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Malta’s parliament has passed a controversial law aimed at safeguarding MGA-licensed gambling operators from overseas claims for damages.

Known as Bill 55, this legislation stipulates that Maltese courts will no longer enforce foreign court judgments if the companies possess a Maltese gambling licence and comply with local regulations.

The law was introduced by Malta’s economy minister Silvio Schembri following discussions with local operators and in response to a surge of lawsuits from abroad.

Particularly, civil courts in Germany and Austria have ordered MGA-licensed operators to compensate players for historical losses incurred through alleged illegal online gambling.

The prevailing argument in these cases is that the absence of a valid licence nullifies the contractual agreement between the operator and the player.

Furthermore, the players frequently contend that they were unaware of the illegality of the gambling offers in their respective countries at the time.

Last month, iGaming NEXT reported that the combined value of these claims is projected to reach hundreds of millions of euros.

Public policy

Bill 55 states that “as a principle of public policy,” no action can be taken against a licence holder, current or former officers, or key persons of a licence holder, in relation to the provision or receipt of gaming services if such action contradicts or undermines the legality of gaming services provided in or from Malta under a valid licence issued by the MGA.

Additionally, the court is obligated to reject the recognition and enforcement of any foreign judgment associated with an action described in this specific provision.

EU complaint

However, a significant question remains whether Malta’s new law is compatible with EU law.

The EU Commission has confirmed that it is currently examining a complaint filed by German lawyer Dr. Benedikt Quarch and Austrian lawyer Karim Weber.

They accuse Malta of violating European law and advocate for infringement proceedings to be initiated.

The extent of the impact of the Maltese ‘protective shield’ on operators facing lawsuits in Germany is yet to be determined.

However, many of the affected companies are now also on the German gambling regulator’s whitelist of approved operators.

The GGL stated to German news outlet Tagesschau that it will closely monitor the situation.

It emphasised that if providers employ the law at the expense of German players, a case-by-case evaluation will be necessary to determine whether it affects the provider’s reliability or necessitates adjustments to the supplementary provisions of the permits.

The MGA, meanwhile, pointed to the “very aggressive advertising” tactics of German and Austrian law firms to encourage players, who may have suffered financial losses, to seek legal assistance.

Last year, iGaming NEXT described how lawyers were seeking assistance from technical platforms to aggregate and handle player claims, enabling the filing of mass historical claims against operators.

The MGA suggests a significant amount of Austrians and Germans are now fully aware of their ability to potentially reclaim losses.

This kind of messaging, the MGA argues, is particularly harmful to problem gamblers, as it could falsely assure them there is no risk involved.

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