Poland Loses €142m In Potential Internet Gambling Taxes Each Year

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Tuesday, April 29th, 2014 | Written by Stephen Smith

According to a report released by the consulting firm Roland Berger in February of this year, Poland’s online gambling market is estimated to be worth around PLN 4.9 billion (approx. €1 billion). Unfortunately for the government, however, the country’s four Polish operators with state-issued licenses only account for 9% of this total, with an estimated PLN 600 million (approx. €142 million) in potential tax revenue lost to grey market operators.

Poland has tried to maintain control over its online gambling industry by introducing a restrictive set of norms in order to monopolize its market, but recently Poland’s position on internet wagering has been weakened further after the country finally acceded to the European Commission’s demands to relax its highly constrictive laws on payment processing.

Online gambling in Poland

The Eastern European country of 38.54 million people has had a regulated online gambling market since 2011 when it introduced the Polish Gambling Act. The strict law forbids all online poker and casino games, whilst allowing online sports betting for just four operators holding online betting licenses.

Nevertheless, Poland’s protectionist policy attracted scrutiny from the European Commission which viewed the country’s practices as in conflict with European treaties which allow for the free movement of services within the EU. In November 2013, the European Commission subsequently launched infringement procedures against Poland and sent a formal letter to its government in order to ascertain “whether the measures in question are compatible with Article 56 TFEU, which guarantees the free movement of services.”

One of the results of the letter was for the Polish government to subsequently make amendments to its laws and permit its companies to now process gambling-related transactions using such online payment processors as Skrill and Neteller. This is a major development as previously online gambling license holders were only permitted to send and receive money exclusively using Polish financial institutions.

How important is Poland’s financial services amendment?

This month, DLA Piper Anna Wietrzynska-Ciolkowska spoke to PokerNews on the importance recent amendments to the Polish Gambling Act will have on the future of the country’s online betting industry. Speaking specifically about the financial processing issue, she commented:

“This is a very important change as it will facilitate the process of paying stakes and receiving winnings in real time as well as making betting on the Internet safer for customers. It will no longer be necessary for customers to prepay the cash for making bets in real time or to disclose such vulnerable data as bank account details or credit card numbers. The change is also in line with general trends in e-services, where using payment instruments instead of a traditional bank account transfer is the norm.”

Online poker still banned from the country

As mentioned, the Polish Gambling Act only permits internet sports wagering whilst Poland adopts a restrictive policy when it comes to all other games of chance, with online poker included in this category.

Many analysts, however, see poker as a game of skill as players compete against one another and not against the house, and their winning depends not only on luck but also on the skill of players to make logical deductions, and anticipate the reactions of fellow players. Consequently, Polish political party Twój Ruch (Your Movement) has proposed a bill which would allow online poker in the country and also allow internet operators from anywhere inside the EU or EFTA countries (Norway, Switzerland, Iceland and Liechtenstein) to obtain a Polish internet license.

Nevertheless, any move towards regulated online poker remains in its infancy and the introduction of a licensed online poker industry in Poland in the near future remains miniscule. Meanwhile, the country is missing out on millions of euros of tax revenues as in spite of having some of the most severe laws when it comes to online poker, they are rarely enforced by authorities and so online poker has since developed into a huge industry in Poland. Many of the world’s biggest online companies, such as bet365 and Mr Green, continue to offer European friendly poker sites, with online gamblers having few problems accessing these unregulated online poker rooms.

Commenting on the matter, DLA Piper Anna Wietrzynska-Ciolkowska, explained: “Referring once again to the Roland Berger report, it is estimated that Poland loses approximately PLN 600 million (approximately €142 million) in potential tax revenue, which would be paid in Poland by international betting operators if they were allowed to have a Polish license. I do not have any similar data for poker, but I would assume that the figure would be similar.”