THE DISTINCTION BETWEEN BETTING, GAMING, AND GAMBLING IN AUSTRIA – STILL AN ATTRACTIVE CHANCE FOR OPERATORS?

This article examines the legal distinction between betting, gaming, and gambling in Austria, with a focus on the distribution of competences between the federal government and the states under the Austrian Federal Constitution (Bundes-Verfassungsgesetz, B-VG). This distinction is of significant practical relevance, as betting and gambling are subject to different statutory regulations and entail different legal consequences, particularly with regard to the recovery of stakes. The article analyses recent case law from the Austrian Supreme Court (Oberster Gerichtshof, OGH) and highlights the rigid boundary between betting and gambling, which is dictated by the constitutional distribution of competences. 

1. Problem Statement

   1. Different Contractual Forms: Betting and gambling are legally distinct contractual forms. While losses from illegal gambling can be recovered, this is not possible for betting losses. This has sparked discussions about the potential for equal treatment of both forms, particularly due to the similar potential for harm associated with both.

   2. Recovery of Stakes: The differential treatment of betting and gambling losses has fuelled attempts to achieve equal treatment through interpretation. The central question is where betting ends and gambling begins. Can betting be "transformed" into gambling?

   3. Objective of the Article: The article aims to present the differing approaches of the supreme courts and to demonstrate the rigid boundary between betting and gambling, as determined by the constitutional distribution of competences. It analyses the recent decision of the OGH (8 Ob 112/23p), which reaffirms existing jurisprudence.

2. Public Law: The Monopoly System as a Competence-Competence

   1. Competence under Article 10(1)(4) B-VG: The Gambling Act is based on the competence of the monopoly system and falls under federal jurisdiction. Betting, however, does not fall under this competence and is therefore a matter for the states. The subsumption of betting under Article 15(1) or (3) B-VG is debated in legal doctrine and case law.

   2. Maximal Expansion of the Monopoly: There is ongoing debate about whether the federal government can extend the gambling monopoly to include betting. Proponents of a "materially open competence-competence" argue that this is possible; however, it contradicts the constitutional distribution of competences. Any expansion of the monopoly would be permissible only within the limits of fundamental rights and the established "petrification" point in time.

   3. Distinction in the Case Law of the Administrative Court (VwGH): The VwGH emphasises that the distinction between betting and gambling is based on the predominance of the element of chance. Bets based on knowledge of sporting events are not classified as gambling. Chance is deemed to be present when the outcome depends neither on purposeful action nor on the participants’ skill.

   4. Prohibited and Unregulated Betting: Explicitly prohibited bets, such as live bets on partial results, remain legally classified as betting and do not fall under the gambling monopoly. Unregulated bets that are not explicitly prohibited remain permissible, as they do not fall under state betting laws. Analogical interpretation to the detriment of the regulated party is inadmissible.

3. Civil Law: The Aleatory Element as the Dividing Line

   1. The Aleatory Element: The aleatory element (chance) is the central characteristic of gambling contracts. The Austrian Civil Code (ABGB) distinguishes between betting, gaming, and gambling. The OGH emphasises the hierarchy of these terms and clarifies that sports betting does not fall under the Gambling Act. The distinction between betting and gaming is made at the third level of the Gambling Act (GSpG).

   2. Distinction in the Case Law of the OGH: The OGH rejects a case-by-case qualification of contracts and relies on the statutory distinction between betting and gambling. In its recent decision (8 Ob 112/23p), the OGH confirmed that sports betting is not subject to the Gambling Act. Predicting the outcome of a game is based on sporting skill and detailed knowledge, rather than chance.

4. Betting and Gambling - joint website

   1. OGH 1 Ob 52/24i: The proceedings were based on an action brought by an Austrian gambling customer of a Malta-based operator (in liquidation), who was legally incapable, to reclaim gambling losses of approximately EUR 2.8 million, including interest. Both companies offered their services from Malta on the basis of a Maltese license via a joint website. The customer registered only once and was able to participate both in betting as well as in games of chance. Nevertheless, it was made clear in the GTC with which of the respective companies the contract was concluded. The gambling provider became insolvent and is currently in liquidation.

   2. According to Austrian judicature, the offer of gambling was unlicensed, i.e. illegal. No contract existed between the customer and the betting operator, meaning liability would only be conceivable on the basis of tort law. § Section 2 para. 1 no. 1 GSpG defines gambling as “games of chance which an entrepreneur organises, offers or makes accessible (...)”. It was therefore questionable whether the joint operation of a joint website by the betting operator was already sufficient to fulfill the elements of an act of participation of the gambling offer.

   3. Joint website leads to joint liability: The Supreme Court affirmed the existence of an act of cooperation. From the mere fact that the defendants shared a website, it can be concluded that they obviously relied on mutual synergy effects, whereby it is clear from the findings that the plaintiff only had to register “simply and quickly” once on the website to access the entire range of games available. With the regular deposits made, the plaintiff could play all the games offered on the website. The betting operator can therefore be compared to a bar operator who seeks to boost beverage sales by installing gambling machines in their bar.  By co-operating in the operation of the website used by the gambling operator for games of chance, the betting operator directly participated in the event, organisation, or offer of  gambling, thereby making it accessible. As a result, the betting operator is liable pursuant to Section 1301 ABGB for all gambling losses suffered by the plaintiff.

5. Conclusion and market opportunities

Despite differing doctrinal approaches, all three supreme courts (Constitutional Court, Administrative Court, and Supreme Court) reach the same conclusion: the boundary between betting and gambling is rigid and constitutionally predetermined. An interpretative shift of these boundaries is not possible, rendering claims by betting customers seeking equal treatment with gambling losses futile. The legal distinction between betting and gambling is based on a clear hierarchy and the constitutional distribution of competences, which complicates flexible adaptation to new betting and gambling products. The recent jurisprudence of the OGH reaffirms the existing line of reasoning and closes the door to comparable claims in the gambling sector.

For providers considering  entry into the Austrian market, this means that in view of the strict differentiation and the different actionability of player stakes, a separation is also necessary in their own market presence and corporate structure in order to establish sufficient “safety nets”. The same applies to the operation of the underlying websites. 

If set up correctly, the Austrian market continues to offer attractive opportunities within a legally secure framework.

Explore these and other topics at Eventus International’s upcoming events: https://www.eventus-international.com/