Bookmakers appeal to politicians: enough of the gray zone

– Our demands and analyzes are not political. We are talking to everyone who can shape the reality and future of the legal sector – emphasizes Adam Lamentowicz, Chairman of the Board of Directors of the Polish Chamber of Commerce for the Entertainment and Book Industry.

For the Polish bookmaking industry, September was marked by meetings, conferences, reports, analyzes and summits. The Federation of Polish Entrepreneurs invited Artur Soboń, State Secretary of the Ministry of Finance, Bartosz Zbaraszczuk, Minister of National Taxes, and representatives of the bookmaking industry and other stakeholders to a discussion, in which politicians and business representatives developed joint recommendations and conclusions. submitted to the government.

In Zakopane, the industry spoke to politicians during the 2nd European Congress of Sport and Tourism about the current legal status and necessary reforms. Also in Karpacz, where the 32nd Economic Forum was held, one of the important elements was a discussion about the direction in which the industry should go. During the establishment of the Good Government Foundation, considerations on how to increase budget revenues from bookmaking aroused great interest. Totalizator Sportowy’s voice is an important element in conversations about the future of the industry. The state-owned company is also struggling to adapt regulations to today’s realities. Why has this topic become so important in the run-up to the elections?

– First of all, because we are dealing with a rare situation in politics where every interested party will benefit from introducing appropriate solutions. If we act wisely and in accordance with the developed solutions, no one in Poland will lose as a result of changes in the law regarding the bookmaking industry, and a lot can be gained – emphasizes Adam Lamentowicz, who took part in all the above-mentioned events on behalf of PIGBRIB – Polish sport will be able to count on even more sponsor support. Society will benefit from hundreds of millions of additional budget revenues. Legal bookmakers will be competitive in the huge gray market. Politicians, regardless of the option they represent, will have additional resources to fulfill their election promises. Moreover, players will be safer after moving from the out-of-control gray zone to corporate entities, he adds.

Arkadiusz Pączka, vice-president of the Federation of Polish Entrepreneurs, agrees with this view. – As a representative organization of employers in the Social Dialogue Council, which issues opinions every year on the draft state budget, we pay detailed attention to the gray zone aspect in Poland. It is incomprehensible that the government, taking into account market data or sector reports, does not take action in the context of implementing certain solutions, and not just legal solutions. That is why we call for starting a dialogue in this area and developing, together with the industry, a map of legislative changes, but also of the implementation of actions. This will not only benefit the state budget, but will also send a clear signal to players and potential investors in this sector in our country. Experiences from other countries show that there are many more advantages. As the Federation of Polish Entrepreneurs, we commit to starting a dialogue with the Ministry of Finance immediately after the elections, in order to adopt, in the spirit of the dialogue, a certain proposal for the path to change for the sector. Those in power must finally give themselves a chance to make money from the bookmaking industry, he says.

In the tail of Europe

Is it really possible to introduce solutions that benefit everyone? Why is there a need for change at all? Firstly, this is due to the fact that the current legislation was introduced in 1992, when the world was a completely different place. There was no internet, which meant that state lines in the bookmaking industry ceased to exist. This entails dangers. – As many as 57% of Polish players admit that they do not only play with legal bookmakers. This gray zone was somewhat delayed due to the changes adopted in 2017, but now the positive trend has slowed down significantly and the legal market has stopped growing. According to a report by H2Gambling, often cited by the regulator, today more than 1.2 million Poles regularly use the offers of illegal operators in Poland. Such people are not adequately protected by the law and their funds are not always safe. Furthermore, the regulator cannot impose necessary procedures on entities that do not have a Polish license, including those related to responsible gaming. Still, people want to be safe and support Polish sports and the budget with their taxes. Legal bookmakers are very interested in being even more involved in sponsoring our sport, and it is worth noting that they are already the main patron. However, to take the next step, it is necessary to equalize the competitive position of legal bookmakers and the gray market. – explains Adam Lamentowicz

