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Polish E-Gaming Legislation Fails EU Test

by Ulrike Lomas, Tax-news.com, Brussels

23 July 2010


The European Commission has issued a detailed opinion against Polish draft legislation regulating online gaming and betting. The Polish draft legislation had also raised concerns among a number of Member States such as the United Kingdom and Malta.

Sigrid Ligné, Secretary General of EGBA said: “We support the Polish government’s intention to join the growing number of countries regulating the online gaming and betting market in the EU. However, the current draft foresees a wide range of obstacles and obligations which will make it highly difficult for EU licensed and regulated operators to apply for a license in Poland. We urge Poland to revise its draft and align it with the requirements of the EU Treaty.”

According to the EGBA, a number of key provisions in the draft are highly doubtful under EU law. These includes:

  • The requirement for licensees to be established in Poland either in the form of a joint stock company or in the form of a limited company with a very high share capital;
  • The possibility to exclude companies whose shares are quoted on stock exchanges;
  • The requirement for online betting companies to install and store their servers in Poland;
  • The obligation for all transactions related to the betting services to be carried out through a Polish bank or a branch of a foreign bank established in Poland;
  • The unjustified exclusion of certain games such as online poker; and
  • The huge differences (in terms of financial guarantees and license fees) required for online and offline operators.

“Some of these provisions seem to stem from a legitimate wish to regulate and enforce the rules for the online gaming market but they duplicate requirements already fulfilled in other jurisdictions. EU licensed and regulated companies can fulfill all necessary requirements on fraud prevention and consumer protection without being necessarily established in Poland. This draft law would leave Polish consumers without a fair, secure and competitive online gaming market,” added Sigrid Ligné.

In addition, some of the provisions such as the licensing requirements and advertising restrictions also beg the question as to whether the law will be economically attractive for EU licensed operators.

The Polish draft law was notified to the European Commission and Member States on 14 April 2010, and the detailed opinion extends the standstill period until August 16, during which time Poland cannot adopt its draft legislation. Poland is required to reply to the Commission’s views. If Poland fails to take into account the Commission’s objections, the Commission could immediately launch infringement proceedings.

A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp
TAGS: European Commission | commerce | law | fees | e-commerce | gambling | licensing | legislation | Poland | regulation | European Union (EU) | Europe

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