Economics of Gambling in Poland

The Ministry of Finance regulates the Polish betting and gaming industry under the Gambling Act of 1992. Since the collapse of the communist regime and the implementation of the 1992 Act, the gaming industry in Poland has grown rapidly. The number of operators who are supplying gambling services in each of the sectors of the market is given in the table below.

Number of Companies in the Polish Gambling Industry in 2003 and 2004:

Sector > 2003 > 2004
Lotteries > 2 > 2
Casinos > 6 > 5
Slot machines outside the casinos > 11 > 11
Slot machines with low prizes (AWP) > 4 > 23
Betting > 5 > 7
Bingo > 2 > 2
Media gambling services > 5 > 3
TOTAL > 31 > 49

Source: Submission to the Enquiry from the Ministry of Finance, Poland

According to an Act on gambling and sweepstakes the government of the Republic of Poland has a monopoly on running a business in lotteries, videolotteries and telebingo. An extra charge of 25% is added to the price of each lottery ticket in the lotteries and an additional 10% is charged for videolotteries and telebingo. Eighty percent of the revenue from this extra charge becomes the income of the Sports Development Fund, whose financial resources constitute the most significant source of sport financing in Poland. €107 million is the budget of the Sports Development Fund, according to its finance plan for 2005. That money is mainly divided as follows:

– 70% allocated to sports construction investments: €72.5 million
– 25% allocated to development of youth and children’s sport: €25 million
– 5% allocated to sport for the disabled: €5 million

In the Polish national budget, only €39 million is allocated for sport, slightly more than a third of the revenues for sport produced by the lottery and gambling.

Annual GGR 2000 – 2004 (in € thousands)

Sector > 2000 > 2001 > 2002 > 2003 > 2004
Slot machines outside the casinos > 48,155 > 53,721 > 52,392 > 52,703 > 59,300
Casinos > 51,076 > 45,557 > 45,353 > 44,535 > 49,055
Bingo > 3,585 > 3,019 > 2,543 > 2,085 > 1,618
Lotteries > 277,236 > 272,907 > 285,880 > 295,393 > 305,719
Betting > 20,079 > 28,328 > 37,615 > 37,691 > 44,553
Total > 400,131 > 403,532 > 423,782 > 432,408 > 460,246

(€1 = 4,08 PLN)

Source: Submission to the Enquiry from the Ministry of Finance, Poland

Turnover of Gambling Market Participants in Poland (in PLN thousands):

Company > Turnover: 2001 > 2002 > 2003
1. Totalizator Sportowy > 2 273 358 > 2 371 267 > 2 420 589
2. Zjednoczone Przedsiębiorstwa > 427 455 > 413 985 > 422 061
4. Casinos Poland > 360 887 > 378 227 > 350 457
5. Star Typ Sport > 95 034 > 164 043 > 217 083
6. Profesjonał > 99 855 > 136 756 > 182 164
7. Casino Polonia Wrocław > 131 591 > 130 559 > 128 767
8. Totolotek TOTO-MIX > 105 420 > 120 115 > 100 084
9. Filmotechnika > 69 845 > 63 971 > 72 349
10. Estrada Polska > 49 813 > 53 225 > 57 590
11. Bingo Centrum > 31 495 > 32 548 > 31 964
12. Casino Centrum > 23 330 > 21 600 > 29 747
13. STWKSłużewiec > – > – > 28 407
14. Finkorp > 20 367 > 19 167 > 16 822
15. Biss International > 18 690 > 18 687 > 14 750
16. Golden Play > 16 977 > 15 655 > 13317
17. Grand > 9 493 > 10 305 > 8 285
18. Betako > 6 162 > 7 385 > 6 456
19. Fortuna > 5 358 > 5 572 > 5 069
20. Club Fair Play > – > – > 4 635
21. Polski Monopol Loteryjny > 395 > 3 295 > 2 634
22. Casino Lubuszanin > 2 399 > 1 775 > 630
23. Progaz Queen’s Casino > 1 799 > – > –
Total > 4 033 764 > 4 288 864 > 4 496 696

Source: Submission to the Enquiry from the Totalizator Sportowy

Gambling figures of revenues have not changed significantly during the course of the past five years and they are not expected to change between now and 2010. Polish betting and gaming premises’ licenses cost PLN150,000 (€36,400), with a further guarantee of up to PLN 700,000 (€170,000) also being required from all casino, slot hall and betting shop operators depending on the number of facilities that they run. Licenses are granted for a period of six years.

Fees Collected for Licenses to Organise Games of Chance and Mutual Bets (in € thousands):

Sector > 2000 > 2001 > 2002 > 2003 > 2004
Gambling services with high payouts > 2 597 > 644 > 250 > 1 663 > 1 136
Audio lotteries, promotional lotteries and other lotteries > 1 246 > 1 561 > 1 578 > 1 850 > 2 252
Slot machines with low prizes > 0 > 0 > 0 > 1 850 > 1 657
Total > 3 843 > 2 204 > 1 829 > 5 364 > 5 044

Source: Submission to the Enquiry from the Ministry of Finance, Poland

All operators used to be obliged to pay VAT tax at 22%. However, since 11 March 2002 all entities running an activity in the scope of games of chance and mutual bets are not obliged to pay VAT but instead are obliged to pay a Gambling Tax (Act of 29 July 1992 on games of chance and mutual bets, article 40, paragraph 1).

