Online gambling in Austria

The Austrian Gaming Act (GSpG 1989) defines a quasi-monopoly, where only partly state-owned operators are granted licences also for gambling on the internet. So-called "small-scale gambling" refers to slot machine halls and there are protective provisions of the individual federal provinces. These have restrictions on maximum stakes between one and ten euros per game (affecting possible maximum winnings), maximum game duration of up to 2 hours and restricted opening hours per day. Currently, the federal law limits the maximum amount that can be played on a hardware machine; a maximum of ten euros can be gambled with one operation and a maximum of 10,000 euros can be won. According to the law, a game must last at least one second, but there is no maximum loss defined in the federal law. For a long time, addiction experts have criticised the great risk of addiction that occurs with such a fast sequence of games. Some federal states have also imposed a maximum loss of about € 500 per gaming day and person on local casinos and machine parlours. All these restrictions do not apply to the 15 licensees of the regular casinos, however, these licenses are all in the hands of the state-controlled Casinos Austria AG, in which the Ministry of Finance is represented on the supervisory board via the state holding agency ÖBAG.

The only authorised Austrian gaming platform on the internet is win2day.at, which in turn is owned by the united Austrian gaming licensees (CasAG) and the Austrian lotteries. This platform offers sports betting, lotto, bingo, card games, virtual slot machines and live dealers (croupier can be seen via video). Also win2day is criticised for not having sufficiently implemented the mentioned player protection measures such as time and money limits. In Austria, online sports betting is also permitted for foreign bookmakers and defined for domestic providers in the laws of the federal provinces. (Overview) Gambling winnings only have to be taxed in Austria if it is the main income of a person.

Since online gambling at foreign casinos is considered illegal at the national level, an offence can be prosecuted. However, the Austrian executive focuses on internet providers and not on players. To date, no players have been held accountable and prosecution remains unlikely so far. It is therefore not surprising that the online competitors of the Austrian licence holder win2day, such as Bwin, Mr. Green, LeoVegas, Interwetten Casino or Pokerstars, are well-known in this country due to massive advertising and still find many players despite formal illegality.

Since the beginning of July 2021, the new State Treaty on Gambling has been in force in Germany and since then, German sports betting providers and online casinos in possession of a German licence may legally serve players from all over Germany. There is a government whitelist for a quick overview of current licence holders. Until then, gambling was a legal grey area, now virtual slot games ("slot machines") and online poker may be offered by German companies nationwide. However, this legalisation still does not affect Austrian players, for them the domestic Austrian monopoly continues to apply and gambling with foreign providers remains formally illegal. Despite the new legislative package, the hoped-for effect in practice has failed to materialise in Germany, as our colleagues from ECC Germany complain. Foreign casinos continue to mislead German players with unclear information about legality, and the real situation still seems similar to what can be observed in Austria. Other reasons for this may be that the central technical blocking system OASIS, which is supposed to remove players from a game after a permitted time, is not yet functioning properly, and that the new central German supervisory authority will not be established until 2023. The corresponding competences continue to be provisionally at the level of the German federal states and overburden the authorities.

These online casinos, casinos, bookmakers, software producers and sports betting providers are mainly based in Malta or Gibraltar, the two most successful providers of gambling licences in the world. Thanks to the economic freedoms of the EU, it is easy for digital companies to choose their headquarters where laws and tax rates promise the highest profit. The second factor is the ease with which they can advertise in markets where, due to national laws, they have no business. With misleading advertising and incomplete information, players in these protected markets are led to believe that they are not doing anything illegal when using the illegal offers. Some countries, such as France, try to keep foreign operators out of the domestic market by blocking their networks and to demotivate French players by confiscating their winnings from gambling abroad. Italy in particular, with its 400,000 gambling addicts, is fighting windmills. Gambling is also popular in the UK, with around a third of the population gambling weekly according to the regulator, around 100,000 working in the gambling industry, and the industry there generating annual revenues of more than £14 billion (2019). The share of company profits from online products accounts for more than a third and is steadily rising. Great Britain also grants licences to foreign companies regardless of location.

