German court rules in gambling case

The ruling, which includes Landesbank Berlin and a German gambler, could influence the global industry.

Germany.- The District Court of Munich ruled in a case that started after Landesbank Berlin argued that a consumer refused to pay off a credit card debt while playing on an unlicensed online casino gambling site. The ruling could set a precedent and be replicated in other territories.

The gambler said that the bank had no legal rights to collect the money he spent as the online casino gambling industry is illegal in Germany. The court said that the bank had the capacity to identify the illegal activity and had an obligation to report it. While the biggest immediate risk includes other consumers following suit by playing and not paying their debts, analysts at Regulus Partners said that the main concern is that banks will shut down gambling transactions in an attempt to decrease exposure.

“The decision almost certainly causes another reason (or excuse) for banks to examine their online gambling risk exposure more generally,” said Regulus Partners. “Typically not splitting hairs about ‘grey’ or ‘regulated’ (especially if the entity is offshore): the fewer mainstream banking/processing options available to operators and customers, the less developed a mass market can be; the higher the risks within the supply chain (legal and commercial), and; self-fulfilling, the less remunerative a focus on compliance becomes,” it added.

“Critically, this risk is global and contagious, not localised. Online gambling related payment issues are likely to be a key problem in the US, for example.”