Polish Gambling Industry Expects Tax Switch As Largest Bookmaker Goes Public

December 10, 2021
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Poland’s bookmakers believe they are close to convincing the government to replace a 12 percent revenue tax on betting with a gross gaming revenue tax.

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Poland’s bookmakers believe they are close to convincing the government to replace a 12 percent revenue tax on betting with a gross gaming revenue (GGR) tax.

A rising number of influential groups have declared support for dropping the current turnover rate, including STS, the country’s largest bookmaker, which backed the GGR tax ahead of a high profile initial public offering (IPO) taking place today.

Local industry observers say legislation to make the change is likely to be passed before the end of the current parliament, the term of which is scheduled to finish in 2023.

On December 10, STS is to debut on the Warsaw Stock Exchange (WSE), selling 30 percent of its shares for close to PLN1.1bn (€240m).

Shortly before the IPO, Mateusz Juroszek, the company’s chief executive, took part in an online chat for prospective investors. During the event, he said that introducing a GGR tax “at a level similar to that of other EU countries would be good for the company” he manages.

VIXIO Data View

Poland's challenging 12 percent turnover tax on sports betting has had a dramatic effect on STS. In the first nine months of 2021, it paid gambling duties of PLN377m (€82m), equivalent to a hefty 46.8 percent of gross revenue of PLN806m (€172m) over the same period.

This partial year GGR total settled just shy of the PLN824m (€179m) yielded by STS in the whole of 2020, reflecting strongly accelerated growth in the wider Polish betting market since the fourth quarter of last year.

See more Data coverage here.

STS NRG Bridge

Support from the market leader may prove to be an important step, but the industry continues to work behind the scenes to convince decision-makers a GGR levy would benefit not only their operations, but also the state budget.

Marek Plota, an attorney-at-law specialised in gambling regulation at the Wrocław-based RM Legal law firm, told VIXIO GamblingCompliance that the GGR tax’s introduction is eagerly awaited by Poland’s licensed bookmakers, but also by a number of major foreign players who have not registered their operations in the Polish market because of the existing unfavourable fiscal regime.

“Introducing a GGR tax would certainly provide a wide range of mid- and long-term benefits to the Polish Treasury. Within the online bookmaking sector, more foreign companies would acquire licences and start to pay their taxes in Poland,” Plota predicted.

“A reasonable GGR tax rate would also discourage Poles from placing bets with unregistered bookmakers who currently pay the entirety of their taxes abroad.”

Asked about the potential timeline for the levy’s introduction, Plota said that “never before have the talks been so advanced, and the decision-makers showed such a positive approach” to replacing the revenue tax with a GGR rate.

“This shift could take place in the next one to two years. The recent discussions in the parliament, held by Polish lawmakers in the presence of bookmaking industry representatives and finance ministry officials, and also the commissioning of a report which calls for the GGR tax’s introduction by Totalizator Sportowy, the state-owned gambling industry player, are some of the positive examples of this trend,” according to the attorney.

In October, at a session of the Consumer and Entrepreneurs’ Protection Team of the Sejm, the lower chamber of Poland’s parliament, lawmakers and other stakeholders discussed a report that former deputy finance minister Konrad Raczkowski had submitted to the finance ministry.

In his study, Raczkowski stated an “optimal level of a GGR tax on gambling is 20 to 25 percent of GGR” and proposed scrapping Poland’s revenue tax, which he claims “is equal to a 55 to 65 percent GGR tax”.

In its 2021 forecast for the country’s gambling industry released earlier this year, the finance ministry said it expected revenues to increase by 24.1 percent to about PLN33.5bn (€7.26bn) in 2021. Bookmakers, specifically, were to grow their revenues by 20 percent.

The ministry also said that, in 2020, the market share of unlicensed bookmakers fell to 9.4 percent, down from 12.4 percent a year earlier.

STS operates more than 400 betting shops and has a robust online presence, which currently generates about 85 percent of the company’s net gaming revenue (NGR).

Last year, STS held a 46 percent stake in the domestic licensed bookmaking market.

In the first nine months of 2021, the business collected bets worth about PLN3.27bn (€710m), up 35.2 percent compared with the same period a year earlier.

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