PayPal chargebacks of gambling stakes

PayPal chargebacks of gambling stakes

The district court Ulm has now decided for a player, the district court Wuppertal for the payment provider – the case law for the chargeback remains inconsistent.

Chargebacks of gambling stakes via PayPal are discussed again and again in the forum. Since online gambling has legally been a gray area in Germany since 2012, players keep trying to book back their losses from credit card companies or PayPal.

In the indictments, the lawyers refer to Section 4 (1) sentence 2 GlüStV. The law punishes illegal gambling transactions. The jurisprudence on the topic is not uniform across Germany. Two new cases show once again: In Ulm the decision was made for the player and the rebooking of the gambling stakes, in Wuppertal for the payment service provider.

The decision of the district court Ulm on the PayPal chargeback

The law firm Lenné has brought proceedings against the payment provider PayPal at the district court in Ulm (LG Ulm, 4 O 202/18 from 16.12.2019). In the specific case, the firm’s client had lost approximately 10,000 euros with the gaming providers “bet-at-home” and “888poker”. The money was deposited through PayPal and only lost in casino games.

PayPal was ordered by the district court of Ulm to repay the lost amounts. The judges confirmed that PayPal violated the prohibition to participate in Section 4 (1) sentence 2 GlüStV. As a result of the violation of the law, the claimant suffered damage that must be repaid. The reasoning states:

The payment service provider has an obligation to check whether it is possible to process the payment or to violate a legal prohibition.

The case before the regional court of Wuppertal on the subject of chargebacks from PayPal

The 3rd civil chamber of the Wuppertal district court had decided on 09.19.2019 with a judgment (Az. 3 O 384/18) on the chargebacks of PayPal gambling stakes against the player. In that case, the lawsuit was dismissed and the plaintiff was ordered to pay the costs.

A player who ordered payments for online gambling stakes through PayPal has sued. The deposits were allegedly made to The amount and the reason for the payments are disputed between the parties.

The applicant had learned at an unknown time that online gambling was illegal. He then exercised his right to withdraw direct debits. The plaintiff returned direct debits worth EUR 13,900.

A letter of attorney dated February 8, 2018 followed. The plaintiff continued to request PayPal to reimburse 36,450 euros. It was alleged that between January 8th, 2015 and October 17th, 2017, PayPal made payments totaling 43,133 euros for online gambling portals.

It was banned online gambling bets. The plaintiff assumed the legality. The payment provider was aware, however, that it is illegal gambling.

One invokes § 4 Abs. 4 GlüStV. Organizing and brokering public gambling on the Internet is prohibited. Section 4 (1) GlüStV states that participation in payments in connection with unauthorized gambling is prohibited. According to the indictment, PayPal has a duty to check the legality of the payment before making it.

The damage to the player results from the payments for the game of chance minus the payments received in the amount of 11,595 euros. At the hearing, he requested that PayPal be sentenced to pay € 43,133. Later, the claim was 33,854 euros including 5% interest since February 28, 2018.

The payment provider denies the breach of duty and the damage. It is believed that online gambling is not automatically prohibited in Germany. In addition, one should be able to assume lawful acts by contractual partners. Even if a gambling provider in Germany does not have a permit, it cannot be blamed on the defendant for lack of obviousness. Furthermore, the damage was not conclusively demonstrated.

The argument was based on the interpretation that participation in payments can only be prohibited by the gaming supervisory authority after the prior announcement of illegal gaming offers.

The reason for the judgment of the regional court Wuppertal

The court in Wuppertal spoke relatively openly for the payment service provider. You can read in the reasoning:

The fact that the plaintiff may not be obliged to pay the stakes to the gambling providers due to the lack of a license to organize casino games in accordance with § 134 BGB does not affect the instructional relationship between the defendant and the plaintiff (cf. LG Berlin, Urt. v. 16.04.2018, Az. 37 O 367/18).

It is therefore also irrelevant whether the providers at issue here are illicit gambling. This has no impact on the effectiveness of the payment service framework contract between the plaintiff and the defendant. By agreeing to the payment process, the contracting company obtains an abstract payment claim from § 780 BGB against the payment service company.

According to the court, the payment was authorized by entering PayPal customer data on the websites of the respective gaming providers. Due to the contract between the user and the payment service provider, PayPal had to make the payment.

In this case, it was also recognized that credit and financial services institutions, including e-money institutions, could be used as responsible disruptors in gambling operations. However, it does require that the gaming regulators have notified that it is illegal gambling. It is not evident that the payment service provider received such a notice from the gaming supervisory authority.

According to the court, it is not the job of a payment service provider to protect the plaintiff from illegal payment transactions. Actually, every contract partner should be able to trust that the partners will behave in a lawful manner. The reasoning states:

The defendant therefore had neither a contractual obligation nor a corresponding reason to check the plaintiff’s payment instructions in detail for their legality. In addition, the defendant was not required to review or monitor the plaintiff’s payment process. Any kind of protection obligations towards customers therefore only exist if the bank has to suspect without further examination in the normal processing of a payment transaction based on objective evidence based on massive suspicions (BGH, XI ZR 56/07).

A comparison with the so-called “white list” of the federal states is not mandatory. The checking effort goes beyond the normal processing of payment transactions. The court also clarified:

Furthermore, the defendant hardly appears to be able to carry out a check, since in any case it should not be possible to ascertain whether each individual game perceived by the plaintiff actually represents illegal gambling.

The court also stated that the damage was caused by the plaintiff’s own will and not by PayPal’s actions.

Jurisprudence on gambling operations via PayPal remains inconsistent

The district court of Ulm, the district court of Leverkusen (judgment of February 19, 2019 – ref .: 26 C 346/18), the district court of Munich (judgment of February 21, 2018 – ref .: 158 C 19107/17) and the AG Wiesbaden (judgment of 16.06.2017 – Az .: 92 C 4323/16 (41)) have previously decided that payment providers violate Section 4 (1) sentence 2 GlüStV.

The district court of Munich, the district court of Berlin and the district court of Wuppertal did not follow this view.

The judgments on chargebacks or chargeback remain inconsistent. Online gambling represents a large gray area in Germany, which is also reflected in the judgments on the chargeback of gambling stakes. The complaints before the different courts almost seem like a “separate kind of gambling”.

At this point, the players’ personal responsibility should be appealed again. Ultimately, it is known that online gambling is a legal granzone. Losses are the rule in gambling, so you should only gamble away what you really need.

Refunds won’t solve problems if you’re really addicted to gaming. Some players are known to have gambled back the chargebacks after a while. So if you have problems, you should rather opt for therapy and take care of the possibilities of blocking. That brings more than everything to put on the chargeback.

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