Analysis: Does Poland need a dedicated gambling regulator?

Poland’s online gambling framework was thrust under the microscope last week following criticism from one of the country’s biggest trade associations about the excessively long registration process for online sports betting.

In a statement, Pracodawcy RP (Employers of the Republic of Poland) said Poland’s Ministry of Finance is making it difficult for the Polish online sports betting market to expand, adding its voice to calls to legalise a simpler, more consumer-friendly process. Pracodawcy comprises over 19,000 companies, with more than five million employees amongst its membership.

“If a player chooses a Polish bookmaker, even if he loses his bet, the Treasury will gain 12%,” Pracodawcy said. “If, on the other hand, he chooses a foreign bookmaker, Poland loses completely. The clever foreign operator and the budget of another state, usually a tax haven, win.”

“The implications of this that Polish bookmakers will be in a loss position in competition with bookmakers who do not have permission from the Minister of Finance to arrange bets and do not pay taxes in Poland.”

So, are Pracodawcy’s calls right? Is Poland’s government contributing to the stagnation of its localised licensed sports betting market?

Time for change?

Under current rules, customers using locally licenced online bookmakers must go through a convoluted registration process before even being able to place a bet, which, together with a 10% tax on players bets make it far less attractive for Polish players to bring their custom to local operators. In addition, locally licenced Polish online bookmakers are taxed at 12% of turnover.

Pracodawcy RP asserts that most will give up before completing this process, instead registering with international unlicensed operators, where they will not be taxed on their bets. The statistics seem to back this assertion up, with almost 60% of the Polish sports betting market estimated to be made up of illegal operators.

The alternative process, which has the support of local bookmakers, establishes that customers could fill in few data points, make a deposit and place a wager, with temporary registrations completed within 30 days. Withdrawals would not be possible until full registration is complete.

Łukasz Borkowski from STS, one of Poland’s biggest sports betting operators also backs the simplified process, adding: “The current registration process is arduous and challenging. A simplified version would be a very helpful and useful tool for the legal part of market.”

While it is possible that the process may be approved this year, any approval would come too late for the natural betting flurries that occur around the World Cup, a setback especially given it occurs in Russia, Poland’s neighbour to the east and features the Polish national team.

Piotr Dynowski a lawyer for Bird & Bird believes this is a symptom of a wider problem, which is the lack of a “real gambling regulator” with responsibility for of supervising the Polish gambling market scattered between the Ministry of Finance and the Fiscal and Custom administration which are both short on staff that would be exclusively dedicated to dealing with gambling matters.

“Setting up a separate governmental agency for the supervision of the gambling market would definitely help the operators to be heard and their issues being dealt with in a prompt manner,” Dynowski says.

However, Lukasz Czucharski, tax lawyer specialising in the impact of Polish law on its companies and entrepreneurs believes that the Polish government is finally getting its act together.

“Actually the Polish government has recently introduced legislative changes that helped Polish-licensed online sports betting operators a lot, i.e. blocking the sites of non-licensed operators” Czucharski says. “Although there is no doubt that further changes are necessary to make the law and formal procedures less complicated.”

He adds: “However, the Polish companies which run their businesses legitimately are in fact satisfied that after years of doing nothing the government started to fix the regulations regarding to sports betting.

“We hope that recent changes are only the beginning of process and soon the Polish betting market will be more competitive internationally. The big challenge now is to continue to reduce the participation of non-licensed operators in the Polish market.”

Ultimately, while the blocking measures are indeed helpful for locally-licensed operators, they might not be necessary in a market with more business-friendly tax and regulations. In other words, the sort of thing a dedicated gambling regulator would undoubtedly help with.