This led to the early establishment of specialised software companies, which have grown very strongly under the most favourable conditions, and now offer gambling worldwide after an industry boom. According to the best-known business magazine Forbes, around 10% of all gambling companies in the world operate on the basis of MGA concessions. The 2004 Maltese regulations in the online gambling sector, previously only offered by non-European offshore tax havens such as Curaçao, have subsequently been imitated by others. The application for a gambling enterprise in Malta costs 5000, the processing fee for an online casino 40,000 and for a software producer 100,000 euros. Once the application has been approved, gambling operators pay at least 25,000 euros in fixed fees per year. Furthermore, depending on the amount of turnover and the type of licence, the tax on gambling winnings varies between 0.4 % and 5 %. Normal corporate taxes are then added. From these levies alone, 1.4 billion euros flow into the budget and 12% of Malta's gross domestic product comes from the gambling industry. The fact that this amount of money fosters corruption and dependency, and that Malta can no longer cope with the volume of money from the grey area of the gambling boom, is evident from the scandals that have beset the island state in recent months. Whereas around 20 years ago two casinos had an online licence, by today this had turned into more than 300 companies operating with the same licence. Against the backdrop of the public enquiry into the murder of investigative journalist Daphne Caruana Galizia, Malta was rocked by a series of scandals in the spring. As a result, the former anti-corruption commissioner of the Malta Gaming Authority, Farrugia, was himself charged with corruption. Meanwhile, anti-mafia prosecutors from Italy accuse the Malta Gambling Authority-licensed website RaiseBet24.com of laundering over €60 million for the Cosa Nostra. Other scandals include tax evasion by a Russian oligarch worth millions of euros and a whistleblower fired by the Malta Gaming Authority who leaked 150,000 documents suggesting that a tax avoidance scheme was set up in Malta for "clients" from all over the EU.

One year after Malta, Gibraltar introduced the Online Gambling Act in 2005, based on the Maltese model. Thus, Gibraltar has created an irresistibly attractive special tax rule for providers and even undercuts Malta. Only 1% income tax has to be paid, VAT is even completely omitted in this industry. Otherwise, 0.15% of the gross gaming revenue (casino income after deduction of the winnings paid out to players) must be paid to the state. The Gibraltar Licensing Authority charges 100,000 pounds per year for the popular licences and adjusts them according to seven industry categories to the performance of the applicants. Thus, Gibraltar is even more flexible in legislation than Malta and could thus attract multinational gambling groups. Gibraltar generates a proud 40% of its gross domestic product from gambling and rakes in a hefty net profit for the United Kingdom.

For around 30,000 euros one-time and monthly fees of around 5,000 euros, investors can acquire a so-called master licence and even pass it on to sub-companies. Compared to the British licence, for example, the procedure for checking the licence is supposed to be much simpler. It has the reputation of being easy to obtain but inferior due to a lack of checks on the technical systems of the providers. In contrast to the practice in Curaçao, it is common practice in other countries for authorities to have the IT systems of applicants for online casinos checked by certified independent third-party companies before a licence is granted, in order to ensure that winnings are actually paid out to players and that game results in random-based gambling cannot be technically manipulated. In the past, casinos licensed by Curaçao have suddenly engaged in illegal practices, stolen money or disappeared from one day to the next. Even some industry websites, which usually reflect unreflective interests of the gambling industry, generally advise players against licensees from Curaçao. The Curaçao Licensing Authority does not get involved in disputes between players and operators, emails from aggrieved parties are allegedly not processed by the authority. Thus, from a player's point of view, a licence from Curaçao is more of a warning sign than an indication of quality or protection. Curiously, the Curaçao licensing authority even offers technical infrastructure such as cloud services and servers to aspirants, so it also sees itself in the role of a service provider and less in the role of a supervisory body. Hundreds of online gambling companies are headquartered in Curaçao and offer virtual slot machines, roulette, blackjack, video poker, betting on fantasy sports and other forms of virtual gambling.

At that time, the Americans had their licence revoked after players were cheated out of more than 400 million dollars in a pyramid game. Depending on the profit, the annual licence fees on Alderney range from 35,000 to 140,000 pounds. The Isle of Man, halfway between Great Britain and Ireland, has similar costs and procedures. Interestingly, Full Tilt Poker got a new one on the Isle of Man after the licence was revoked in Alderney. The other curiosity is that companies have to pay lower tax rates the more annual turnover they achieve. As a result, the world's largest online poker providers today operate from the same place. The island is also the registered headquarters of the world's largest software manufacturer, Playtech, which supplies casinos and gaming houses with software and employs thousands of programmers worldwide.

Many EU countries have not yet introduced any regulation of online gambling, the legislators have failed to keep up with the network offers from abroad and it is precisely there that online providers with so-called offshore authorisations (e.g. a Malta licence) can also be active. Since Brexit, this also applies to the extraterritorial British licences (Alderney, Gibraltar and Isle of Man), provided there is a regular company branch on EU territory. In contrast to countries without legal restrictions on online gambling, the situation is quite different in Austria or Spain, for example. There, where the market is strictly regulated, such offshore licences do not apply.

The fact that domestic players are now sitting at a virtual one-armed bandit that is "operated" from abroad is often not even clear to them or does not matter to them as long as they are not aware that with licences that do not apply in Austria, they could contest their gambling losses and reclaim them by means of a lawsuit. The website is designed in perfect German, if you don't pay attention to it, you can't tell that the money gambled is flowing abroad.

