Following the judgment by the BGH on snowball gaming systems, a legal expert identifies chances for injured gamblers to seek compensation in cases of unlawful gambling.
Here's a fresh take on that article:
- A Game-Changer for Ponzi Schemes and Potential Legal Blow for Illegal Gambling
- By Angela Burke, April 28, 2025
Last updated April 28, 2025.
After tightening liabilities for companies involved in Ponzi schemes on March 6, 2025, the Federal Court of Justice (BGH) may have opened a new door for lawsuits against illegal gambling operators. Lawyer Istvan Cocron suggests that the ruling could be leveraged to hold gambling companies accountable, as well aspayment service providers and software companies that enable such operations.
A New Legal Landscape for Ponzi Schemes
In the landmark case with file number III ZR 137/24, the BGH ruled that companies involved in managing or directing Ponzi schemes are liable for damages arising from these illicit activities. Lawyer Istvan Cocron believes that the same principles could apply to illegal gambling cases.
This new stance, supported by section 31 BGB, requires individual firms to be held liable for any damages they inflict either individually or collectively. This could potentially drag payment service providers and software companies into the fray, as they may indirectly facilitate illegal business practices.
Closing the Loopholes in the Casino Game
The Joint Gambling Authority of the States (GGL) has been stepping up its enforcement, particularly after a data leak was discovered at casino software provider The Mill Adventure. As IT security researcher Lilith Wittmann uncovered the security breach, experts are now focusing on targeting platforms that provide infrastructure for illegal gambling sites.
The GGL is also working to restrict payment providers and implement network blocking, preventing money from being deposited on illegal sites and making them less accessible. However, legal barriers remain, and avoiding pitfalls will be crucial to ensure the effectiveness of these measures.
The gambling industry is also taking action, with Tipico launching a campaign rewarding companies that only distribute their slot software within the legal market.
Navigating the Uncharted Waters of Gambling Liability
Despite the potential of the BGH ruling to compensate players who have lost money to illegal gambling providers, lawyer Istvan Cocron warns that success is not guaranteed. This newfound "legal lever" is significant, but it may not be enough to pursue a successful claim in court.
The GGJ ruling's interpretation could potentially be a ground-breaking strategy for player lawsuits; however, it remains to be seen whether courts will explicitly apply these principles to gambling cases. As it stands, developing a clearer legal framework around this issue is still a work in progress.
Contextual Insights
The Katjes ruling (June 2024) establishes stricter requirements for substantiating commercial claims made by companies in Germany. This precedent reinforces the idea that German courts are more skeptical about commercial assertions that lack solid evidence. If illegal gambling or Ponzi schemes are contested in court, this stricter approach could potentially apply to financial product representations.
Germany's regulatory landscape for financial products is increasingly stringent, as evidenced by BaFin's heightened scrutiny of ESG disclosures. This cautious approach likely extends to financial fraud cases, such as Ponzi schemes and illegal gambling, necessitating clear and substantiated evidence of fraudulent intent.
Without definitive gambling-specific regulations in place, it is likely that courts will rely on general fraud principles and the State Treaty on Gambling to determine liability in these cases. For civil claims, intentional misrepresentation would be essential, while criminal fraud elements would come into play for specific laws like §263 StGB for deceit and §284 StGB for operating illegal gambling.
- Istvan Cocron, a lawyer, proposes that the recent BGH ruling on Ponzi schemes could be utilized to hold illegal gambling operators, along with payment service providers and software companies, accountable for any damages caused.
- In light of the BGH ruling, the principle of individual and collective liability for damages may extend to payment service providers and software companies that facilitate illegal gambling operations.
- Law firms could potentially use the BGH ruling as a legal basis for lawsuits against illegal gambling operators, though success in court may not be guaranteed due to the need for substantiated evidence of fraudulent intent.
- The GGL is aiming to restrict payment providers and network blocking to prevent money from being deposited on illegal gambling sites and make them less accessible, despite the presence of legal barriers that need to be carefully navigated.