Gambling specific taxes in Poland are as follows:

10% in case of award lotteries, raffle bingo games, cash bingo games and mutual wagering
• 15% in case of cash lotteries and telebingo games
• 20% in case of number games
• 45% in case of games organised in casinos and slot machine games salons and in case of video lotteries
• the tax on games rate in virtue of conducting the economic activity in the scope of mutual wagering regarding the sports competition of animals, on the basis of permits granted exclusively for the organisation of such competitions, amounts to 2%.

The taxpayers who have permits for the organisation of slot machine games with low prizes pay the tax in the form of a lump sum amounting to the equivalent of:

€50 – for the period until 31 December 2003,
• €75 – for the period from 1 January 2004 to 31 December 2004,
• €100 – for the period from 1 January 2005 to 31 December 2005,
• €125 – for the period from 1 January 2006,

on a monthly basis for every slot machine.

The additional payments amount to:

25% of the stake or price of a ticket or other participation receipt – in numbers games;
• 10% of the stake or price of a ticket or other participation receipt – in video lotteries, cash lotteries and telebingo.

Aggregate Amount of Gambling Tax Collected from Each Sector Between 2000 – 2004 (in € thousands):

Sector > 2000 > 2001 > 2002 > 2003 > 2004
Slot machines outside the casinos > 19 077 > 24 183 > 23 592 > 23 753 > 30 207
Casinos > 17 919 > 20 634 > 20 591 > 20 138 > 22 078
Bingo > 841 > 715 > 593 > 466 > 360
Lotteries > 109 > 118 > 108 > 320 > 113 > 459 > 117 > 076 > 121 > 414
Betting > 4 753 > 7 482 > 10 514 > 12 435 > 15 247
Total > 151 > 708 > 161 > 333 > 168 > 749 > 173 > 869 > 189 > 305

(1 EUR = 4,08 PLN)

Source: Submission to the Enquiry from the Ministry of Finance, Poland

The obligation of collecting and transferring the additional payments for companies conducting a video lottery is six months after the date of commencement of the economic activity in this area.

The entities organising the games are obligated to transfer the revenue from the additional payments onto the separate special receipts accounts, operated by:

the minister responsible for cultural matters and national heritage protection – 20%,
• the minister responsible for physical education and sport – 80%.

The receipts from the additional payments for the cultural matters and national heritage protection are assigned exclusively for the promotion and support for:

nationwide and international artistic events, inclusive of educational events,
• literary creation and periodicals, as well as for activities in favour of the culture of Polish language and developing the reading habit, supporting the cultural magazines and lowimpression publications,
• activities in favour of the Polish national heritage protection,
• young writers and artists,
• activities undertaken to enable the access to cultural values for handicapped persons.

The receipts from the additional payments for physical education and sport are assigned exclusively for the modernisation, overhaul and financing of investments connected with sports buildings and the promotion of sport among children, teenagers and the handicapped.

The employment in each sector was stable in Poland in 2000-2004, and is not expected to change in the next five years given current legislation.

Employment in the Gambling Services Market 2001 – 2004:

Sector > 2001 > 2002 > 2003 > 2004
Slot machines outside the casinos > 1 098 > 1 077 > 1 046 > 1 164
Casinos > 1 646 > 1 584 > 1 531 > 1 652
Bingo > 91 > 97 > 93 > 62
Lotteries > 2 372 > 2 199 > 2 846 > 2 794
Betting > 796 > 993 > 1 887 > 2 224
Total > 6 003 > 5 950 > 7 403 > 7 896

Source: Submission to the Enquiry from the Ministry of Finance, Poland

GAMING SECTOR ANALYSIS

Lotteries

The lotteries in Poland consist of: Cash Lotteries and Numerical Games. Those two activities are covered by the State monopoly. Totalizator Sportowy, Poland’s largest lottery company, generates over 95% of all lottery revenue in the country.

Polish Lottery Market Structure 2004:

Operator > Market share (in %)
The sector of numerical games
- Totalizator Sportowy Sp. z o.o. > 100.0
- Total > 100.0
The sector of cash lotteries
- Polski Monopol Loteryjny > 4.4
- Totalizator Sportowy Sp. z o.o. > 95.6
Total > 100.0

Source: Submission to the Enquiry from the Ministry of Finance, Poland

The vast majority of Totalizator Sportowy’s turnover is generated by lotto, though it has sold instants as well since September 1999 and their share of turnover has grown rapidly. The lotto games offered by Totalizator Sportowy include Duży Lotek (6/49 lotto), Express Lotek (5/42 lotto), Zakłady Specjalne (5/45 lotto) and keno game – Multi Lotek (10/20/80) and numbers game – Twój Szczęśliwy Numerek (4/45 + 1/36).

