MALTA’S CLASH WITH THE EU OVER CROSS-BORDER BETTING

Malta is currently embroiled in a legal dispute with the European Commission over a contentious amendment to its Gaming Act. Article 56A, introduced in 2023, aims to protect Malta-licensed operators from foreign court judgments, sparking a fundamental debate about national sovereignty and the EU’s legal unity.

At the core of the disagreement is Malta’s interpretation of the EU’s Treaty on the Functioning of the European Union (TFEU), particularly Article 56 TFEU, which guarantees the freedom to provide services across member states.

Malta operates on a “point-of-supply” licensing model, asserting that its licensed operators, by complying with Maltese regulations, should be free to offer their services throughout Europe.

The Malta Gaming Authority (MGA) argues that any “unjustified restrictions” by other member states on this freedom contradict established rulings from the Court of Justice of the European Union (CJEU) and impede the EU’s internal market.

Article 56A

Article 56A was specifically crafted to reinforce this interpretation. It states that Maltese courts will refuse to recognise or enforce any foreign court judgment that “conflicts with or undermines the legality of the provision of gambling services in and from Malta by licensed operators.”

The MGA has clarified that this is not a blanket immunity, but rather a codification of Malta’s long-standing public policy on online gambling, leveraging the “public policy” exception within the Brussels I (recast) Regulation (Regulation (EU) No 1215/2012), which governs the recognition and enforcement of civil and commercial judgments across the EU.

The European Commission, however,  views this provision as a dangerous precedent. In a formal letter of notice issued on 18 June 2025, the Commission accused Malta of failing to comply with Regulation (EU) No 1215/2012.

It argues that Article 56A unfairly protects Maltese licensees from legitimate legal challenges brought by other EU markets, thereby violating the prohibition on reviewing judgments from other member states on their substance and exceeding the limits of the public policy exception.

The Commission also highlighted concerns that the Maltese law discourages foreign litigants from pursuing legal action in Maltese courts, even when EU rules designate such courts as the appropriate forum.

Escalation to the ECJ

The practical consequences of Article 56A are already evident in national courts, particularly in Austria and Germany. Players in these countries have initiated legal proceedings to reclaim gambling losses from Malta-licensed operators, arguing the services were offered illegally in their jurisdictions. Maltese Civil Courts have, in some instances, invoked Article 56A to refuse the enforcement of Austrian court judgments ordering refunds.

This clash of legal interpretations has led to a significant escalation. 

Several of these cases, unresolved at the national level, have been referred to the European Court of Justice (ECJ). A hearing on the matter took place in April 2025, and a ruling is anticipated in July 2025. This decision will be a pivotal moment, potentially shaping the future of cross-border online gambling within the EU and clarifying the boundaries between national regulatory autonomy and overarching EU legal principles.

Legal experts across Europe are watching closely, recognising the potential for significant implications for player protection and market access.

Broader EU Scrutiny 

This is not Malta’s first encounter with EU scrutiny over its legal frameworks. The recent ECJ ruling against Malta’s “golden passport” (citizenship-by-investment) scheme, declaring it illegal, underscores the EU’s increasing willingness to challenge national policies it deems in conflict with fundamental Union values or the integrity of its legal order. While different in nature, both disputes highlight a broader tension between national sovereignty and the collective principles of EU law.

The Maltese government and the MGA have reiterated their commitment to “open and constructive dialogue” with the European Commission, promising a formal response to the Letter of Formal Notice within the two-month deadline. 

They maintain that Article 56A aligns with existing EU law and does not introduce new grounds for rejecting foreign judgments beyond those already permitted.

Malta’s economic reliance on the iGaming sector is substantial. In 2024, the gaming industry’s gross value added (GVA) grew by 3.5%, reaching €1.39 billion, and it is estimated to account for around 6.2% of the national workforce, employing approximately 18,000 people directly or indirectly. Its direct contribution to the country’s economy stands at around 9.5% of the GVA, reaching 12.2% when indirect effects are factored in. Furthermore, Malta hosts approximately 10% of the world’s online gaming companies, making the outcome of this legal battle particularly critical for the island’s economic stability.

Critics, including Nationalist MEP Peter Agius, have urged Malta to swiftly align its laws with EU obligations, warning that continued divergence risks isolating the island nation within the single market. Agius has also called for the Commission to address the “jungle” of third-party litigation funding (TPLF) he argues is fuelling mass legal actions against Maltese operators.

The outcome of this legal battle will undoubtedly have significant consequences for Malta’s crucial gaming industry. More broadly, it will provide vital clarity on the interplay between national gambling regulations, the freedom to provide services, and the crucial principle of mutual trust that underpins judicial cooperation across the European Union. 

As the July ECJ ruling approaches, all eyes are on Malta…