Poland: Modified draft amendment to the Polish Gambling Act

By Anna Wietrzyńska-Ciołkowska, Counsel, DLA Piper, Warsaw.

The Sejm (the lower chamber of the Polish parliament) has recently adopted a significant modification to the draft amendment to the Polish Gambling Act. If it is adopted by the Senat (the upper chamber of the Polish parliament) and signed by the president by October this year, it will allow foreign gambling operators to have a presence in Poland by establishing a Polish branch or by appointing a Polish representative.

What was the legislative process that led to this amendment? On 5 November 2014, the Polish government notified a draft amendment to the Polish Gambling Act to the EC. Under this amendment, limited liability companies or joint stock companies conducting gambling activity with a registered office in EU or EFTA countries would be allowed to apply for a Polish gambling licence (currently only granted to Polish limited liability companies and Polish joint stock companies) if they opened a branch in Poland and met all the requirements applicable to Polish gambling companies (including those related to the location of servers, minimum capital requirements, limitations with respect to shareholders and board members, and prior approval of the Polish regulator to any change in the shareholding structure or management board/supervisory board composition). For more details please see our previous blog post.

The first reading of the notified draft amendment in the Commission of Public Finances took place on 4 December 2014 and upon completion the Commission sent a detailed proposal for consideration to the Subcommittee for Controlling the Budget Implementation. The Subcommittee considered the draft amendment at a meeting on 14 January 2015 but its report has not yet been approved because in the meantime the Polish government received some comments and feedback from the EC, including a number of reservations. Unfortunately, the EC’s comments and feedback have not been disclosed to anybody outside the government, including the members of the Commission and the Subcommittee and the members of parliament (all correspondence was classified – limited access clause). As a result of the EC’s comments and feedback, the Minister of Finance proposed a modified draft amendment under which several far-reaching changes have been introduced, inter alia:

  1. the possibility for any limited company or joint stock company or companies acting on the basis of appropriate for those companies conducting gambling activity and having a registered office in an EU or EFTA member state to obtain a Polish licence if they either establish a Polish branch or appoint a Polish speaking representative located in Poland;
  2. a number of detailed provisions related to the appointment of a representative and changing the scope of requirements imposed on both Polish and EU/EFTA gambling companies, e.g. requirements with respect to the nationality of shareholders and board members, removing the limitation on the number of shares held in these companies, the introduction of an obligation to submit a certificate of good conduct on the territory of EU or EFTA countries, the introduction of an obligation to provide documents, once every two years, evidencing no delays in the payments of taxes, customs duties, or social insurance contributions, and documents evidencing the lack of any criminal record concerning the shareholders and the members of the management board, supervisory board, or audit commission, and documents evidencing compliance with rules governing anti-money laundering and the financing of terrorism, as well as with the rules and the rules for accounting;
  3. a change in the requirement to obtain prior approval for any change of data to ex-post inspection, and the potential cancelation of the licence if the requirements of the Polish Gambling Act are no longer being met or if the documents evidencing the meeting of the requirements are not submitted on time;
  4. the introduction of provisions giving the Minister of Finance the right to authorise subordinate authorities to issue decisions on its behalf confirming whether a given game should be considered as a game of chance, betting, or a slot machine game in the meaning of the Polish Gambling Act and therefore whether it requires a Polish licence;
  5. minor changes in tax provisions to clarify the tax records, the subject of taxation, and tax liability in order to remove any further doubts, including an explicit provision prohibiting the aggregation of gaming tax bases;
  6. a transition period for gambling companies to adapt to the modified requirements.

According to the Ministry of Finance, the purpose of the modifications was to (i) rectify the defects related to the binding version of the Polish Gambling Act of 2009 which was not notified to the EC and in many points appeared to be incompliant with EU law and (ii) to avoid any further doubts related to the assessment of the technical nature of certain provisions of the Polish Gambling Act in the context of the judgment of the ECJ of 19 July 2012.

The modified draft amendment is to come into force two weeks after its publication, following signing by the president.

The Subcommittee considered and submitted the modified draft amendment during its meeting on 25 May 2015. On 26 May 2015, the Commission of Public Finances approved the results of the Subcommittee’s work. There was an open question raised by members of the Subcommittee whether the number of far-reaching changes in comparison with the version notified to the EC in November 2014 will require another notification process. The question of compliance with the EU law has been raised with the Polish Ministry of Foreign Affairs. However, the answer given by the Polish Minister of Foreign Affairs on 1 June 2015 was rather strange. The Minister said that due to the lack of any detailed reasoning underlying the proposed modifications, the analysis of whether the modified draft amendment meets the requirements imposed under EU law should be conducted by the author of the draft amendment, i.e. the Minister of Finance.

Despite the doubts concerning the necessity of another EC notification of the modified amendment, or a motion to suspend any work on the modified draft amendment until the EC notification is made once again, the government decided to send it to the Sejm for consideration as it believes that the modified draft amendment is in line with the EC’s reservations and comments. On 12 June, the governing coalition adopted the modified draft in the wording of 25 May 2015. Nevertheless, the governing party’s coalition partner and opposition parties raised their doubts concerning the EC notification requirements, stating their wish to avoid a situation similar to the current one, where – as a  result of court verdicts declaring the non-applicability of the restrictions under the Polish Gambling Act due to the lack of EC notification of the 2009 Polish Gambling Act – the Polish state budget is said to have lost between PLN 6 – 9 billion (approx. EUR 1.5 – 2.25 billion) per year.

The next sitting of the Senat is planned for 24 and 25 June. Consideration or voting on the modified draft amendment is not on the agenda.

The pace of the efforts to adopt the modified draft amendment in recent weeks appears to be connected with the forthcoming parliamentary elections in October. Due to the principle of the discontinuation of parliamentary work, if the modified draft amendment is not enacted by this parliament by October 2015, the newly elected parliament will have to start the work again from scratch, including any EC notification procedures.