Malta’s gaming industry contributes approximately 12% to the country’s economic output, making it a vital sector in the national economy. Given its significance, Malta has implemented strong legal protections for gaming operators, most notably through Bill 55, which came into force in 2023. This controversial law allows Maltese courts to refuse recognition and, or enforcement of foreign judgments against companies registered on the island. The Maltese government justified the law as part of a longstanding policy to encourage the establishment of gaming operators and to shield the sector from potentially costly legal claims abroad.
Bill 55 was passed swiftly, with parliamentary approval from both the government and opposition, in response to a rising number of lawsuits against Malta-based gaming firms. In practical terms, the law has been used to nullify foreign court rulings from other EU member states, ensuring that Maltese gaming operators do not have to pay out millions in compensation claims filed by affected players abroad.
The law has sparked significant controversy, particularly in Austria, Germany, Sweden, and the Netherlands. Courts in these countries have ruled against Malta-based online gaming companies, demanding reimbursement for losses incurred by players using what are considered “illegal” foreign betting platforms.
In a recent landmark ruling, two Maltese court decisions confirmed that Austrian courts cannot compel Malta-based gaming operators to compensate Austrian gamblers for their losses. These rulings highlight key legal disputes surrounding the regulation of cross-border gaming operations, monopolistic restrictions, and compliance with EU law. Austrian courts have argued that, under their national laws, foreign operators are illegal, making any contracts with them void and rendering losses refundable.
Conversely, Maltese courts have defended Bill 55 under Article 56 of the Treaty on the Functioning of the European Union (TFEU), which guarantees the free movement of services. From Malta’s perspective, a company licensed under its jurisdiction should have the right to offer its services across the EU. However, national gaming laws in other member states require operators to hold domestic licenses and pay local taxes to legally operate within their borders. The Maltese court rulings found Austria’s strict limitations on foreign operators to be disproportionately restrictive and inconsistent with past European Court of Justice (ECJ) judgments.
The ongoing legal dispute underscores a broader issue: the absence of harmonized EU regulations on gambling. Despite multiple calls for a unified policy framework, the European Commission has remained largely inactive on the matter. A dedicated “Gambling Unit” was disbanded in 2017, and a 2021 letter from 13 European regulators advocating for common policies was dismissed. This regulatory vacuum has resulted in a fragmented legal landscape across the EU, allowing for significant discrepancies in gambling laws and enforcement.
The European Commission has so far only stated that it is “assessing” the legal situation regarding Bill 55. Some legal experts argue that the Commission should initiate infringement proceedings against Malta for failing to uphold EU law. A recent investigative report by Investigate Europe revealed that approximately 50,000 ongoing claims exist in Germany and Austria alone, with losses totalling an estimated €1 billion across Europe. Lawyers representing affected players argue that Bill 55 violates EU law and obstructs rightful compensation for thousands of claimants.
The legal battle surrounding Bill 55 may soon reach a decisive turning point. The Vienna Commercial Court has referred key questions regarding the law to the ECJ, seeking clarity on its compatibility with EU regulations. Unlike previous cases concerning individual gamblers’ claims, this referral focuses on an expert opinion commissioned by a litigation funder regarding the legal standing of Bill 55 under EU law.
Many legal experts, such as German lawyer Dr Benedikt Quarch believe that Malta’s argument is weak and that Bill 55 is unlikely to withstand ECJ´s legal scrutiny. It is argued that under the Brussels I Regulation, enforcement of foreign judgments can only be refused in exceptional cases where they violate public policy (ordre public). However, ordre public is interpreted narrowly, and economic interests alone are insufficient grounds to justify an exception. Malta has justified Bill 55 on the basis that enforcement of foreign rulings would undermine its gambling licenses and economic framework. However, the ECJ has previously rejected similar economic arguments as insufficient under EU law.
A ruling against Malta could have significant financial and regulatory consequences for the country’s iGaming industry. If Bill 55 is struck down, gaming operators based in Malta may become vulnerable to a flood of compensation claims from gamblers across Europe.
While the recent Maltese court decisions have been viewed as a victory for gaming operators, the legal dispute between Malta, Austria, and the broader EU is far from over. The ECJ’s forthcoming ruling on Bill 55 will be a pivotal moment for gambling regulations in Europe. If the court rules against Malta, it could reignite discussions on the necessity of EU-wide gambling laws to protect consumers, uphold fair competition, and ensure compliance with the EU’s fundamental freedoms.