ECJ ruling raises fresh questions over Malta’s Article 56A and cross-border gambling claims

A landmark ruling by the European Court of Justice (ECJ) has reinforced the power of EU Member States to restrict online gambling – a decision that is now placing Malta’s controversial Article 56A under renewed scrutiny.

The judgment in case confirms that countries such as Germany can prohibit certain types of online gambling and treat contracts with non-compliant operators as invalid, even if those operators are licensed in another EU jurisdiction like Malta.

At the heart of the ruling is Article 56 TFEU, which guarantees the free movement of services across the EU. While this principle applies to online gambling, the court made it clear that it is not absolute. Member States retain the right to impose restrictions based on public policy objectives, including consumer protection and the prevention of illegal gambling.

In practical terms, this means that a Malta-licensed operator can still be blocked from offering services in another country, and if it does so without complying with local rules, any gambling contract may be declared void under that country’s law. Players can then seek to recover their losses through civil claims in that country, and the ECJ confirmed that doing so does not amount to an abuse of rights under EU law.

Legal expert Terence Cassar described the judgment as a “bomb” for the industry, noting that it confirms Article 56 does not prevent Member States from prohibiting certain online gambling activities or recognising legal disputes tied to previously unlawful operations. He highlighted that the court made clear that compliance in one Member State is not a sufficient guarantee in another, even where regulatory objectives are similar.

The ruling also confirms that contracts can be deemed null under national law, and that this nullity is not an additional restriction under EU law, but rather a direct consequence of illegality in that jurisdiction. Consumers are therefore entitled to bring civil actions based on the invalidity of those contracts in their country of residence.

The judgment lands at a critical moment for Malta’s iGaming framework, particularly in light of Article 56A – the provision introduced in 2023 to protect Malta-licensed operators from the enforcement of foreign court judgments.

Article 56A effectively empowers Maltese courts to refuse recognition of foreign rulings that would require operators to refund player losses, on the basis of Malta’s public policy supporting licensed gaming services. The provision was introduced following a surge in claims from players in countries such as Germany and Austria, where courts have consistently ruled that losses incurred on unlicensed platforms should be reimbursed.

Those claims are typically based on the argument that, regardless of EU freedoms, the gambling activity was illegal under the player’s local law. As a result, players have sought to enforce foreign judgments against Malta-based operators through Maltese courts.

The ECJ’s latest ruling appears to strengthen the legal foundation of such claims at source, by confirming that Member States are entitled to impose their own restrictions and treat non-compliant gambling contracts as void.

However, Dr Cassar noted that the judgment does not directly address the legality of Article 56A itself. That issue remains unresolved and could still be examined in future proceedings, particularly as Malta faces ongoing scrutiny at EU level.

A fragmented legal landscape

The broader issue highlighted by both the ruling and ongoing disputes is the lack of harmonised EU rules on online gambling. While Article 56 provides for the free movement of services, the absence of a unified regulatory framework has led to a patchwork of national laws, often in direct conflict with one another.

This has created a complex environment for operators, who may be fully compliant in Malta but exposed to legal risks in other jurisdictions. In response, some companies have already withdrawn from certain markets or restructured their operations to limit exposure to cross-border claims.

The ECJ’s decision is expected to have a ripple effect across the iGaming industry, particularly as further cases examining Malta’s regulatory framework make their way through the courts.

For operators, the ruling reinforces the need to assess legal risks on a market-by-market basis, rather than relying solely on an EU licence. For players, it potentially strengthens their ability to challenge gambling losses incurred on platforms not authorised in their country.

Most importantly, for Malta, the judgment places Article 56A at “a crossroads,” as Dr Cassar said. While it remains in force for now, the growing body of EU case law on cross-border gambling disputes suggests that its compatibility with EU law may soon face a definitive test.