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German Court Says Gambler Doesn't Have to Pay Credit Card Debts

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A German credit card customer was recently let off the hook for gambling debts that his card issuer sued to collect. The District Court of Munich ruled, in a February judgment that was finalized in September 2018, against Landesbank, saying that the consumer was not liable for the debts he incurred while betting online.



There was no doubt that the individual in question used his credit card for real money internet gaming and then failed to pay the balance owed. This point was not in dispute. Rather, the defendant stated that he was not liable because the gambling he was conducting was illegal under German law, and therefore, the bank should have blocked the transaction. The online casino that he played at was not identified in court documents.

The bank was not able to contend that it didn't know what was going on because the transaction was clearly coded, using the Merchant Category Code (MCC) system, as being for gambling. Indeed, Landesbank levies its own extra fees on purchases for “lottery, betting and casino sales,” so it was impossible for the company to claim that it had no knowledge of such charges being made.

Summing up its decision, the court stated:

The court cannot recognize any wrongful behavior on the part of the defendant. Rather, it is the plaintiff who is behaving in an abusive manner if it clearly violates a legal prohibition…the purpose of which is to protect the defendant from the harms of gambling.

Landesbank has explained that it does not intend to appeal this verdict.

Image Representing Landesbank's Feelings After Court Judgment


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The consequences of this ruling are not confined to Landesbank and the specific individual from whom it was trying to collect. Many other German banks, like Deutsche Postbank and Fidorbank, also allow MCC-coded gambling transactions to pass through unhindered while extracting additional fees for this service. Now that such debts can't be recovered, financial institutions will most likely block them going forward.

Banks in Germany That Process Gambling TransactionsSome of the German Banks That Work With Gambling Companies

This will have spillover effects to the way online gaming houses run their operations. With gambling transactions no longer allowed by banks, online sportsbooks, casinos, and poker rooms will have to find creative workarounds to allow customers to fund their accounts.

Potential Solutions

Man Deciding Between Three Paths

One solution open to internet betting enterprises is to miscode purchases as being for some other purpose, such as buying computers or shoes, rather than the true purpose: gambling. However, this type of deception can get firms into trouble with the authorities. For an example of what can go wrong with the intentionally inaccurate coding of transactions, we need merely look at the 2011 Black Friday fiasco in the United States.

Perhaps a better long-term remedy lies in eschewing the traditional banking and financial sectors altogether. By cutting out the middle men and dealing directly with their users, businesses can avoid having their payments subject to the review of the authorities.

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Bitcoin and other crypto-currencies fulfill exactly this role. There are no chargebacks or other ex post facto shenanigans with digital money. Moreover, fees tend to be lower than what credit card companies typically charge. Customers appreciate the relative anonymity and control over their own money that they have with Bitcoin as compared to legacy payment processors.

German Online Gambling Law

Law Book

The basic framework for online gaming law in Germany is provided by the 2012 Interstate Treaty on Gambling. While there are many caveats, special provisos, and exceptions contained in this document, it basically makes all online casino and poker operations illegal. Other types of gambling, like lotteries, sports betting, and brick-and-mortar casinos, can be licensed by the regulatory bodies in each of the 16 states.

German Map Showing All 16 StatesMap of the 16 Constituent States (Länder) of Germany

These individual states have the right to bow out of the treaty if they wish and license online gambling on their own. Only in the state of Schleswig-Holstein did this come to pass with internet gaming licenses issued in 2012. However, the experiment only lasted about a year, and a change in administration in 2013 put an end to the licensure of any additional entities.

Unlike many gambling-unfriendly jurisdictions, Germany has actually gone after ordinary players in addition to those who manage the online platforms that accept their action. In September 2015, a 25-year-old man had to hand over more than €65,000 that he had won online playing blackjack.

Situation Unstable

Man Falling Through Air

While the law-and-order German political leaders may frown with heavy disfavor upon gambling that's not heavily managed by the state, European bureaucrats have other opinions on the matter. The European Union and its Court of Justice have already expressed the view that Germany's protected market in this industry is not compatible with EU regulations. They have determined that Germany cannot punish international gambling firms that offer their services without a local license because there's no procedure in place for them to obtain such a license.

The EU has in the past warned member nations that the maintenance of closed gambling markets is not in accord with their treaty obligations. One example is Sweden, which is expected to go live with a new regulated gambling environment in January 2019 after years of pressure from Brussels. Unless lawmakers in Berlin get their act together and come up with a rational way of licensing betting activities, they may find themselves a similar target of unwanted transnational attention.

Online Gambling Exists in Germany


Notwithstanding the pronouncements of government bodies and courts, it's possible to play online from Germany for real money without getting into trouble. Many of the most prominent gaming providers, especially those that offer poker, make it easy by transacting in Bitcoin. Check out our list of Bitcoin-friendly online poker sites for further information.