High-stakes game
The European Poker Tour's Polish Open event, a stop on the professional European poker circuit, was held in Warsaw last week. Two hundred and seventeen players from 30 countries competed for the $465,445 (zł.1,423,325) first prize in this zł.20,000 ($6,544) buy-in event, with the pot eventually taken home by 26-year-old Joao Barbosa of Portugal.
Earlier in the month a very different sort of gambling fever spread through Poland, when the Duży Lotek lottery offered its biggest ever prize - zł.40 ($13) million. Although there was no single winner to focus on - the jackpot was divided between six tickets - media reports showcased the amount of excitement the record sum created among Poles.
Magic of the numbers
Duży Lotek and Multi Lotek are the biggest lotteries in Poland, with the former in operation for over 50 years. Both are run by Totalizator Sportowy (TS), the state-controlled monopoly which oversees lotteries and numbers games in the country. The firm has around 11,000 sales points nationwide.
TS also oversees horse racing at the Służewiec race track in Warsaw now, following a 30-year lease agreement for the property signed with the Polish Jockey Club in May this year.
According to the firm's data, over 60 percent of Poles try their luck on the bigger lotteries and about 600 people in Poland have become lottery-millionaires since 1996. All those players generate big money for TS - its 2007 revenues from lotteries and numbers games reached zł.2.7 billion, while its sales profit amounted to zł.239.9 million.
In turn, the company brought around zł.1.3 billion to the state budget last year. A large portion of the taxes TS pays is spent on the promotion of sports among young people and the disabled, according to the firm.
Other games of chance
Totalizator Sportowy may have a monopoly on lotteries, but it's not the only game in town. Other opportunities for gambling have developed in Poland, especially since the late 1980s and early 1990s, when the process of creating a legislative framework for casinos took place.
The first legal casino operator was Casinos Poland, which launched in 1988 and is currently owned by LOT Polish Airlines, "Polish Airports" State Enterprise and G5, a subsidiary of international casino operator Century Casinos. The firm claims to have a 55.28 percent share of the (legal) casino market in Poland, operating seven full casinos and one slot casino in six Polish cities.
Another major player is Olympic Casino Poland, a subsidiary of the CEE-focused Olympic Entertainment Group, which has eight casinos in four Polish cities. The firm entered the Polish market in 2007 when it took over Casino Polonia, the third-largest casino operator in Poland.
Olympic Entertainment Group is listed on the Warsaw and Tallinn bourses. In the first nine months of 2008, it earned consolidated revenues of EEK2.07 ($0.16, zł.0.51) billion, marking y/y growth of 22.9 percent. Its revenues from Poland in that period accounted for 17.7 percent of total revenues and amounted to EEK367.8 ($29.6, zł.90.6) million, up 179.6 percent y/y.
| A popular pastime Revenues generated by casinos in selected European countries in 2007, in € million |
||||
| Country | Revenues | Recent change y/y | Number of casinos | |
| France |
2,811
|
28.2
|
197
|
|
| Great Britain |
1,073
|
10.7
|
138
|
|
| Germany |
1,065
|
10.6
|
81
|
|
| Greece |
802
|
8.0
|
9
|
|
| Netherlands |
719
|
7.2
|
14
|
|
| Switzerland |
601
|
6.0
|
17
|
|
| Italy |
585
|
5.8
|
4
|
|
| Spain |
554
|
5.5
|
42
|
|
| Austria |
277
|
2.8
|
12
|
|
| Czech Republic* |
170
|
1.7
|
150
|
|
| Sweden |
125
|
1.2
|
4
|
|
| Estonia* |
121
|
1.2
|
163
|
|
| Poland |
80
|
0.8
|
27
|
|
| Denmark |
77
|
0.8
|
6
|
|
| Romania |
66
|
0.7
|
22
|
|
| Luxembourg |
46
|
0.5
|
1
|
|
| Hungary |
42
|
0.4
|
5
|
|
| Finland |
34
|
0.3
|
1
|
|
| *No distinction made between slot and full casinos Source: European Casino Association |
||||
A universal need?
"The need for gambling is as universal as the need for other types of entertainment and it is visible in every culture," Zbigniew Macioszek, a member of the board of Casinos Poland, told WBJ. "Poland is no different in that respect from any other country," he said.
Yet the style of gambling varies considerably from culture to culture. "Poland did not take to craps, for example, but poker is very popular," Macioszek said.
This purported universality of gambling makes it impossible to describe a stereotypical casino patron in Poland, according to Macioszek, who noted that these people were not just the affluent, over-50 businessmen that many people imagined.
