in particular, draw the civil law consequences provided by applicable law.

This conclusion remains valid even when the operator claims that it was unable to obtain the license due to deficiencies in the procedure. According to the opinion, the protection of the right derived from the freedom to provide services is sufficiently ensured by the possibility of contesting the licensing procedure or its absence before a court. In other words, the operator cannot simply start providing services without a license as a form of "self-repair" of a procedure deemed non-compliant, as such behavior would create serious risks for consumers.

The Advocate General emphasizes that the freedom to provide services does not prevent German authorities from requiring a German license for offering sports betting in Germany and, in general, does not prevent the application of civil law consequences against operators who have operated without this license, such as the nullity of contracts concluded with customers. These consequences are, in principle, proportional to the consumer protection objective pursued by the licensing system. In particular, the nullity of gambling contracts, which may involve the obligation to refund stakes received from players, contributes to deterring gambling operators from circumventing the authorization system.

However, the opinion also opens an important exception. Civil consequences should not be imposed when this would be disproportionate, especially if authorized and reliable sources within the national authorities provided the operator with precise, unconditional, and consistent assurances that the licensing obligation would not be enforced and that it could, consequently, provide services to consumers without a license, as long as it meets certain basic conditions.

In such a situation, the Advocate General considers that no fault could be attributed to the operator for violating the contested licensing regime. In these circumstances, German courts should use the mechanisms available in German private law to exempt Tipico from the civil consequences in question. If, in such a context, consumers have suffered harm, liability could only rest with the public authorities that provided the respective assurances. The concrete establishment of these circumstances falls to the national court, in this case, the Federal Court of Justice.

Another important element of the opinion concerns how it interprets the previous case law of the Court regarding gambling. The Advocate General proposes a nuanced reading of it and reminds that member states are not obliged to allow freely operators established in another member state to provide gambling services on their territory. They have the right to subject these activities to a licensing regime and are not obliged to automatically recognize licenses granted by other member states. The right to provide services does not, by itself, grant an established and licensed operator in one member state a direct right to provide services in another member state. Such a right derives from the license that must be obtained in the host state.

At the same time, the opinion reminds that states can impose conditions for granting licenses, provided that these are proportional and non-discriminatory, and can even limit the number of available licenses. In the case of Germany, the previous scheme, which provided only 20 licenses, was criticized in court for lack of transparency and failure to respect operators' rights to a transparent and non-discriminatory procedure. However, these procedural issues do not mean, according to the Advocate General, that the entire national system must be considered inapplicable in civil disputes between consumers and operators.

From a procedural standpoint, the Advocate General's opinion is not binding on the Court. The judges of the Court of Justice will deliberate, and the ruling will be pronounced later. However, the opinion provides clear guidance on how consumer protection, freedom to provide services, and member states' autonomy in regulating the gambling sector could be balanced under EU law.

The gambling sector is treated particularly in EU law, with member states retaining a wide margin of discretion to regulate it, including through strict licensing regimes. The justification invoked is generally consumer protection and limiting risks related to addiction and financial losses. In this logic, the licensing system aims to channel gambling demand towards authorized offers supervised by national authorities.

The Tipico case is important because it puts into play not only the validity of civil consequences applied to operators who have operated without a license but also the relationship between these consequences and any deficiencies in national authorization procedures. The message of the opinion is that the freedom to provide services does not automatically protect operators who have provided services without the required license, but that proportionality may impose an exception when even state authorities have clearly created a legitimate expectation that the licensing obligation will not be enforced.

https://2eu.brussels/ro/stiri/avocatul-general-al-cjue-spune-ca-operatorii-de-pariuri-fara-licenta-pot-fi-obligati-sa-restituie-mizele-pierdute-de-jucatori