German debt ruling could affect global payments

A German court’s ruling that a gambler could have his debts written off due to the operator not being licensed in the country could have global repercussions.

Landesbank Berlin took legal action after the consumer refused to pay off a credit card debt through Visa accrued while playing on an unnamed online casino site.

However, the gambler argued in the District Court of Munich that the bank had no right to collect due to online casino gambling being illegal in Germany.

The court ruled that the bank had the capability to identify the transaction as gambling and had an obligation to prevent it taking place. It ultimately sided with the defendant and dismissed the claim, leaving Landesbank out of pocket and many wondering what the wider impact could be for payments within the gaming industry in Germany and beyond.

Of course, there is the potential risk of other German consumers following suit by playing on gambling sites and then refusing to pay their debts.

However, the biggest risk, according to analysts at Regulus Partners, is that banks will simply put up the shutters on gambling transactions in a bid to decrease their exposure. They said that could prove contagious beyond Germany’s borders.

“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.

“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.”

iGamingBusiness.com understands that German operators do not believe that the ruling will have a major impact on gambling in the country, including the progress of legislation after years of confusion.

Sixteen German states are currently debating a reform of the German gambling regulation, with a key question in the negotiations as to whether Germany retains its ban on online casinos or applies a licensing system.

The DOCV, which represents German gambling operators, supports a licensing system similar to that already employed in the UK and Denmark.