Polish Offshore Online Gambling Market Shrinks to 25%

The offshore gambling market shrunk to 25% of the total in 2020, new research by H2 Gambling Capital has indicated.

The legalization of online gambling in Poland has significantly shrunk the share of the offshore betting and gaming market in the country, a new report by H2 Gambling Capital, commissioned by Totalizator Sportowy, has revealed.

Offshore gambling accounted for 80% of the total gambling market in the country in 2016 when an amendment to the country’s gambling legislation was issued, paving the way for regulated operations. As of 2020, this number has fallen to 25%, according to the data collected and presented by H2.

H2 Gambling Capital director David Henwood stated that some 120 websites are actively targeting Polish players but not all of those operators are falling in line with regulation. According to Henwood, the company has determined, based on the active websites reviewed, that the value of offshore online gambling in Poland in 2020 was worth zł629 million ($165 million).

According to H2, the value of the offshore market would have been much higher had it not been for the amendments accepted in legislation allowing the government to launch regulated gambling and block unauthorized companies from targeting Polish residents.

Some 78% of the total online gaming and betting market is currently controlled by legal gambling operators, but H2 still expects to see the illegal gambling market register an average growth of 3.9% by 2026, with 4.1% growth for regulated operations.

According to the company, while the Polish government has acted quickly to limit the reach of the offshore gambling markets, it would not be able to eliminate those markets completely without periodic reviews, which allow regulators to take further action.

Meanwhile, UN Global Compact representative Kamil Wyszkowski stated that his organization has been fighting for more liberal rules to allow regulated operators to run their businesses more freely. Wyszkowski explained that if operators are too pressed by regulation, this may create an additional vacuum for criminals and boost the shadow market further.

Low Engagement with the Unregulated Gambling Market in Poland

Further evidence suggests that only 1.5% of adult Poles have played on an illegal betting website, with 2.6% participating in poker or casino. This means that around 1.16 million adult Polish citizens have participated in illegal gambling in the 12 months surveyed by the report published on Monday, September 6.

However, to deal a definitive blow to the offshore gambling market, Henwood advises the government to start focusing on optimizing the conditions for the regulated market rather than weighing legal businesses with unnecessary regulation.

The company puts the current market potential of the Polish online gambling market at zł4.1 billion gross ($1.08 billion) based on current regulation. Out of this amount, zł900 million ($236 million) would be generated by offshore gambling companies. H2 Gambling Capital also estimates that around zł1.8 billion ($473 million) could be generated from taxing online betting and casino gaming through the current regulatory system. In contrast, 2020 brought in some zł900 million in total tax.

However, the market potential could reach zł5.8 billion ($1.52 billion), and the ensuing tax, zł2.3 billion ($600 million). For this potential to be fulfilled, H2 cautions that the state would have to let up on its monopoly and suspend its advertising ban for one.

The regulator would also have to introduce a uniform tax base for games in the industry, the company said as one of the possible scenarios for the country.

H2 Gambling Capital Knows Who the Offshore Players Are

Offshore gambling companies are known to H2 Gambling Capital which has analyzed the bidding players in the market. Presently, ten foreign entities control an estimated 80% of the total illegal online gambling market in Poland.

While the company has not named them in the report, it specified that they are based in Malta, Gibraltar and Curacao. These websites intentionally create Polish websites and applications that then attract unwitting Polish consumers.

This practice is made more unfortunate, as the Polish government has said that participants and purveyors of gambling could face steep financial penalties. However, consumers are not entirely to blame as they are misled by the rogue operators who are not forthcoming about their unregulated status and rely on a lack of awareness on behalf of participants to turn a profit.

H2GC outlined the string of potential dangers that consumers run by opting for offshore platforms, including denied withdrawals, stiff penalties by the government and loss of personal data, among others.

The company’s report also points out that the ban on advertisement is hurtful to legal operators in the country, but this doesn’t stop illegal companies from flooding the Polish market with their ads while regulated entities cannot. While Poland is doing well with blocking unregulated operators and taxation, a lack of flexibility in advertising by regulated entities has continually redirected customers to the grey market.

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