PayPal must pay casino player money back
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The success of online casinos and online sports betting providers largely depends on the payment methods provided. Previously, it mattered whether a casino had a license so that the payment methods were also considered legal and therefore legally feasible.
The precedent around PayPal and sports betting providers bet-at-home and 888poker has forced PayPal to withdraw from the world of online casinos in Germany. And after such a precedent (which we will talk more about later in the article) it could happen in any country in the world.
What can we expect in the future until the new State Gambling Treaty takes effect? Which payment service providers will also be gone from online casinos and sports betting by the end of 2022? Which service providers will become attractive payment providers in their place?
Online Casino Germany with PayPal closing date
The number of online casino users via the Internet has been steadily increasing over the years. Thanks to cheap internet rates and available fixed phone company offers for smartphone users, as well as the constant availability of online casino games, the online casino market in Germany is thriving like never before.
Online casinos often provide more than 2,000 different casino games online on their platforms and in casino apps. Many online casinos have a valid EU license from the Mediterranean island of Malta (Malta Gaming Authority).
Accordingly, online casinos have to deal with all the latest, innovative payment methods. This also includes the integration of the payment option “paypal online casino”. There were only a few PayPal online casinos a few years ago, that is, online casinos that accept PayPal payments, so this market has grown tremendously and Paypal deposits are now part of the extended standard in many online casinos.
PayPal lawsuit: who has to pay?
According to law, online payment service providers are accountable to track and assess where a payment is made. According to the Ulm Regional Court, it is up to the payment service providers to check the payment before it is made. PayPal did not do this in the case of a plaintiff in Ulm. If the ruling is upheld by higher courts, PayPal and other payment processors could face millions in restitution claims. Although PayPal reacted directly after the verdict and withdrew from all online casinos, deposits made by players are also at risk of being sued. One player has already been awarded justice.
He gets 9,600 euros, which he used at the online casino, plus the interest returned. It is doubtful that not only PayPal, but also other payment processors should expect lawsuits from players or betting customers. And so it will be until the new gambling contract goes into effect, a balancing act for payment processors that will likely backfire on the payment processor if a lawsuit is in doubt. Once the new wording goes into effect, it will become easier for payment processors, whether it’s a legal payment to a casino or a legal sports betting provider.
What’s particularly interesting is that even before the Ulm ruling, the casino plaintiff had already tried to get his bets refunded through the courts. On his first attempt, the plaintiff failed. On the second attempt, Ulm ruled in favor of the payment processor PayPal.
For online casinos in Germany came the end of the PayPal payment method
PayPal has changed its terms of use for online casinos in Germany. In the future you will no longer be able to use this payment method for online casinos.
Online casino gaming is not legal outside of the state of Schleswig-Holstein in Germany, but it is in the allowed gray area! For this reason PayPal will prevent cooperation for gaming payments in the rest of the country in the future. Starting this year, online casinos in Germany can no longer be paid with PayPal.
This began in June 2019, Lower Saxony issued its first nationwide order blocking the payment service provider. Although no company has been named in detail, legal circles and the online casino industry generally assume that this payment service provider was PayPal.
The ruling prohibited cooperation with online casino, poker and lottery providers. The Lower Saxony Department of the Interior has also warned a number of other payment service providers not to continue cooperating with illegal gambling.
All of these are the first signs of the new State Gambling Agreement, which is currently back under consideration in the German states. The new version has already been approved by the 16 prime ministers of the individual federal states, but it has to be ratified by the end of the year.
Ulm case
The Ulm Regional Court ruled against payment processor PayPal in a case. The plaintiff was represented by the law firm Lenne. The cause of action was the wagering of a total of 10,000 euros. They were used by the plaintiff exclusively on sports betting at online bookmakers 888poker and bet-at-home. All deposits were made through PayPal. The plaintiff could not make any profit.
According to the applicable gambling law in Germany, there is a prohibition of participation by § 4 para. 1 sentence 2 GluStV. Since both online bookies are sports betting providers without licenses in Germany, PayPal did not act in accordance with the law by making the payment. This demonstrates an objective of the current State Treaty on Gambling in Germany, which will be revised at the end of 2022.
Payment service providers that make payments in Germany from players or betting customers to online casinos or sports betting providers that are not legalized in Germany may be required to return the deposited money to the customer. PayPal has not yet filed an appeal, but this is to be expected given the media interest that now exists.
Payment methods in online casinos
As of 2019, there are currently no more casinos with PayPal in Germany. One reason for this is that payments to and from online casinos that are not legal in Germany are also not legal. In addition, the company behind PayPal is not standing still, and it can be assumed that before legal online gambling takes effect from the end of 2022, the T&C conditions will be changed. It can be assumed that the changes to T&C and the terms of use will be made for the benefit of German customers.
Secure payment methods other than PayPal at a glance:
- Neteller
- Trustly
- Klarna
- Apple Pay
- Google Pay
- Instant Bank Transfer
- Credit card payment
- PaySafeCard
- Bitcoin
Below you will find a brief description of each payment method you can use instead of PayPal.
While PayPal is leaving the online casino market, it is worth getting to know and using the existing PayPal alternatives for casinos. When using this payment processor, you should always pay attention to the presence of secure SSL encryption of at least 128 bits. In addition, neither the casino nor the payment processor itself should use fees for deposits or withdrawals using this payment method.
It remains to be seen whether the rules for payment processors will appear in the new, now fourth version of the State Gaming Compact. That is when the responsible ministers of the federal states will meet to discuss and approve the final draft of the State Treaty on Gambling.
