The Court of Justice of the European Union has ruled that EU law does not prevent Member States from prohibiting certain forms of online gambling, even where those services are licensed in another EU jurisdiction, in a decision with potentially significant implications for cross-border gaming operators.

In its judgment in Case C-440/23 involving European Lotto and Betting and Deutsche Lotto- und Sportwetten, the court confirmed that national restrictions on online gambling can be compatible with EU principles on the freedom to provide services.

The case centered on two Malta-licensed operators offering online virtual slot games and betting on lottery outcomes, which were accessible to players in Germany between June 2019 and July 2021. During that period, German law largely prohibited online casino-style games, allowing only limited activities such as sports betting, horse-race betting and certain lotteries.

A Germany-based player who incurred losses while using those services subsequently sought restitution of lost stakes. The claim was later assigned to a third party, which pursued the case before a Maltese court. That court referred key questions to the CJEU regarding whether Germany’s prohibition conflicted with EU law, particularly given that the operators were licensed in another Member State.

In its ruling, the court held that EU law does not preclude national legislation prohibiting online casino games, including virtual slots, as well as certain forms of betting such as lottery outcome wagers. It found that such restrictions may be justified by overriding reasons in the public interest, including consumer protection and the safeguarding of social order.

The court emphasized that, in the absence of harmonized EU-wide gambling regulation, Member States retain broad discretion to determine their own level of protection. This includes the ability to differentiate between gambling formats, permitting some activities while prohibiting others, whether online or land-based.

It further noted that online gambling presents heightened risks compared to physical venues, citing factors such as constant accessibility, player anonymity, reduced social oversight, and the potential for high-frequency participation. These characteristics, the court said, justify stricter regulatory approaches.

Importantly, the ruling clarified that the existence of a valid license in another Member State does not override national prohibitions. Nor does strong consumer demand for certain products, such as online slot machines, render such prohibitions inconsistent under EU law.

The court also addressed Germany’s regulatory shift, which from July 1, 2021 replaced the general prohibition with a licensing system for online gambling. It held that this transition does not invalidate the earlier prohibition, describing the change as part of a broader policy of controlled market expansion aimed at channeling players toward regulated offerings.

As a result, contracts entered into during the period when the prohibition was in force may still be deemed void under national law. The court confirmed that EU law does not preclude civil actions seeking restitution of losses incurred under such contracts.

The decision leaves it to national courts to determine the legal consequences of such nullity, including whether players are entitled to recover lost stakes. It also clarified that a player’s participation in gambling services licensed elsewhere in the EU does not automatically constitute an abuse of rights, with any assessment of bad faith remaining a matter for national law.

The ruling reinforces the fragmented nature of Europe’s online gambling landscape, where operators must navigate differing national regimes despite the overarching framework of EU law.