Malta has already earned a well-deserved title of the iGaming hub years ago. The Maltese islands are known to be Europe’s centre for the casino and betting industry not without a reason. Being one of the first jurisdictions which established the iGaming framework, the country has been a leading force in the virtual gambling vertical. 

Convenient corporate and gaming taxes, competitive costs of a gaming licence and a well-regulated market work all in favour of Malta’s position in the iGaming sector. If the recipe for success is that simple, why cannot Poland – a country that is nearly one thousand times bigger than Malta – even dream of competing with the sunny islands? 

The controversies about Poland’s Gaming Law

The case of Poland is nowhere close to Malta’s situation with regards to the iGaming offering. Incredibly harsh regulations and the strict approach of the government towards the industry has been affecting Poland’s gaming position in the EU for years now.

All gambling activities performed on the territory of Poland are regulated by the Act on Gambling Games of November 19, 2002 (Gambling Law). The document does not only discuss a list of nearly impossible to follow rules for gambling operators but also sets austere penalties for the violation of the law. The new law was introduced in just two days, which effected in a number of inconsistencies and errors. Some authorities have even raised concerns about its compliance with the EU law. Another issue arose from the fact that the Gambling Law was passed without any prior notification sent to the European Commission – which is a legal requirement.

In 2017, a major overhaul of the law was introduced. One might have hoped that the regulations would see the friendlier approach from the government but the reality turned out to be quite the opposite. The revised law includes a blocking mechanism that restricts access to websites of unlicensed online gaming operators, together with a legal requirement for payment services providers to stop executing such.

There is no definition for online gambling provided in the Gambling Law, making it even more vague and almost impossible for foreign operators to abide by. Currently, online betting and promotional lotteries are the only forms of internet gambling allowed to be conducted by private companies. There is only one, state-owned company (Totalizator Sportowy Sp. z.o.o.) entitled to offer other forms of virtual gambling.

Getting the right things done

The position of Poland in the iGaming industry is both tough and unclear, with tens of gambling operators constantly moving back and forwards due to the market’s uncertainty. If we take Malta as an exemplary iGaming centre, Poland might need to discover the possibility of establishing a dedicated gaming supervisory authority. The Malta Gaming Authority, in contrast to Poland’s finance ministry, makes decisions on classifying gambling products and issues licences to gaming operators.

Secondly, the limitation of betting and promotional lotteries services clearly cuts down on potential profits for the country’s tax revenue. Even these two verticals do not seem to be extremely tempting for offshore gaming providers, due to the high tax. The popular betting sector is subject to 12 per cent tax, whereas in Malta it is 0.5 per cent. 

Let’s not forget about a difficult case of the casino monopoly – with only one online casino fully complying with Poland’s extremely harsh regulations, remote operators might want to look into expanding their business in alternative locations.

How COVID-19 has added fuel to the flames

The growing interest in gambling in times of the COVID-19 outbreak meant spikes in profit at first. However, the satisfaction did not last long. As the first quarter of 2020 brought good results, recording significant growth in gambling tax, the second quarter no longer causes too much optimism. The 20 per cent decrease in YoY gambling tax revenue and a 26 per cent lower rate than in the last quarter sends an alarming signal to the Polish government. The tax paid by casinos only was as much as 52 per cent lower than in the first quarter and nearly 60 per cent lower than in the corresponding year.

Poland’s virtual casino, Total Casino, is the only operator that regularly records the increase in the company’s revenues. The casino has paid nearly 30 per cent more in gambling tax in relation to the first quarter, as the Polish gaming leader continues to accelerate growth during the pandemic.

It’s not about the lack of appetite for gaming - the community of Polish players becomes more and more numerous and a growing number of remote operators express the hope to target this market (source: The problem lies in the official position of the country – a monopoly with the government-owned Totalizator Sportowy clearly does not encourage competition and, instead, leads to reduced financial success. 

The blacklist of illegal domains, that as of today includes over eleven thousand websites, should clearly be revised and the criteria for its composition changed. Overall, it is in the country’s good interest to attract new revenue streams, rather than implement restrictions and limitations that only contribute towards the growth of illegal gaming activities in Poland.

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