The Court of Justice of the European Union (CJEU) has heard oral arguments in a significant legal case that could reshape Germany’s online gambling framework. Known as case C-440/23, the proceeding centers on whether German restrictions on lottery and casino betting comply with EU legal principles—particularly Article 56 of the Treaty on the Functioning of the European Union (TFEU), which protects the free movement of services across member states.
Key Issues Surrounding the Legal Dispute
At the heart of the case is a challenge brought by a German lawyer acting on behalf of a player seeking reimbursement for losses incurred through Lottoland, a Malta-based secondary lottery operator. The case was filed in Malta, where the operator is licensed, potentially to benefit from local rules like Malta’s Bill 55, which shields Maltese gambling firms from foreign enforcement actions unless they breach domestic law.
The plaintiff’s approach, however, raised questions during the hearing, including whether Maltese courts are competent to assess the validity of Germany’s laws under EU jurisdiction. Although the German state isn’t a party in the proceedings, the European Commission and representatives from Malta, Germany, and Belgium all participated in the hearing.
Another focal point of the case is whether Germany’s pre-2021 ban on unlicensed online casino operators, including restrictions on secondary lottery betting, was legally justified under consumer protection aims. The CJEU must determine if this regulatory framework unfairly distinguishes between state-run and private lottery offerings, violating the principle of fiscal neutrality—a key tenet of EU VAT rules.
The Advocate General’s opinion is expected on 10 July 2025 and could shape thousands of similar reimbursement claims pending in Germany. Legal expert István Cocron described the hearing as met with “great excitement,” noting it was the first time the ECJ had heard oral arguments related to Germany’s now-repealed 2012 Interstate Gambling Treaty (GlüStV).
Broader Context: VAT Exemptions and State Aid Concerns
The proceedings also echo recent EU-level debates about how tax policies apply to gambling services. In a separate but related case (C‑741/22), the CJEU examined whether Belgium’s selective VAT exemption for state-run lotteries while taxing private online gambling violated the principle of tax neutrality. That ruling emphasized that VAT rules must be applied equally if two types of services meet similar consumer needs.
For Germany, this means its system will only withstand scrutiny if the court finds that lotteries and other online gambling formats are not equivalent from a consumer’s point of view. According to the court’s past guidance, significant differences—such as the role of skill, size of winnings, and timing of draws—must demonstrably influence consumer decisions to justify unequal tax treatment.
Meanwhile, the case has drawn further attention due to its implications for state aid rules. If the exemption granted to certain gambling formats is deemed a form of illegal aid under Article 107 TFEU, affected operators might attempt to seek damages. However, the CJEU has clarified that such exemptions, even if unlawful, do not entitle others to equivalent tax refunds in the form of damages.
No decision has been issued yet. But if the court finds that Germany’s earlier gambling restrictions conflict with EU law, this could affect both how EU member states regulate gambling and how they handle cross-border claims for tax and gaming losses.
Source:
Judgment of the Court (First Chamber), curia.europa.eu, September 12, 2024.
