Behar Merlaku, 27, won the jackpot after playing a slot machine at the Bregenz casino, just across the border from Switzerland, in March 2011, German-language newspaper Blick reports.
However, the casino, part of the Casinos Austria group, refused to pay out the winnings, claiming a computer software error had occurred.
Merlaku reached an out-of-court settlement after launching a legal process at the beginning of the year, Swiss news agency SDA reported this week.
The deal was confirmed by Reinhard Flatz, a spokesman for the regional court of Feldkirch, in Austria.
The court case, in which Merlaku sought €5 million compensation, began in January, attracting significant media attention.
The casino offered him €500,000, a sum that he turned down and the case was subsequently adjourned.
When it resumed in July, after just a few minutes the two parties agreed to pursue negotiations for an agreement out of court.
The amount of the final compensation was not disclosed, but the Austrian newspaper Heute reported a sum of €1 million.
However, neither the court nor Casinos Austria would confirm the amount.
The Bregenz casino is located on the eastern shores of Lake Constance, around 10 kilometres from the border with the Swiss canton of Saint Gallen.