Poland – Another government loses the fight against gambling

PiS politicians promised to make order in gambling and the state would start earning money on games. Meanwhile, there are still no state-owned slot machines, so called one-armed bandits. It is also not known when the e-casino will be launched, because the Totalizator Sportowy unsuccessfully leads the case. And the budget gets lower taxation income than expected.

During the PiS rule, from 2015, they only managed to detain the former deputy finance minister Jacek Kapica last Thursday, who was the face of PO-PSL in the fight against illegal gambling.
In 2017, the State budget was to receive over PLN 1.7 billion from gambling taxes. After 11 months of last year (full data is not yet available), PLN 1.47 billion was allocated to the state budget, which is almost the same as in 2016. Looking at the dynamics of influence – every month from taxing games, the state has about PLN 120-150 million – there is no chance that the PiS government’s rumors about a serious gambling budget injection after changes in the taxation of games and the legality of gambling would come true.

Despite the fact that the bill of law adopted in 2017 by the government of Beata Szydło was really revolutionary. First of all, the liquidation of the black market for low prizes machines was ordered. Indeed, since 2009, that is the entry into force of the previous gambling act, by April 2017, approx. 80,000 illegal machines had been requisitioned. At the time of the new regulations , the raids of the services of the National Tax Administration on premises with “one-armed bandits”, which managed to track another 20 thousand illegal machines, were still underway.

There is also a registry of domains with illegal gambling websites (there are more than 1,500 of them in total) that ISP’s must block.
Therefore, the gray zone was closed. The income of registered legal bookmakers also increased. But the successes of government earnings on gambling are lacking. Income from gambling is lower than at the beginning of PO-PSL governments.

A billion on Wednesday, or not

Two large monopolies were donated by the state to Totalizator Sportowy. This state-owned company was to organize and manage a network of 35,000. state-owned, legal machines. The first “one-armed bandits” from the state were to appear on the market by the fourth quarter of 2017 at the latest.

“We are thinking about launching 50 points with several hundred devices, we chose 43 locations. We will observe how these machines were adopted by the market. In the perspective of two or three years, we would like to exhaust the limit that the law gives us, which is 35,000 devices “- assured a year ago acting president of TS Radosław Śmigulski.

Until now, however, not a single machine had been installed.

    “I saw machines prepared by Wojskowe Zakłady Łączności several months ago. They are quite clumsy, in the style of the 90’s. But they are. They are still waiting for the software to be delivered by Totalizator, but it is not ready, “says an expert who advises the government in the development of IT systems.

Totalizator refused to provide us with information on when and how many “one-armed” will appear on the market. “As a result of TS’s inefficiency of taxes, which should have been flowing from this source for several months, as it was not, it is not still,” the expert notes.

And yet it was one of the reasons for changing the gambling law in Poland. The regulatory impact assessments assumed that only in the first year of functioning of the Act, the budget will receive an additional PLN 637 million, and in 2018 already almost PLN 1.5 billion. Ultimately, the gambling was to generate over PLN 2.3 billion a year.

For now, the new gambling law generates costs. For the sole storage of confiscated “one-armed bandits”, which in total in KAS stores is about 90 thousand, the state pays approx. PLN 720-780 thousand monthly and it is not known how long is it going to be paid for, because the law did not foresee what to do with these machines.

Secrets of Totalizator Sportowy

It is difficult to count on improving the budget revenue from gambling, when it also has no influence from the second state monopoly that Totalizator received, which is Lotto betting via the Internet. The tender for the organization of the TS e-casinos has been settled a dozen or so days ago, almost six months after the announcement. They are to be performed by a syndicate of American-Israeli companies Playtech Services Limited and Playtech Software Ltd. And … nothing more is known about the e-casino.

“The proceedings emerging for the winner of the tender took a very long time and virtually everything around it is classified by Totalizator. Nothing is known about the e-casino, “notes the expert.

Totalizator refused to answer the questions. How many companies were willing to build this system, what were their offers, and even when the e-casinos were to be launched. In the official communication, however, the TS boasts that it will give “countless benefits to players and the state treasury”. What exactly? This is also not known.

TS spokeswoman Aida Bella only replies:

“We have calculations for estimated revenues from online sales of casino games, but at this stage of the project we don’t want to reveal them yet. The syndicate’s salary is calculated as a percentage of Gross Gaming Revenue (the sum of funds paid by game participants, minus the payment of winnings). We cannot provide details as this would violate the trade secret. “

The only, which results from the public tender documents, is the amount of the bid bond (PLN 1 million) and PLN 50 million collateral from the e-casinos contractors. So a lot of money, which can say a little about the amount of the contract, because as a rule, the contractor does not receive any collateral higher than the value of the contract.

The government also remained tight-lipped . The Ministry of Finance cuts itself off from Totalizator, stating that it does not supervise this company. Until recently, it was subordinate to the development department, but along with the reconstruction of the government, it came under direct supervision of Prime Minister Morawiecki. The Government Information Center for three weeks did not reply to the questions about the state of implementation of the state monopolies by this company.

Also the deputies can’t wait for a specific information. The answers to the next interpellations are so general that in the latest one Kukiz’15 deputy Bartosz Jóźwiak asked for a response to the Secret Chancellery of the Sejm to avoid losing trade secrets by Totalizator.

Where did the “one-armed” scandal come from?

After the gambling scandal from the time of the PO regarding lobbying for gambling, in 2009 a new law had been passed, which was supposed to clear Poland from low-prize machines, so called one-armed bandits. According to the Customs Service, there were as many as 53,000 of them in Poland at that time.

The law assumed that all these machines would disappear from the market, and the idea was not one-time delegalization, but the suspension of issuing new concessions and waiting for the old ones to expire. And from year to year there were supposed to be less machines. From 29 October 2015, when the last concessions expired, the market was to be free from “one-armed bandits”.
However, it quickly turned out that the new law is ineffective. Although customs officers still requisitioned machines that operated without concessions (for five years they removed more than 40,000 machines from the market), but it was tilting at windmills.

The PO government did not notify the passed act in the EU, so the owners of the seized machines did not recognize the new law and filed a complaint with the European Court of Justice, which in 2012 recognized that the Polish government made a mistake and lack of notification means that the law does not concern the “one-armed”. Owners of these machines began to sue the requisitions. And the courts ruled diversely. Some in favor of entrepreneurs, ordering the state to return machines.

The machines returned to the market. The concessions for them have expired, so they functioned in the untaxed gray zone. This ineffectiveness of the struggle against “one-armed” aroused controversy throughout the entire period of the Capitol’s administration. To the extent that in 2013, officers of the Central Investigation Office entered its cabinet. Investigators assumed it’s too suspicious that thousands of “one-armed bandits” still exist in Poland. According to the law, these machines could only be played for minimum rates, but in reality the restrictions did not exist because the machines were out of control.

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