Poland remains on a regulatory knife-edge

In July, the Polish Minister of Finance, Pawel Szalamacha, proposed changes to their national Gambling Act which would introduce a state monopoly for online and offline casino games and slot machines. The draft proposal, which has now been sent to the European Commission for review, included the continuation of a 12% turnover tax on sports betting and IP blocking for unlicensed operators in the region.

Polish-based operators such as STS.pl, Fortuna and Totolotek, currently make up 10% of the overall industry in the country, leaving the remaining 90% a grey market. The wellbeing of the punters should always remain the focus, and regulated markets offer them a huge benefit. Yet, this benefit is only achieved if it is implemented in a free and competitive way.

In the UK, for example, you see a regulated market geared towards protecting bettors, their outlays and their experience within the betting space. It strives for safe betting, and heavily invests in responsible gambling at a regulatory level.

It’s also an incredibly competitive market, created by the open environment that drives innovation. Due to the way it is regulated, the UK is a market that leads the way, as operators, suppliers and affiliates look to gain an edge on their rivals. It can be seen in everything from new mobile innovation and virtual reality development, to in-play apps and the sportbooks’ competitive prices. All areas that can only be good for the punter.

However, in Poland, if the regulation in its current form is pushed through, only the state monopoly and existing licensed sports operators would benefit. It would mean a large upheaval for those others who make up the remaining 90% of the Polish market.

Danger ahead
One of the dangers of a heavily regulated, monopolised market, like the Polish parliament proposed, is that competition at the top of the Polish industry would be limited and innovation stifled.

Currently, locally-based Polish operators are looking to catch up with their international counterparts, but their capabilities remain behind other more developed betting markets and sportsbooks. Poland does, in fact, have a thriving technology industry, which is playing a part in developing the capabilities of the Polish operators – but there is still some way to go.

There would be a hit to the public purse if regulations are particularly restrictive, as outside operators would be unlikely to launch into the regulation process when there are many safe, developed and well-regulated territories elsewhere.

In a heavily regulated, insular market, opportunity for further outside investment would be diminished, leaving the remaining bookies and the state monopoly to rely on government funds for research, development and innovation. The question under the proposed regulations would be whether or not there is enough incentive for the Polish entities to innovate?

Analysts project those operators would quickly go from a 10% share of the market to 20-50% in the first two years, and then on upwards. Being in such a strong position would presumably limit the need to scrutinise their own projects, to gain that edge on competitors. In addition, challenges around fully implementing IP blocking would be costly and complex, which would be a second burden on government purses which would then likely trickle back in costs to the taxpayer.

The utopia that most countries aspire to is a system where operators and suppliers thrive, innovate and grow—offering punters a safe place to bet that is enjoyable and fair. As Poland looks to exert more control over the grey markets that make up a significant part of the territory, it moves closer to achieving that aim.

However, to fully take advantage of the fantastic opportunities put forward by competition (often embodied in the respected, international operators and forward-thinking suppliers) they must ensure that the regulatory model they adopt is one that really puts the punter first. Let’s wait and see.