The gambling industry in Europe has been experiencing increased unease due to tax hikes, with Britain and the Netherlands serving as examples of how swiftly market dynamics can shift. Poland, however, is no stranger to a heavy taxation burden, having managed one of the toughest tax regimes on the continent for the past 17 years.
The challenge of managing taxation stands as a key issue in what is otherwise an enticing market. Operators face a difficult landscape, as short-term struggles persist, but the long-term potential in one of Europe's fastest-growing economies remains compelling.
Poland's gambling regulatory framework is complex, marked by compromises between political motivations and operational necessities. The core gambling legislation, enacted in 2009, arose from a political scandal known as 'Blackjack-gate,' which tarnished public trust in the industry. This led to the introduction of a stringent 12% turnover tax on sports betting for private operators and an eye-watering 50% tax based on gross gaming revenue (GGR) for casinos. Adding to the burden, players face a 10% winnings tax, collected at the source by operators.
Land-based casinos operate under a licensing model, with state-owned Totalizator Sportowy monopolizing the online casino market and land-based slot machines outside traditional casinos following significant reforms in 2017. Online sports betting is open to private firms through a licensing process, and the reforms also equipped authorities with the power to mandate payment service providers to block transactions to illegal gambling sites, although the effectiveness of these measures is still debated.
Sports betting operators in Poland often voice two main concerns regarding the taxes: they are excessively high and create market distortions. Myke Foster, group head of gaming at Fortuna Entertainment Group, a leading sports betting firm in Poland, stated, "Turnover tax is aggressively anti-customer and always will be. It prevents us offering as fun and as engaging of a product as we’d like to." He noted that the turnover tax directly impacts the competitiveness of sports betting offerings, forcing operators to pursue higher margins to compensate for the tax.
Data from H2 Gambling Capital projects that total sports betting GGR in Poland will reach €1.62 billion by 2026, based on an estimated gross turnover of around €5.07 billion. This suggests a margin of about 32%, significantly above the industry average in other markets, as operators strive to mitigate the 12% loss due to the turnover tax.
Foster emphasized that players are acutely aware of the 10% tax on their winnings but may not fully grasp the implications of the turnover tax on the product options available to them. He elaborated that the unpredictable nature of turnover taxes drives operators to aim for higher margins, ultimately diminishing the competitiveness of their offerings.
Ed Birkin, managing director at H2 Gambling Capital, explained how the high GGR margin is necessary to cover the 12% turnover tax, making the products less appealing compared to those offered by illegal operators. Hermann Pamminger, secretary general of the European Casino Association, echoed concerns at the World Gaming Leaders' Summit, stating it is “almost impossible” to manage Poland's tax burden without compromising the online consumer experience.
Calls for tax reform have emerged, with discussions about shifting from the turnover tax to a GGR-based tax system. In a 2021 opinion paper, Polish economist and former finance minister Konrad Raczkowski suggested replacing the 12% turnover tax with a GGR-based tax rate of 20-25%, aligning closer to the European average. However, such a change would lead to a substantial tax revenue drop, potentially halving expected revenues based on 2026 figures.
Birkin noted that while a shift to a GGR model might reduce tax revenue initially, it could also encourage legal market participation and, thus, long-term growth. The notion that tax policy should balance taxation with onshore participation was emphasized, making it clear that while reforms could affect short-term revenue, they might yield better long-term market health.
Despite high taxes, Poland's gambling market continues to grow. H2 Gambling Capital anticipates that the total GGR, combining online and land-based activities, will reach $4.96 billion by 2026, reflecting several years of consecutive growth. This resilience presents an argument against the immediate need for reform, especially as many more liberalized European markets grapple with similar issues.
However, Poland's unregulated gambling sector poses challenges, with estimates suggesting that a large percentage of Polish players engage with illegal online operators. H2 estimates sports betting channelisation is between 78% and 88%, while online casino channelisation sits significantly lower at around 59%. The unregulated sector doubled in size between 2017 and 2025.
Totalizator Sportowy, the state-owned operator, reports substantial revenues, contributing significantly to state coffers. Liberalising the online casino market might substantially alter the economic landscape, yet the influence of Totalizator Sportowy remains strong. There is still a lack of clarity regarding the likelihood of liberalisation after Radosław Kietliński, a board advisor for Totalizator Sportowy, voiced skepticism about its potential benefits.
A 2025 survey indicated public support for maintaining the state monopoly in gambling, with only 16% expressing opposition. Despite internal calls for reform, Foster believes that the current state monopoly drives customers toward unregulated options, saying, "You’re not going to trick the customers." He urged regulators to consider liberalising the market, suggesting it would benefit both consumers and the state financially.
The political climate present challenges for reform, especially with the upcoming 2027 parliamentary elections looming. Neither major political party seems particularly friendly to industry interests. The hard-right Confederation party is the only one advocating for liberalisation, but unless they can gain broader support, significant legislative changes appear unlikely.
Complicating matters further is Poland's broader political agenda, which is currently dominated by pressing issues such as the Russia-Ukraine conflict. Yet there remains a glimmer of hope that other countries, particularly Finland, which is moving toward liberalising its monopoly market, could inspire similar changes in Poland if the Finnish model is perceived as successful. Still, the cautious Polish context—tainted by past scandals—may impede this potential shift in strategy. As the conversation around market controls and taxation continues, pressure for reform may eventually compel action to address the grey market and better regulate the gambling landscape.
