Austrian gamblers struggle to recoup money lost on ‘illegal’ betting sites

Austrian gamblers are struggling to recoup money they have lost betting on websites owned by 888 and Flutter, which the country’s supreme court has ruled are operating illegally because they contravene a federal gambling monopoly.

Since 2019, lawyers and litigation financing firms have been bankrolling thousands of cases on behalf of gamblers. Casinos Austria, the state-backed gambling company, has held a monopoly on casino operations since 2016 and Austria’s three highest courts have since ruled that other betting companies are operating illegally and should return any losses.

As of the end of January, more than 2,500 gamblers have been repaid losses totalling €75.8mn following court judgments and out-of-court settlements, according to data provided by the three main legal groups backing cases: AdvoFin, G&L Rechtsanwälte and lawyer Oliver Peschel. The firms receive a cut of the payouts.

But €34mn in payouts has been withheld for longer than the fortnight-long grace period set out by the court. Lawyers working on the cases say the main culprits have been websites owned by Flutter and 888. They are now pursuing enforcement action in courts in Malta, where the two gambling groups are headquartered.

PokerStars, a brand owned by Flutter, has withheld about €17mn following lost cases and has paid out only €1,795, according to data compiled by the three legal groups acting on behalf of gamblers. 888-owned Mr Green has refused to pay out €12.6mn, while William Hill, another 888 brand, has withheld around two-thirds of cash from €6.7mn in lost judgments.

Flutter’s legal team argues that because most of PokerStar’s business is focused on poker, where gamblers play against each other rather than the house, with Flutter taking a commission only, the company is not liable for players’ losses.

Brands owned by 888 had previously paid out around €8mn but in recent months payments have stopped, according to all three legal groups involved. 888 bought William Hill and Mr Green as part of a £1.95bn acquisition in July last year.

Ladbrokes owner Entain has paid out for all judgments, totalling €41mn. Cases against a number of gambling groups, relating to €61mn worth of claims, are yet to conclude.

Most groups continue to operate in Austria despite the supreme court decision, arguing the gambling monopoly is against fundamental rights guaranteed by EU law, including the freedom to provide services.

PokerStars said it was operating legally in Austria under a Maltese licence “in accordance with the freedom of services across member states under EU law”, adding that the Austrian judgments were “incompatible with these settled EU legal principles”.

888 said “the group continues to contest the compatibility of the Austrian licensing regime with EU law”, adding that the Malta gaming authority shares that view. Flutter and 888 said they would fight the court enforcement proceedings filed in Malta, where both are licensed.

Lawyers for the people suing the betting groups have also alleged certain operators have failed to follow “know your customer” consumer protection and anti-money laundering rules in Austria.

Sven Thorstensen, a lawyer working with AdvoFin, wrote to 888 chair Lord Jonathan Mendelsohn in January. The letter, which has been seen by the Financial Times, cited the case of a client who lost €311,000 on the Mr Green platform.

“At no point, Mr Green Ltd [made] contact with her and asked her where these funds are from and [whether] she would be financially able to suffer such tremendous losses,” wrote Thorstensen, who accused the company of failing to abide by anti-money laundering and consumer protection rules. The case predates 888’s ownership of Mr Green.

In January, 888 removed its chief executive, Itai Pazner, and launched an investigation into failures to follow anti-money laundering processes on VIP customer accounts. It also froze £50mn of Middle East customer accounts as part of the investigation.

The UK Gambling Commission has fined 888 a total of £17.2mn in two penalties issued in 2017 and 2022 for consumer protection and money laundering failings.