POLAND

Poland – Response to the interpellation of deputy Józwiak

Response to the interpellation No. 19866 regarding the supply, service and maintenance of equipment covered by the amended “gambling act”. Respondent: Secretary of State in the Chancellery of the Prime Minister Grzegorz Schreiber.

Warsaw, 10-04-2018

Dear Marshal,

responding to the interpellation No. 19866 of Mr Bartosz Józwiak regarding the supply, service and maintenance of devices covered by the amended Gambling Act, I would like to present the following.

Referring to the application for access to contracts concluded by the company Totalizator Sportowy Sp. z o.o. (Totalizator Sportowy, Company), in the period from 2000 to 2018, directly or indirectly supplying, servicing and service equipment covered by the amended Gambling Act implemented on 1 April 2017, bearing in mind the presented facts being subject of the interpellation, the request of the Member should be considered in the context of the introduction of a state monopoly in the field of arranging games on gaming machines in arcades.

The correct implementation of the monopoly in the area of slot machine games, according to the information provided by the Totalizator Sportowy Board, requires building a central system to operate a network of gaming machines, the task of which will be to record all events from gaming machines; construction of central registration and authentication of players along with the reception of arcades; construction of the network and infrastructure responsible for sending the above data and their archiving.

In the opinion of the Management Board, the effective implementation by Totalizator Sportowy of the state monopoly in the area requires establishing cooperation with entities possessing the necessary knowledge, experience and technical infrastructure. Detailed information about the above entities, the scope of individual contracts and the amount of costs related to the performance of contracts are of significant economic importance for the Company and are therefore not to be disclosed to the public.

According to the information provided by the Management Board of the Company, the most important contracts included in the implementation of the state monopoly in the field of arranging games on gaming machines are a company secret, as defined in the Act on Fighting Unfair Competition. Other contracts related to the functioning of arcades games rooms are subject to contractual confidentiality clauses. These contractual clauses protect not only commercial, organizational, technical and technological information relevant to Totalizator Sportowy, but also its business partners that are parties to these agreements.

Their disclosure may expose Totalizator Sportowy to liability for breach of the terms of commercial contracts, as well as liability for engaging in acts of unfair competition against entrepreneurs who have entered into business secrets with Totalizator Sportowy, or liability for infringement of other people’s personal rights.

At the same time, it should be pointed out that Totalizator Sportowy is not an entity obliged to apply the provisions of the Act of 29’th of January 2004 – Public Procurement Law and, consequently, is not obliged to publish commercial contracts to which it is a party. The above also applies to commercial contracts concluded before 1’st of April 2017 regarding gaming devices under the Gambling Act.

At the same time, bearing in mind art. 19 § 1 of the Act of 9’th of May 1996 on the performance of a deputy’s and senator’s mandate (Journal of Laws of 2016, item 1510), according to which a deputy or senator has the right to obtain information and materials in compliance with the provisions on legally protected secrecy, documents being the subject of an interpellation, due to their nature, can not be made available to the deputy. In addition, these documents are not covered by the clauses referred to in the Act of 5’th of August 2010 on the protection of classified information (Journal of Laws of 2018, item 412), therefore the procedure for their disclosure by the Chancellery of the Sejm is not applicable.

Regarding questions refering to the the stage of implementation of the state monopoly in the area of arranging slot machines by Totalizator Sportowy, the number of accepted locations of gaming points on machines and costs incurred in connection with the implementation of this project, I kindly inform that: The company as part of the implementation of the state monopoly in this area adopted a business model of its development based on building new, highly specialized competences on the Polish market, through cooperation with other companies with the State Treasury share. Totalizator Sportowy finalized the stage of negotiations and signed cooperation agreements with selected partners.

The project of launching arcades’ gaming salons is currently in the implementation phase. Due to the restrictive regulations of the Gambling Act, concerning the launch and operation of arcades and high costs of project implementation, Totalizator Sportowy decided that in the first stage a pilot program will be launched, the aim of which will be to assess financial results and to assess market reactions.

The launch of the first arcade games salons is planned for the second quarter of 2018. The pilot referred to above will continue until the end of 2018. During this period, a minimum of 1220 slot machines are planned to be made available. The company is currently preparing to launch a pilot program in the following cities: Bydgoszcz, Bytom, Elbląg, Katowice, Koszalin, Radom, Rzeszów, Warsaw, Lublin, Płock, Łódź, Legionowo, Jelenia Góra. During the pilot, the project’s effectiveness will be monitored and based on its conclusions, Totalizator Sportowy will continue to make further decisions as to the project development model.

At the same time, the Company is implementing a process of adaptation of premises and obtaining permits for operating slot machines arcades. According to art. 15 § 1c of the Gambling Act, the location of a gaming room on slot machines is approved by a director of the fiscal administration chamber competent for the planned location of the gaming salon. According to the information provided by Totalizator Sportowy, in the period up to 22’th of March 2018, the Company submitted 147 applications for approval of the location of gaming arcades, of which 88 received positive decisions and 22 refusals. During the administrative procedure there are still 37 applications for locations. According to the information provided by the Company, further applications for issuing decisions accepting the location of arcades on slot machines are submitted on an ongoing basis.

In the area of incurred costs in connection with the implementation of the state monopoly in the area of slot machine games, the Management Board of the Company informed that the process of launching games on slot machines organized outside of casinos is a complex and multistage process, as it requires, among others, providing various types of goods (devices, software, security systems, recording and monitoring systems), providing necessary services (technical service, monitoring, training) and undertaking other activities necessary for this type of activity, i.e. providing premises for gaming rooms and employment of personnel.

In view of the above, in the opinion of the Management Board of the Company, objective costs related to the launching of gaming arcades, both incurred and required to be incurred, can be demonstrated only after starting operations in this area.

Sincerely,

Grzegorz Schreiber

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