"You would be surprised how many young people there are in a casino every night," he said, adding that average joes who don't spend large amounts accounted for the majority of the casino's revenues in Poland.
Casinos Poland claims that its casino in the Marriott Hotel is the most popular in Poland. Foreign clients account for between eight to 35 percent of the total. "Their presence depends on the region and the season of the year," Macioszek explained.
Shady reputation
In sharp contrast to Duży Lotek, which is hugely popular and well-established in Poland, casinos are largely regarded as dens of iniquity.
"We are seen as a controversial business," Macioszek said.
He admitted, however, that this reputation is understandable since in many other places in the world the casino business is rooted in illegal activities and the mafia. Poland has been no exception either, as scandals involving the mafia and the former secret service operatives took place in Polish casinos in the 1990s.
Although the industry has put much of this behind it, some questionable financial dealings may still occur, as a 2007 audit of Casinos Poland by Ernst & Young showed. The value of "suspicious transactions" which the audit revealed amounted to over zł.10 million, according to Newsweek Polska.
Legal framework battles
A poor reputation is not the only obstacle casinos face, however. Wrangling over the legal framework for the industry has also created problems.
In May, a debate appeared in the media about whether the government should lift restrictions limiting the number of casino licenses. At present, only one full casino per 250,000 inhabitants can operate in a city. For slot casinos the requirement is one per 100,000 inhabitants.
These restrictions have kept the number of full and slot casinos in Poland relatively low - 27 and 200, respectively. In comparison, France has 197 full casinos and Great Britain has 138, according to European Casino Association data.
In June, the Polish government gave up on plans to lift such restrictions, according to press reports.
Industry criticism
Interestingly, the proposal to lift the restrictions met with criticism from the gambling industry itself.
"This decision was not thought through. [Lifting restrictions] would result in a number of threats, such as problems with oversight of the market," Jacek Kosiński, the president of gambling, media and real estate group ZPR, told Puls Biznesu in May.
As examples, he pointed to Russia and Turkey, where the removal of restrictions on the number of casinos created a host of new problems. In Russia, gambling addictions rose sharply and criminal organizations took control of many casinos, while in Turkey the backlash to a similar proposal nearly resulted in the closure of all casinos in the country, he said.
Casinos Poland's Macioszek also noted that the restrictions served an important purpose.
"I agree that we cannot let the business run free, because some gamblers may hurt themselves," he said, adding that the casino market is regulated in other countries too. The burden of regulations on the gambling industry could be lighter however, Macioszek said.
"I can understand that we are treated by the State Treasury like sheep to be 'shorn,' but I appeal to the state to at least leave us our legs."
Some regulations seem only to make the lives of the gambling operators more difficult and do nothing to increase the government's earnings, Macioszek explained. Other regulations, ostensibly aimed at boosting the government's take from the industry, will bring about the opposite effect, helping to develop the "gray economy." One example, he said, is a plan to introduce a 10 percent tax on each betting transaction from January 2009 on.
The new tax would support investments in the run-up to the Euro 2012 soccer championship, but casino owners claim it will do more harm than good. According to special research commissioned from the PolishAcademy of Sciences by casino operators, the tax is likely to stimulate the development of illegal gambling dens.
E-legal gambling
Online gambling is an issue that elicits mixed emotions from regulators and industry insiders. It is illegal to run an online gambling site from the territory of Poland, and most EU countries have similar laws, but attempts to legalize such operations have been made several times.
"The only state that made [online gambling sites] legal is Malta, but the regulations are so heavy that if any other country were to legalize the industry, it would attract investors immediately. I cannot see any reason why Poland should not do it," Macioszek said. He added that the legalization and development of online gambling would create a great deal of synergy with traditional casinos.
The popularity of online gambling is growing rapidly in Poland. For example, gambling site Bet-at-home.com has tripled its Polish client base to 450,000 within the last two years, according to Dziennik. Every fifth player on the site comes from Poland, according to Bet-at-home's data.
The risk of addiction has grown alongside the popularity of online gambling, however. Earlier this month, an article inDziennik described how psychiatric therapists are struggling to deal with the growing number of online gambling addicts.
New framework needed
According to Macioszek, a new legal framework for gambling is needed in Poland.
"[The current framework] was created almost 20 years ago from scratch, with a lot of regulations copied from other countries. Thus, a number of regulations are obsolete or inapplicable in the current context," Macioszek said.
"There is no one system that we could follow, since every country is different. There are, however, solutions that are worth noting," Macioszek said, pointing to the US as an example.
"In Poland, we fall under the government's customs department, which does not have much time to focus on the branch and does not understand it," he said.
