Malta’s back-and-forth legal battle with Austria over players’ gambling losses is yet again under the spotlight, with no end seemingly in sight.
Austrian citizen Marek Ehrlich is suing Malta-based operator Virtual Services Digital Limited for almost €500k in an attempt to recoup losses incurred on the gambling provider’s platform, which is not licensed in Austria.
While the Austrian court and subsequently the European Court of Justice (CJEU) have sided with the plaintiff, Maltese judge Mark Simiana has now countered by applying local legislature, specifically Article 56A of the Malta Gambling Act, which was introduced in 2023 with Bill 55.
The Bill 55 battle
With this piece of legislation, Malta essentially ringfenced operators registered with the Maltese Gaming Authority (MGA) against decisions made by foreign courts, such as the Austria case.
What’s more, Simiana also quoted Article 56 of the Treaty on the Functioning of the European Union (TFEU), which establishes freedoms to provide cross-border services, including licensed online gambling, across EU member states.
Legal experts believe that lawsuits like these walk a slippery slope and have the potential to undermine the whole concept of the European Union legislature, which is based on the principles of free trade.
Antonio Ghio, Lawyer at TMT, explained on LinkedIn that Malta will continue to fight aggressively to defend the sovereignty of its national legal system, which is equal to all other European states and falls within EU regulatory compliance.
Continued challenges against Malta’s gaming regulations from other EU nations or from the EU itself could undermine the legitimacy of its licensing system, however. Many operators are active internationally using MGA licences – well over 500 companies are licensed on the island nation.
Another interesting point that Ghio makes is the extent to which the Austrian argument is valid, which bases itself on the protection of Austria’s monopoly on gambling.
As a reminder, this monopoly is not state-owned in the natural sense, with Allwyn holding a 59.7% stake in the land-based Casino Austria (CASAG) franchise.
Furthermore, Austrian Lotteries – which has an exclusive remit over lotteries and online gambling in Austria – are 74% owned by ÖLG Holding GmbH, which is fully owned by CASAG.
“This observation, while not determinative, underscores the difficulty in characterising the Austrian restrictions as genuinely pursuing consumer protection or public order objectives,” Ghio added.
Malta’s credibility on the line?
The Austria case is also not the only one centring around Malta’s Bill 55, or with relevance to it. A similar scenario has played out regarding Germany, with courts in that country also lashing out at the legislation and at Maltese firms active in its jurisdiction without a licence.
Malta has been adamant throughout these different legal proceedings that the activities of its licensed gambling companies are protected under EU freedom of commerce standards, though the CJEU has sided with the Austrian courts in a customer’s case against a now defunct firm called DrückGlück.
This intense legal battle really underscores the complexities of the European markets, and illustrates the sword of Damocles when it comes to each member state retaining the rights to regulate its own gambling sector – instead of a harmonised EU legislation being put in place.
Regardless of where this legal case might end, Austria is confidently moving towards a more liberalised gambling regime which will almost certainly take permanent shape by the end of this decade.
Meanwhile, though the legal battles seemingly have no end in sight, if it ends badly for Malta its legitimacy as an international gambling hub could be tarnished – coming at a time when new prospective iGaming hubs like Estonia are trying to dethrone the Mediterranean island nation.