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Serious changes in Gambling Act

The latest amendment to the Gambling Act enters into force on 1 April 2017. The effective date may be a joke, but the changes are no laughing matter. Will they achieve the intended results?

Assumptions of new gaming law

According to the justification for the Act of 15 December 2016 Amending the Gambling Act and Certain Other Acts, the impetus to modify Polish gaming law was the scale of the grey market, the need for improved protection of players against the negative consequences of gambling, and the need to raise social awareness of the dangers of using services of illegal gaming operators. The justification claimed that many gaming participants did not realise they were using the services of illegal operators.

The grey zone primarily involves online gaming services provided by foreign operators. The weapons for combating the grey zone include legalisation of online gaming combined with blocking access to websites where services are provided without a Polish licence, and blocking payments to such operators. The state is extending its monopoly to cover a large section of the market while admitting operators holding the required permits. The intended result is to provide players with safe, aware gaming while moving them from the grey zone to legal operators who pay gaming tax in Poland.

Boundaries of the state monopoly

From 1 April 2017 the state’s gaming monopoly will cover operations involving numbers games, cash lotteries, telebingo, games on gaming machines outside casinos, and online gaming. However, pari-mutuel betting and promotional lotteries operated under a licence are excluded from the state monopoly.

Exercise of the state monopoly is entrusted to the Prime Minister, who may establish companies for this purpose wholly owned by the State Treasury.

It should be stressed that the state monopoly has also been extended to operating of games on gaming machines outside casinos. It will be possible to install such machines in game rooms in a number no greater than 1 per 1,000 inhabitants (or fraction thereof) in each county, at locations not found to have operated illegal gaming on machines within the past 5 years.

Register of domains used to offer gambling illegally

A new tool for combating the activity of foreign operators providing online gaming services contrary to Polish law (although in many instances operating legally in the territory of other EU member states) will be a register of websites where illegal gaming is offered. Entry of a domain in the register to be maintained by the Minister of Finance, as well as modification or deletion of entries, will be done by the ministry at its own initiative. It will be possible to file an objection to an entry within 2 months after a domain name is entered in the register. Then the minister will issue a decision within 7 days after receipt of the objection to retain or delete the entry. The party will have a right to file a complaint against the decision with the province administrative court.

The register will include websites used to operate gaming without a required licence, permit or notification, directed to service recipients in the territory of Poland. Under the act, directing services to users in Poland will be understood to include, for example, making a site available in Polish or advertising in Poland. This is meant to defeat the practice currently followed by some foreign operators of including a notice on their site stating that while it is provided in Polish it is intended for Poles living abroad.

A consequence of placement of a domain name in the register will be blocking access to it and display of a notice that the site is being used to offer gaming illegally. Blocking of access to these sites is a new obligation imposed on telecommunications service providers. In turn, payment service providers will be prohibited from providing payment services to operators of websites entered in the register. Violation of these obligations will be subject to a fine of up to PLN 250,000.

The register will begin to function on 1 April 2017, and thus the first entries of domain names can be expected to appear from that date. However, the real consequences from blocking of access and payment services will be observable starting 1 July 2017, when the provisions imposing duties on telecommunications service providers and payment service providers kick in. Will Poland succeed in eliminating illegal online gambling by this route? The experiences of other EU members states in blocking websites have not been satisfactory.

Provisions on licences and permits

The provisions involving the procedure and requirements for obtaining licences and permits to offer gaming are hardly revolutionary. The biggest changes involve the requirement of a lack of valid reservations about a company that seeks to provide gaming services, from the perspective of state security, public order, protection of the economic interests of the state, and regulations on money laundering and terrorism financing. To this end, the Minister of Finance can apply to the General Inspector of Financial Information, the head of the Internal Security Agency, the head of the Central Anti-Corruption Bureau or the Chief of Police for information about the existence of such reservations.

Effects of amendment

The Ministry of Finance estimates that the revenue for the state budget connected with gaming under the new rules will be PLN 15 billion over 10 years, including profit of PLN 300 million generated by the end of 2017.

Legalisation of online gaming is a pragmatic solution, recognising the digital reality. Polish players will be able to use online gaming services without breaking the law.

The basic question is whether the solutions introduced by the amendment (both permitting legal gaming and hindering the use of sites entered in the register) will truly encourage players to use the services of operators paying gaming tax in Poland.

A fundamental problem in this respect is the amount of the tax, which for example in the case of online pari-mutuel betting is 12%, and 50% with respect to games on gaming machines, cylinder games or dice games. In the final balance, this tax will come out of the winnings from legal service providers. For this reason, players will regard involvement in gaming offered by service providers without legal status in Poland as more attractive.

The amount of the gaming tax in Poland will also discourage foreign operators (offering pari-mutuel betting, as other forms of online gaming will remain under the state monopoly) from applying for a licence to operate online in Poland.

But when it comes to game rooms, including them under the state monopoly and limiting the number of gaming machines should eliminate the common sight of “fruit machines” from the landscape of Polish cities, towns and villages.

Joanna Goryca, Tax practice, Wardyński & Partners

Agnieszka Kraińska, EU Law practice, Wardyński & Partners