Taking into account all Totalizator Sportowy on-line network, there are about 11,000 outlets, of which 7,400 are handled by SMEs. According to Totalizator Sportowy calculations there are about 16,500 people employed at their outlets. Overall indirect employment in Totalizator Sportowy could reach 28,000 people full or part time. In addition to tax paid, Totalizator Sportowy regularly contributes large sums of money to the variety of “good causes”, such as education, health, culture and sport.

The other lottery operator in Poland is Polski Monopol Loteryjny. Prior to 1999 it was the only provider of instant games in Poland; however since then Totalizator Sportowy has captured a large portion of the instant lotteries market. Polski Monopol Loteryjny does not provide any numbers games. During 2003 Totalizator Sportowy’s sales were PLN 2.407 billion (€584.7 million). The total value of the Polish lottery market in 2003 was approximately PLN 2.759 billion (€670.3 million).

The Totalizator Sportowy is currently working on a system of online/internet/mobile phone services. At the moment though, such services are illegal. In addition, according to Polish law, cross-border gambling is also illegal.

Casino Gaming

Casinos have been licensed in Poland since 1989, with the formation of Casinos Poland. The number of casinos that are permitted per Polish town or city is dictated by population. The scale ranges from no casinos for towns with population of 250,000 or less, whereas cities with over one million inhabitants are permitted five casinos.

In total, there are approximately 35 casinos in Poland in what has developed as a small but competitive market despite the fact that until recently there were restrictions on the number and location of properties. The typical casino generates an average annual GGR of approximately €6 million. Table games are by far the most popular, accounting for 78% of GGR during 2002.

Machine Gambling Outside Casinos

Video poker machines are permitted in Poland and, as is the case with casinos, a town’s or city’s population determines the number of gaming machine halls permitted. Towns with a population of less than 50,000 inhabitants are not permitted to have a gaming hall.

There are two kinds of gambling machines located outside of casinos in Poland: gambling machines and slot machines with low prizes. According to the act of 29 July 1992 on games of chance and mutual bets:

Art. 2. 2a. Slot machine games shall be the games that are played using mechanical, electromechanical and electronic devices aimed at winning either cash or material prizes.

Art. 2. 2b. Slot machine games with low prizes shall be the games that are played using mechanical, electromechanical and electronic devices aimed at winning either cash or material prizes, wherein single winnings may not exceed 15 euro, and the amount of the maximum rate for participation in a single game may not exceed 0,07 euro.

Legislation on gaming machines passed the Polish Parliament in 2003. Under the new legislation the maximum stake is €0.05 with the maximum payout being €10.80. There is a tax that was initially set at a monthly rate per device of €36.50 during 2003 increasing to about €55 during 2004, €73 during 2005 and reaching €91 during 2006. There will also be an annual license fee payable per device of about €7.40. (Source: GBGC Report)

At the end of 2000 there were an estimated 50,000 grey (illegal) machines operating in the country’s bars, pubs and arcades. It is doubtful that anywhere near this number will be reached as legal gaming machines replace the grey machines, as each location will be limited to just three devices and they must be situated at least 100 metres from churches and schools.

Betting

Sluzewiec-Tory Wyscigow Konnnych Spolka (STWK) holds the exclusive license to run both on-course and off-course betting on horseracing in Poland. STWK is licensed and regulated by the Ministry of Treasury.

Three companies dominate sports betting in Poland. They are:

Professional, which is the biggest bookmaker with 300 betting shops. This bookmaker uses Czech software supplied by Tefpunkt.
• STS has 200 betting shops had formerly been partners with Professional;
• Totolotek – Totomix use Telenord software from Denmark. They have 600 sales points. (Source: GBGC Report)

A license must be obtained from Government for each betting shop. Betting tax is 10% of turnover, and winning bets have to pay an additional tax of 10%.

Bingo

Population dictates the number of bingo halls in Poland, similar to casinos and automated games halls. The range of permitted bingo halls is determined as follows: towns with less than 100,000 inhabitants are not permitted to have any bingo halls, whereas cities with more than one million inhabitants are permitted up to seven. Towns and cities with intermediate populations are permitted varying numbers of bingo halls between one and five. (Source: GBGC Report)

Bingo is usually operated by small private companies or not-for profit organisations.

Sales Promotional Gambling

In connection with the fact that promotional sales are organised by over 200 companies and this kind of activity is not the basic activity conducted by those companies it is almost impossible to present the market share held by each operator in this sector. However, below is a graph showing information about licenses granted between 2000 and 2004.

The Quantity of Granted Sales Promotion Licenses in Poland, 2000-2004:

Source: Submission to the Enquiry from the Ministry of Finance, Poland

Charity Gambling

Prize lotteries organised by the non-profit organizations are under the supervision of Tax Chambers. Moreover, prize lotteries are seldom organised and are mainly in the area of one of the few provinces of Poland. Some non-for profit organisations operate Bingo.