Austrian who lost €500,000 on Maltese gaming site loses bid for a refund

Updated 1.30pm

An Austrian doctor who lost almost €500,000 while gambling on Malta-registered sites has lost a legal bid to force the company to pay him back his losses.

The court decision is the latest legal salvo in a back-and-forth battle over gaming sector regulation that has also seen the European Court of Justice get involved.

The player, Marek Ehrlich, petitioned a Maltese court to force Virtual Digital Services Limited – which operates the Malta Gaming Authority licensed Mr Green online casino - to refund him €488,546 plus interest, as well as over €16,000 in legal fees, on the back of a judgment by an Austrian court.

An Austrian court had ruled in the player’s favour, saying that because Virtual Digital Services Limited did not hold an Austrian gaming licence, it was operating illegally in Austria and the player’s losses, therefore, had to be refunded.

The applicant then filed court action before the Maltese courts, seeking to have that judgment enforced in Malta.

In a judgment handed down on Friday, a Maltese civil court presided by Judge Mark Simiani found in favour of Virtual Digital Services Limited. 

Maltese regulators have previously warned that Austrian law firms are running "aggressive" advertising campaigns on Austrian TV, print publications and bus stops, encouraging gamblers who lost money on Malta-registered gaming sites to file court claims to recoup their losses. 

Unlike various other sectors, gaming is not regulated at EU level, with each member state free to introduce its own legal frameworks as they see fit. Austria operates an effective monopoly in the sector, only granting an online gaming licence to a single operator.

In 2023, Maltese lawmakers introduced a legal provision to the Gaming Act, informally dubbed Bill 55, to protect local gaming operators. The provision states that the courts shall "refuse recognition and, or enforcement in Malta of any foreign judgment" related to Malta gaming operators that operate in accordance with national regulations. 

In this case, the player argued that EU Regulation 1215/2012 explicitly allows decisions by courts in one EU member state to be enforceable in others – effectively meaning that the Maltese courts had to enforce the Austrian court’s decision in his favour.

The Maltese court, however, noted that the EU regulation is not absolute and that courts can refuse to recognise judgments that are “manifestly contrary to public policy” of that country.

Bill 55 made it clear that Malta's public policy is to uphold the fundamental right to allow operators to provide services across the EU, the court said. 

"This right would be seriously and irredeemably prejudiced by the recognition and execution of the foreign court's sentence... and is in this sense recognition [of the foreign judgment] runs contrary to Malta's public policy," the court concluded.  

The court therefore dismissed the claim and ordered the applicant to pay court fees.

Lawyers Jonathan Muscat and Davinia Cutajar from WH Partners and lawyer Joseph Mizzi represented the Maltese licensee.

The decision will, however, not be the last word on the matter.

In December, the European Court of Justice ruled that a gambler can file court action in their country of residence, even if the gambling platform is based in another EU member state. 

Though the ECJ decision did not examine the legality of Bill 55, it may yet do so: the European Commission last summer filed infringement proceedings against Malta, saying Bill 55 breaches EU law. Should those proceedings not be resolved, the matter will be referred to the ECJ for judgment.