Whether the Austrian gambling monopoly is in conflict with the EU's freedom to provide services has often been a matter for the highest legal authorities. In a specific case, the Austrian Supreme Court ruled in favour of the private plaintiff against the casino operators based in Gibraltar in June 2021. An Austrian private plaintiff had lost over €1000 in gambling and sued for the repayment of these paid gambling losses, as the provider in Austria does not have a licence and is not allowed to apply its Gibraltar licence in this country.

However, the defendant company from Gibraltar challenged the action before the Supreme Court. In its appeal it was argued that Austria with its gambling monopoly violates Union law in that the state sets measures restricting competition and because online sports betting and online gambling are regulated with unequal strictness by law. The Supreme Court did not follow this opinion, rejected the challenge and confirmed the judgement in favour of the plaintiff from the first instance.

The reasons for the rejection were as follows: Sports betting or the setting up of slot machines are also not completely liberalised in Austria and are subject to restrictions under provincial law, therefore there is no major discrepancy with the state gambling monopoly. Furthermore, there is no illegality under EU law with regard to the Austrian Gaming Act, which the Senate of the ECJ has already repeatedly confirmed in its dealings with the GSpG and the exceptions to the freedom to provide services, and because it considers the national restrictions to be lawful for the protection of players.

The Austrian Constitutional Court also came to the following conclusion after dealing with the case law of the ECJ (B 887/09): A gaming licence issued in one EU country, which fulfils valid rights and obligations there, is not sufficient to sufficiently guarantee the measures in force in another EU country to prevent gambling addiction and the associated increase in crime due to gambling debts. Here, the Court refers in particular to aggressive and expansionist online advertising activities by foreign concessionaires.

National states as well as the EU try to take action against the following undesirable effects of gambling on society. In gambler protection, the focus is on addiction problems and acquisitive crime in order to be able to service debts, as well as the protection of minors. In Austria, more than three quarters of all gambling addicts are in debt, about 64,000 Austrians have apparent problems with gambling, and these so-called "problem gamblers" are barred from official casinos, say the statistics.

Likewise, the prevention of crime and fraudulent activity by online providers are in the public focus of the authorities. Gambling, for example, is repeatedly abused for money laundering or terrorist financing, as the ECJ ruling on Jyske Bank in Gibraltar points out. (C-212/11, Jyske Bank Gibraltar, para. 62)

The ECC Austria repeatedly receives enquiries from domestic gamblers with losses in Malta or Gibraltar. The most frequent complaints and requests for help can be broken down as follows:

1. When players have lost higher sums of money and learned about the licensing problems of foreign online casinos.
2. Winnings are sometimes not paid out
3. Other complaints concern, for example, bets cancelled by providers, user accounts blocked or bonuses not granted

First of all, it is important to find out with which licence the website operator is operating in order to find out to which supervisory authority one can address one's complaint. If it is one of the most common MGA (Malta) or GRA (Gibraltar) licences, it is advisable to submit a written complaint to these state control authorities officially and free of charge. The prerequisite, however, is that the aggrieved party has already complained to the online casino and tried to find a solution themselves. If the casino does not reply within a week or refuses to do so, it is advisable to write again to express your disagreement. Equipped with this mail correspondence, an official complaint can be submitted via the official mail contacts of the authorities or preferably via the input masks listed below:

From our experience, we know that these authorities handle complaints in a very bureaucratic way and that those affected often get the impression that the gambling authorities do not show the desired neutrality and protect their licensees. For the official complaint process, one should in any case prepare evidence documents with screenshots, proof of payment and stored mail traffic.

As an alternative, hiring legal cost financiers would be worth considering. There are many providers in the German-speaking countries who operate such gambling lawsuits and they are easy to find on the web. In case of success in court, legal cost financiers retain a share of about one third of the amount of damages won as a fee; in case the lawsuit is lost, the company takes over the legal costs and clients thus do not bear any cost risk. In the case of an out-of-court settlement with the online casino, legal cost financiers usually retain about half of the fee that would otherwise be incurred if the court decision had been in favour of the plaintiffs.

In autumn 2020, the Higher Regional Courts of Vienna and Innsbruck confirmed that providers without an Austrian licence must pay damages and repay stakes. These appeal rulings, which ordered offshore providers to make repayments, can no longer be appealed (OLG Vienna 11.9.2020, 1 R 98/20; OLG Innsbruck 8.10.2020, 1 R 87/20h). In June 2021, the Supreme Court similarly rejected an appeal by a casino located in Gibraltar (OGH 22.6.2021, 1 Ob 229/20p). Thus, lawsuits by players of this kind based on the lack of licences of foreign online casinos have very good chances of success and hundreds of lawsuits have already been won. It is important to note here that sports betting is not affected by this! Since gambling losses can be claimed under the title of damages and enrichment law, they are recoverable for 30 years.