iPoker Network Leaves Poland
Polish poker players on the iPoker Network were greeted with an unwelcomed surprise this week as they found out they were no longer permitted to play on the network. As of April 24th, the entire network has withdrawn from the Polish gaming market.
Things like this happen and nobody is thrilled with it, but it does seem that, according to a post on the Gambling Portal Webmasters Association message board, two iPoker skins, Titan and Winner, didn’t notify customers in advance. Polish players would have been booted either way, but having some advance warning is nice so that players can investigate other options, rather than having a bombshell dropped in their laps.
Three major players on the iPoker Network – Betfair, William Hill, and Bet365 – had already exited Poland, but why did they do so and why did the entire network just up and leave? As is always the case, it is because of regulatory issues.
On April 1st, the new Polish Gaming Act went into effect. Prior to these regulations, online poker was not technically legal; only online sports betting was. The new law was promoted as expanding, as “liberalizing” online gambling in Poland and, in a sense, it did. Online casino games, online poker, and online bingo are all now legal in the country. The problem is, the state-run monopoly operator, Totlizator Sportowy, is the only one allowed to operate internet casino games, poker, and bingo. Other operators, including those outside of Poland, can still apply for online sports betting licenses.
So that’s not particularly great for operators or for Polish online gamblers who would like to see plenty of choice. The Polish government has even warned that it will block domains of unlicensed operators and/or block their funding methods by July 1st. That all said, it would not necessarily have been out of the question for the iPoker Network to remain in the Polish market and call the government’s bluff.
In fact, it does not appear that the above licensing issue is the top reason why the iPoker Network, as well as Betfair, Bet365, and William Hill previously, has bolted from Poland. The real reason why the network has decided to abandon Poland is the oppressive tax rate imposed by the new gaming regulations.
At first blush, a 12 percent tax rate looks great. But it is not the percentage that is the issue here – it is what is actually taxed. The regulations levy a 12 percent tax on sports betting turnover. Typically, the tax is on gross gaming revenue (or something very similar), which equals the total bets placed by players (so, the revenue the sports book brings in) minus the player wins paid out minus other player compensation such as a bonus. Basically, governments tax the gambling profits a site actually makes.
Turnover, on the other hand, is the total amount wagered by players. Right away, it is obvious that there is a HUGE difference. No player wins are accounted for at all. It is completely ludicrous to tax a company on its total revenue instead of its profit, which taxing turnover for all intents and purposes does.
In September 2016, the Remote Gambling Association (RGA) criticized this part of the new Polish gaming regulations, saying that the tax plan was poorly thought out and counterproductive:
Despite the stated objectives, which include reducing the size of the unregulated market, the Bill does not address the key issue of a viable tax regime. The existing 12% turnover tax on sports betting has so far failed to build an attractive regime and it is bound to continue to do so, if not changed. The current turnover system will continue to prevent licensed operators from providing the required level of value and choice to Polish consumers. As a result, Polish consumers will continue to seek out better offerings from operators who are licensed outside of Poland and who are not liable to pay tax there. The proposed blocking measures will not stop Polish consumers from doing so, as these measures can be easily circumvented.
“Unfortunately, we have already observed since 2011 the effect of a turnover tax on the ability of Poland’s online gambling regime to attract European operators,” RGA Chief Executive Clive Hawkswood added. “We have advised the Polish authorities that their fiscal framework is not workable. Until it is changed, few operators will take up licences in Poland. This will continue to stifle competition, value and choice for consumers. It would be a great shame if Poland did not seize the opportunity created by the new Bill to move towards a more viable regulatory option.”
Getting back to the iPoker Network, it should be apparent now why it has left Poland. The taxes with the new regulations are just too oppressive. Granted, we are talking about a poker network and the taxes apply to sports betting, but most of the iPoker skins have a sports betting division – several with major ones – so staying for poker (even though they can’t get licensed for it) would be costly.