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Gambling in the spotlight - new regulations in Poland

On 1 April 2017, the provisions of the amended Gambling Act came into force in Poland (Journal of Laws of 2016, item 471). They introduce a number of regulations as regards offering gambling services as well as new market regulation mechanisms. The two main areas of change in this regard are the introduction of a state monopoly on operations of slot machines outside casinos and the introduction of the possibility of blocking online domains offering access to gambling operated by entities without required authorization issued by the Polish Ministry of Finance. Since 1 July 2017, the Register of Domains Used to Offer Gambling Services in Violation of the Act has been maintained.

Each address entered in the Register must be blocked by providers of Internet services from the moment it has been listed in the Register. Moreover, in the list, there can be entered providers of money transfer services that enable players to transfer funds to bookmaking platforms entered in the Register. The regulation goes much further, as players who have been engaged in gambling through illegal websites and have been proven guilty of being involved in such a practice are subject to a fine, and the entire winnings are forfeited to the State Treasury.

In practice, the new regulations have forced banks operating on the Polish market to block gambling transactions offered by entities without a Polish licence. Since 1 July 2017, both bank transfers and card payments have been considered, under the new legal regime, as participation in illegal gambling and have been subject to punishment on this account. Banks have been obliged by the Polish Financial Supervision Authority to prevent their customers from engaging in transitions of this kind.

According to estimates by UN economic experts, at the peak of the market worth 5 billion per year, 80-90% of bookmakers offering betting services operated without the required authorization. Most of them operated through companies and servers located in Caribbean countries, while EU-authorized entities were usually located in Malta and Cyprus. It has been argued that such a market structure makes it difficult for consumers to pursue effectively their rights and claims against dishonest bookmakers and leads to a loss of revenue by the state budget on account of taxes and other levies.

At present, only few entities have been authorized by the Polish Ministry of Finance to offer betting services to customers, and all of them are registered in Poland. Interestingly, each of them has held the required authorization for years, and the most popular websites offering similar betting services, operated by foreign entities, initiated authorization procedures only in the first quarter of 2017. For the first time in history of the Polish Internet, the regulation in question has introduced a closed catalogue of websites. Previously, blockades were imposed only individually on the contents that had explicitly violated the criminal law or had been at variance with the principles of community life.

The solutions adopted in the Act may raise some doubts. In its judgement C-49/16, the Court of Justice of the European Union stated that a Member State cannot block websites that offer gambling services operated by undertakings authorized to do so by another Member State in a manner that is discriminatory to those entities. The case originated in a question referred for a preliminary ruling to the CJEU by the Hungarian court hearing on the matter. The Hungarian Act regulates online gambling activities in a manner similar to Polish solutions; therefore, this judgement can influence significantly the issue of further regulation of the gambling market in Poland and the European Union.

 

Jarosław Rudy, Partner, Legal Adviser

Maciej Kwadrans, Lawyer

Żyglicka & Partners

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