EU precedent: Offshore gambling operators subject to players’ local law

On 15 January 2026, the Court of Justice of the European Union (CJEU) delivered its judgment in Case C-77/24, originating from a dispute brought before the Austrian courts. While formally limited to the interpretation of EU conflict-of-law rules, the decision has far broader implications. It establishes a highly consequential precedent for the way offshore gambling operators and their directors may be exposed to liability when offering online gambling services to European players without a local license.

Although the underlying dispute arose between an Austrian player and the directors of a Maltese operator, the CJEU’s reasoning significantly reshapes the legal landscape for offshore operators targeting EU markets. In practice, it strengthens the ability of players to sue operators and their management in their home jurisdictions and sharply limits traditional defensive strategies based on offshore licensing structures.

Case background and procedural history

The dispute began in 2022, when an Austrian player filed a civil claim before the Regional Court for Civil Matters in Vienna (Landesgericht für Zivilrechtssachen Wien) against two directors of a Malta-based company. The company had offered online gambling services to Austrian residents without holding an Austrian gambling license. The claimant sought reimbursement of his gambling losses, arguing that the directors were personally liable under Austrian tort law for breaching mandatory licensing and player protection rules.

On 27 April 2023, the court of first instance declined jurisdiction, holding that Austrian courts lacked international jurisdiction to hear the case. The claimant appealed later; the appellate court concluded that Austrian courts could have jurisdiction over tort claims brought against directors of a foreign company and remitted the case for further proceedings.

The defendants then filed a revision appeal with the Austrian Supreme Court (Oberster Gerichtshof). In the course of reviewing the case in autumn 2023, the Supreme Court determined that the applicable law and the legal classification of the claims under the Rome II Regulation were not clear-cut. As a result, it stayed the proceedings.

In early 2024, the Austrian Supreme Court referred a set of preliminary questions to the CJEU, seeking clarification on which law governs such claims and whether the liability of company directors should be treated as a matter of company law or tort law. Finally, on 15 January 2026, the CJEU delivered its judgment in C-77/24, providing authoritative guidance on the application of Rome II.

Following the judgment, the case was returned to Austria for continuation and eventual resolution in line with the CJEU’s interpretation.

Key findings and legal conclusions

1. The Player’s Place of Residence as the Place of Harm

CJEU confirmed that, in cases involving unlawful online gambling, the relevant place of harm is the player’s country of habitual residence. The decisive moment is not the movement of money, but the player’s participation in gambling under an unlawful offer. The infringement consists of interference with an interest protected by the public law of the player’s state of residence, specifically the licensing prohibition.

In this context, CJEU explicitly rejected several alternative connecting factors as irrelevant. These include:

• the location of the player account,
• the player’s bank, the place where funds were ultimately lost, and
• the location of the player’s assets.

The Advocate General went further, warning that reliance on the location of bank accounts is unpredictable, easily manipulated, and prone to being used by operators for forum shopping.

The Advocate General also explained step by step why locating harm at the player’s residence is the only stable and coherent model. Online gambling lacks a physical location. Servers and operational staff may constitute the event, giving rise to damage, but they do not determine where the damage occurs. The actual interference with a legally protected interest takes place when the player participates in the game, in the country where the protective prohibition applies, and from which the player is involved. This approach also avoids fragmentation of applicable law and prevents disputes over each individual bet.

2. Director and Management Liability: Tort, Not Company Law

A second core finding concerns the legal nature of directors’ liability. CJEU clarified that obligations of directors fall under company law only if they arise from internal corporate governance, organization, or duties owed to the company itself. Where the alleged breach concerns an external, general legal norm, such as a prohibition on offering gambling services without a local license, liability is delictual in nature.

As a result, the applicable law is the law of the place where the harm occurs, namely the player’s country of residence. In this case, this meant that Maltese corporate law could not

shield the directors from liability under Austrian tort law. The so-called "Malta shield"1 therefore did not apply.

CJEU also emphasized foreseeability. It held that the operator and its directors could reasonably have expected that they were offering gambling services to residents of another Member State and that failure to comply with local licensing requirements could harm the protected interests of those players.

3. Narrow and Exceptional Derogations

CJEU acknowledged that exceptions are theoretically possible. Departing from the rule that the player’s residence determines the place of harm constitutes a derogation from the general principle and must be interpreted strictly. Such departures are permissible only in exceptional cases, based on the nature of the dispute and a comprehensive assessment of all circumstances. While CJEU did not provide concrete examples, the message is clear: deviations from the general rule will be rare and difficult to justify.

Industry impact and broader implications

When delivering its judgment, CJEU was fully aware of the broader regulatory and litigation context. It acknowledged the existence of mass player claims in Austria and Germany against Maltese operators, the established practice of national courts granting such claims, and the strategic nature of this litigation. It also noted the existence and inapplicability of the "Malta shield".

The CJEU’s interpretation of EU law is binding on all courts of EU Member States when applying the same provisions in comparable cases. Formally, its direct effect is limited to EU jurisdictions and situations involving EU law. In non-EU countries, e.g., CIS countries or Asia, the judgment may still be relied upon as persuasive authority, but it does not carry binding force.

What comes next

The underlying Austrian proceedings will now continue and are likely to reach a final resolution. More importantly, the CJEU’s ruling will serve as a powerful tool in future cases against offshore operators targeting EU players without proper licensing.

The remaining challenge lies in enforcement. Malta, as well as other offshore hubs such as Curacao, Anjouan, Tobique, etc., may continue to defend its protective framework, and some operators may choose to ignore adverse judgments. Nevertheless, the direction is clear.

With each passing year, the licensed sector is further strengthened, while the space for grey or offshore operations continues to shrink. Operating outside the regulatory framework, particularly in Europe, is becoming increasingly difficult and increasingly risky.

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