[Poland] Gambling Act in Parliament

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The draft of the new Gambling Act developed by the Ministry of Finance in order to curb informal business in the gambling industry has gone through to parliament, which will now decide where and on what basis players will be able to gamble legally.

The European Union allows its Member States to develop their own gambling laws. This freedom is, however, limited by a number of requirements. Failure to comply with them could lead to an Act being annulled by the EU Court of Justice as being in conflict with EU laws (as was the case with the 2009 Act, which was not notified). Notification aside, one of the basic requirements in terms of gambling legislation is consistency. According to experts, this is not a strong point of the project prepared by the Ministry of Finance, ie. because of its liberal (in their opinion) approach to gambling advertising.

Justifying their decision with fear of illegal lobbying, officials did not consult the new Act with the gambling industry. – We prepared the amendments following the examples of Scandinavian countries, most of which have a state monopoly on gambling – said Ministry of Finance Secretary of State and head of the team preparing the act Wiesław Jańczyk in a July interview with “Gazeta Bankowa”. “The monopoly on slot machines outside casinos is to be implemented by the state-owned Totalizator Sportowy. Machines will only appear in shops run by the Lottery as well as on license in casinos run by commercial entities”, explained the deputy minister.

Beat gambling with a monopoly

There’s no denying that the bill gives the state monopolist enormous power. Totalizator Sportowy, which currently runs the National Lottery and scratch card games, is to run slot machines, poker, and virtually any online games. The trouble is, if the law enters into force in the shape currently proposed by the Ministry of Finance, popular Internet games – from Tetris to Scrabble – will all be banned, even if the organisers do not offer prizes. The only entity that will have the right to organize them, will be the state monopolist. Players not conscious of the new law may be held accountable for breaking the law if they use illegal websites. Moreover, the state-owned company will be able to offer poker without paying tax on games, which the poker industry perceives as unfair competition in favor of the state monopoly. It is worth noting that the introduction of new regulations is to be a remedy for the effects of the2009 Gambling Act which effectively removed gambling from under state control, which led to the creation of a powerful informal economy. The creators of the new rules sought the lesser evil, allowing gambling only under control of the state monopoly.

The draft was presented to parliament as a government project, despite the fact that Deputy Prime Minister and Minister of Science and Higher Education Jarosław Gowin voiced his reservations about the bill. Along with his party, Poland Together (Polska Razem), Gowin prepared a draft liberalising so called “soft gambling”, such as betting and card games. Although the party never submitted their project to parliament, they are not giving up on it – says Michał Wypij, a close advisor to Deputy Prime Minister Jarosław Gowin’s Political Cabinet. “Above all, MPs should be pragmatic and take into account factors such as budget revenues, because it would be impossible to completely eliminate gambling”, says Gowin’s advisor. “If our proposed amendments are not taken into account by parliament, we will have to submit another draft, which will be a waste of time and budget revenues”, adds Wypij.

What about adblocking?

Bartosz Andruszaniec, legal adviser at Legaltube law firm, is skeptical about the Ministry of Finance bill. “Looking at the state’s gambling policies so far, it would be difficult to call them anything other than ineffective. Six years after the introduction of the strict 2009 Gambling Act, 90% of the market (up to 92% according to a recent report by Roland Berger) is beyond state control. I doubt the new law will change this if it is passed in its current form”,  says the lawyer.

He gives the example of the Netherlands, which has been criticized for recently passing a GGR (Gross Gaming Revenue) tax at a rate of 29%. “According to experts, the high tax will encourage informal business. The Dutch rate pales, however, when compared with the real tax rate for bookmakers in Poland, which is currently 12% of turnover. Expressed as GGR (assuming standard margins for bookmakers), this would work out at 55-60% GGR”, he counts. “Not to mention the enormous operation costs as well as the need to fulfill a number of regulatory obligations. Unfortunately, Poland does not encourage investors to apply for Polish permit and therefore to comply with the law”, summarises Andruszaniec.

Besides most companies in the gambling industry, the Ministry of Digitalisation also has its reservations about the effectiveness of blocking websites, one of the main points of the government draft. During inter-ministerial consultations, the Ministry of Digitalisation issued a 12-page report in which it noted that “due to the very low efficiency of blocking websites, far-reaching doubts about compatibility with EU laws, and a negative socio-political context, activities related to blocking online content (such as ACTA or recent protests against the introduction of a bill allowing government services to control data transmission, as well as the adoption of the Anti-Terrorism Law) speak against this method. Not only is it inefficient, it does not bring desired effects and generates very high costs for telecommunications companies “(…). However, six days later, on July 19, during extra consultation, Anna Strzeżyńska, head of the Ministry of Digitization withdrew all previous doubts. She did not provide any causes for her sudden change of mind. Karol Manys, a spokesman for the Ministry only said that while ministers sometimes change their minds, sometimes they have to.

 

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