Proposed Legislation in Malta Aims to Safeguard Operators Against Foreign Accountability

In response to certain businesses encountering legal actions related to their operations in Austria, legislators in the Maltese parliament have presented a bill (Bill 55) aimed at safeguarding licensed online gaming operators from foreign liability.

The proposed legislation seeks to amend Malta’s gaming regulations by incorporating a provision that would prevent Maltese courts from granting damages to plaintiffs who have sued gaming companies for providing gaming services internationally.

This measure would provide legal protection to gambling enterprises operating within the European grey market that have faced lawsuits. In certain instances, local courts have mandated operators to compensate customers for their entire losses.

Maltese Bill Seeks to Shield Licensed Businesses from Foreign Liability

A proposed bill in Malta aims to protect licensed businesses in the country from foreign liability by providing guidance to courts to refuse recognition and enforcement of foreign judgments that undermine the legality of gaming services provided by licensed entities in Malta.

The bill seeks to codify the long-standing public policy of Malta to encourage the establishment of gaming operators in the country and support private enterprise in accordance with the Constitution of Malta.

However, the bill has faced criticism from Austrian and German lawyers who argue that it is an attempt to bypass ongoing lawsuits in the region. Lawyers Karim Weber and Benedikt Quarch have described the bill as a blatant undermining of the European rule of law and a violation of the fundamental rights of EU citizens and residents.

Weber and Quarch have represented clients seeking to recover their losses after operators were found to have violated local laws. They contend that the Maltese government has no right to interfere with the independent judiciary, especially considering its biased interest in favor of gaming companies over the rights of citizens and residents of countries like Austria and Germany.

In light of these concerns, the lawyers have urged the European Commission to intervene in the matter.

Operators Face Liability for Austrian Operations

In September 2021, the Austrian Supreme Court ruled that PokerStars, owned by Flutter, was operating without a license in the country, rendering all contracts between the poker business and Austrian consumers null and void. The ruling stemmed from a case involving the validity of the Casinos Austria gaming monopoly, where an individual represented by the Gottgeisl Leinsmer Weber law firm sued PokerStars for their losses. The court ordered PokerStars to refund the player’s losses, amounting to €28,000 over five years.

This landmark ruling exposed businesses that had accepted bets in Austria to potential liability. Since then, numerous cases have been brought before Austrian courts, with many operators choosing to comply with court orders to compensate consumers. However, some gaming businesses have opted to challenge these rulings.

Legal documents obtained by iGB reveal a case involving an Austrian physician who incurred losses of approximately €500,000 through one of 888’s gaming operations. In January 2022, the individual obtained a final and non-appealable judgment against 888’s Malta subsidiary, Virtual Digital Services Limited, ordering them to repay the total amount. However, 888 did not comply with the court’s order within the specified period, leading the individual’s lawyers to seek a judgment through Maltese courts.

If Bill 55 successfully passes, it would significantly impede local Maltese courts from awarding damages in such cases. 888 cites the principles of the EU’s free movement of services to contest the compatibility of the Austrian licensing regime with EU law. The operator, like many other international gambling operators, asserts that it services Austrian customers through a license issued by the Malta Gaming Authority. According to 888, this license permits them to offer services outside of Malta as long as there are valid legal arguments to support it, provided they adhere to Maltese regulatory and legal requirements. The operator maintains that its position aligns with the fundamental EU principle of freedom to provide services.

888 emphasizes that it has sought extensive independent legal advice, both from experts within and outside Austria, who argue that the position adopted by Austrian courts contradicts this principle. The operator highlights that the Malta Gaming Authority shares this view and takes the stance that gaming service providers licensed by them can legally offer their services in Austria based on the freedom to provide services within the internal market, as long as they comply with Maltese regulations. Based on the advice received, 888 expresses full confidence in its legal and regulatory position.