Cezary Gizka is an industry expert and was a long time President of the Board of Olympic Casino Poland. We asked him for evaluation of a current situation of gambling and gaming market in Poland.
E-PLAY: Project of amendment of The Gambling Act has been accepted by the Senate and is now waiting for Presidents approval. What do you think about the pace of works on this law and introducing the changes within the law so fast?
Cezary Gizka: I don’t see any particular hurry when talking about Governments actions or any chaos that could be found when the amendment of 2009 was introduced. This law is not based on suspicions of illegal lobbing or corruption of state officials. It has been being introduced in a reasonable pace with all the procedures required for creating new acts. There was time and place for public consultations in which, as an expert of Polish Business Club, I took part myself. After analyzing opinions of registered lobbyists, the law was forwarded to the European Union for appraisal of technical regulations. After obtaining those, the act was passed to the parliament. I don’t see here any actions that could make this act legally doubtful in the future. We have to remember that the speed of introducing previous version of the act caused the development of the grey area as the law wasn’t properly enforced.
E-PLAY: I understand that you refer to the machines known as low stake slot machines ( AWP), currently not being restricted by any technical regulations, which can be found in almost every city and village in Poland?
Cezary Gizka: Exactly. Their legality causes a lot of problems because of current opinions and verdicts of courts. I think that their owners themselves would like to operate with clear regulations, which would specify rights and obligations of both operators and regulator i.e. Ministry of Finance.
E-PLAY: From what you’ve said, it seems that you are not in favor of gambling machine exploitations outside the casinos?
Cezary Gizka: It is not about my personal feeling or believes. I have been working in this sector for 27 years now, from the time when first casinos in Poland were established. My experience allows me to create a reasonable opinion about the market. This branch is quite specific as it bases on vices and certain thought pattern of the players. What counts is achieving financial success as a result of luck- at least that’s what some players think, whereas the truth is those are just simple mathematical events. There is no space here for lack of legal regulations or incidental actions. This business brings significant income for the organizers, but it also enriches state budget if the law regulations are proper. Every country with regulated gambling rules benefits from the hidden “hope to get lucky” tax. New amendments concerning The Gambling Act introduces State’s monopoly on the gambling machines. This kind of solution is nothing uncommon in the world, also in EU countries. In my opinion, using Public Private Partnership formula is a key. In this case the State controls and regulates the sector, being also to some extend an investor through contribution and/or providing locations . Private entities sources of capital and operators. In this scenario the state would de facto not invest, would have ultimate control and would gain most of the income from gambling. We have to remember that the profits coming from gambling machines are influenced by their quality, choosing proper games for the given market, location, customer service quality, safety and many, many more. It involves extensive knowledge, possessed by professionals not by state officials. There is a reason why slot machines in the slot halls I have been managing were generating about 10 times higher revenue than those operated by competitors.
E-PLAY: Having said that, how would you rate the changes that will be brought by the new act?
Cezary Gizka: Casinos wouldn’t notice much change. Unfortunately, the new amendment doesn’t correct the basic blunders from the previous version of The Gambling Act. Those are rules concerning tenders’ criteria, which are in favor of historic buildings, five star hotels or a rule of a three year positive balance for the companies that apply for the concession. Obtaining positive opinions of city or district councils is extremely difficult and creates barriers for the new entities nearly impossible to overcome. Changes of tenders’ criteria may bring instant increase of income to the state budget if companies generating highest revenues will be obtaining concessions.
I created and managed two the best Polish casinos in Marriott and Hilton Hotels located in Warsaw. Monthly revenue from those two is equal to the revenue generated by 25 casinos of competitors. According to the current regulations, these two casinos won’t get the concessions, because they are not historic buildings.
Let’s take some time to reflect on the fact that until the end of 2018, The Ministry of Finance will organize 30 tenders for casinos’ licenses.
Bookmakers’ sector, being the only beneficiary of the new amendment, should be happy about the regulations which enable elimination of offshore companies, which took over 90% of the on-line market. Comprehensible rules about obtaining concessions, blocking websites without Polish license and facilitations within marketing are going to considerably facilitate running bookmaker business in Poland. If it is going to be introduced during amendment in the tax rules- suggested 20% of Gross Gaming Revenue, bookmakers would benefit the most.
And finally state monopoly for slot halls and online casinos. I think it is a quite interesting solution for stabilizing gaming market. It will eliminate chaos and normalize gambling market in its most delicate sector. I realize this process is not going to be the easiest. I am sure that European producers and operators will want to sell the machines or the controlling systems. I think it is a bit too early for speculations on this subject. We have to wait for the implementing regulations for The Act which, for what we know, will be introduced only in June 2017. Thus, we have time for detailed analysis of the amendments.
Online casinos, currently dominated by various companies from Europe, would have to give up Polish market. Payment operators working within online market may have limited reception and may be persecuted. Of course if the amended law will be effective, internet providers would operate according to the new regulations.
Casino online operated by State monopoly is hard to believe. I can’t imagine only one legal casino in Poland to be managed by State owned company or State Treasury. Understanding this sector requires extensive knowledge on the sector, knowing the unwritten rules of the online gambling market and connections with games producers. I do not know any country in the world where such business structure would be present. It should be managed by private entity, but in PPP formula. I am quite sure of my rating on this subject. Player has to trust the operator, but he needs to have a choice.
E-PLAY: After analyzing the amendment do you see any option of developing new structures or a chance of bringing the investors to our gambling market?
Cezary Gizka: I think that in order to analyze oncoming changes we need to wait for its presentation, implementation rules. We would have to find out how consequently will the state eliminate prohibited operations. Right now there are too many uncertain issues, I am waiting for the final version of The Gambling Act.
E-PLAY: Last question concerns your future business plans. Would you like to make use of the changes coming from the amendment?
Cezary Gizka: As I mentioned before, I am observing the changes carefully and I am carefully analyzing them. Having longtime experience with managing casinos and game houses, I often participate in various sector meetings and conferences, mainly as a business advisor and consultant. I was also preparing projects for bookmaking and online companies. I am looking forward to see how the situation will develop and I am ready for the new challenges.
I would also like to take this opportunity to wish Merry Christmas and Happy New Year to all E-PLAY readers (especially that I can find numerous friends among them!), believing that the forthcoming year will bring some interesting solutions to the gambling and gaming sector in Poland.