Legal entities on our market must pay a tax of 12%. on turnover, which was the norm 31 years ago, when Poland’s betting legislation was created. However, currently the world and Europe have noticed the need to change tax laws to combat the gray zone and influence the way this industry operates. First of all, levying tax on every amount wagered (on turnover) is a thing of the past. In Europe, only 6 countries have an income-based gambling tax: Poland 12%, Portugal 8%, Germany 5%, Croatia 5%, Austria 2% and Ireland 2%. The most effective solution is a tax on GGR, i.e. the gross margin, which in EU countries is usually between 15 and 35 percent (the average for the EU is 22%). It means that players are not financially “penalized” if they play legally – their winnings can be comparable to those of gray zone entities, resulting in the migration of customers to the legal zone without increasing demand. – However, there are solutions that increase player safety and do not require changes to the law. These could be implemented immediately. Let’s start a Gaming Guarantee Fund. This is an element of credibility of all legal entities under one umbrella. Everyone pays for their permits to the Ministry of Finance. Let’s combine these funds with appropriate security measures on the part of Totalizator Sportowy and create one large gambling fund, on the model of the Bank Guarantee Fund. It will ensure that funds with legal bookmakers are safe and will draw customers’ attention to the fact that they are often unknowingly playing with an illegal bookmaker. – Lamentowicz will appeal.

The problem also concerns the online casino market – Totalizator Sportowy presented a new H2Gambling report as part of the Economic Forum in Karpacz – one of the report’s recommendations is the introduction of the GGR tax for bookmaker companies in Poland – H2Gambling indicates that a Such a change reduces the gray zone for both bookmaker companies and the owner of the Lotto and TotalCasino brands.

Marek Plota, legal advisor and expert in international gambling law at law firm RM Legal, draws attention to another aspect of the discussed problem. – It is worthwhile to look at our gambling rules from the perspective of lost profits. Today, Poland, with its 12% sales tax, has the worst offer in Europe for foreign operators, discouraging them from making financial transfers to the Polish budget and sports, and in the worst case, these companies provide their services to Polish customers without the appropriate license, which increases the gray zone and at the same time closes a legal umbrella that protects customers of legal bookmakers. Our market still lacks key players in the global bookmaking industry, whose budgets many times exceed the financial capabilities of domestic companies. The introduction of the changes proposed by the Chamber will attract the attention of foreign capital, improve the prospects of tax revenues for the state budget and activate the financing of Polish sports almost overnight. Let us not miss this opportunity, he emphasizes.

Changes – what now?

Why exactly would the state help bookmakers? Primarily to ensure adequate protection of its citizens and to increase the amount of money reinvested in Polish sport. Another major advantage is the ability to easily increase budget income. In Sweden, gambling tax revenues on mutual bets increased more than three times in 2020 compared to 2018 (302.1%) after legislative changes (the GGR tax rate is 18%). In 2014, Bulgaria introduced a GGR tax of 20% and revenues from this tax have increased by a whopping 751.4% in 2021 compared to 2014 and the market is steadily growing at 50% per year. This is just the beginning of a long list of evidence for the effectiveness of this method in reducing the gray zone.

– At this point the entire industry is at a crossroads. The current situation makes it very difficult for smaller entities to achieve profitability and they are at risk of going bankrupt. Changes are necessary – this is evidenced by the fact that the legal market is no longer growing and only recently have three local operators ceased operations. By working together we can equalize the odds among legal bookmakers and thus guarantee customer safety. However, this requires implementation of the proposed solutions. What will happen to Polish sports and Polish bookmaker customers if this doesn’t happen? We, as the Polish Chamber of Commerce for the Entertainment and Book Industry, try to answer this question in the Foresight Betting 2040 report, which we presented at the conference in Zakopane. I encourage you to read it, but I can tell you that in the hypothetical “era of grayness, deregulation and dispersion of responsibility” that will result from delaying the implementation of effective solutions in the fight against the gray zone, the opportunities to invest in sports or culture are significantly limited, players are increasingly becoming victims of fraudsters and legal bookmakers are going bankrupt. This would be a financial drama for Polish sports leagues and clubs – describes Lamentowicz.

PLN 379 million: this is how much the Polish budget lost in 2021 due to the lack of tax revenue from those playing in the gray zone. The market is growing every year, and therefore the losses are also growing, as the process of players switching to legal entities has slowed down due to uncompetitive profit rates. – Now is the time to act. Not in a year, two years or five. When the current law was introduced, the first McDonald’s restaurant opened in Poland, Pasikowski’s “Dogs” dominated the cinema screens, no one had internet or a mobile phone at home, and the Polish national team was celebrating its silver medal win at the Barcelona Olympics. Things have changed since then, haven’t they? – Lamentowicz asks rhetorically.