Under European Union rules, Member States are free to set their own rules on betting and gambling but the EC Treaty requires that these rules are applied in the same way to domestic and foreign operations. In 2006 the European Commission sent Poland a formal request to end discriminatory taxation on foreign lotteries. At the time Poland exempted winnings from domestic lotteries, or taxed them at a flat 10% rate, whereas winnings from lotteries in Member States were taxed at progressive rates from 19-40%.

It now appears that the European Commission is unhappy with the proposed Polish Gambling Bill, which includes making slot machines illegal outside casinos and the introduction of a 50% tax on gambling businesses. However, it is not thought that the Commission is taking exception to either of these two measures. The bill also is likely to differentiate between Polish companies and foreign companies. A letter has been sent from Brussels to Warsaw asking for more information in order to clarify the situation and decide if the bill would break EU law.

Parts of the bill that seem to be causing concern in Brussels are the requirements that any company planning to operate in Poland must register the business in Poland and have a Polish bank account. Additionally all online operations would have to be connected to a Polish server. Gambling laws in many EU countries are being contested through the European Court of Justice, with mixed results.

As recently as last month, Betfair and Ladbrokes failed to end the Dutch state monopoly on Internet betting. The court ruling stated that any online offering other than the incumbent monopoly can be restricted, even if operators are licensed in other EU countries, until e-gaming laws are harmonised across the EU. Unfortunately so far it has proved impossible to get Member States to work towards any such harmonisation as state gambling monopolies are a huge revenue source for governments. (E-07.16.10)

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