Regulatory data suggests Poland is beginning to expand enforcement in offshore gambling by adding over 46,000 unlicensed domains to its block list. The government is also guiding payment processors to restrict off-site transactions. These actions seek to limit access to illegally operating foreign casinos. The effects are now global as payment processors respond to these limitations as offshore sites are changed. This presumably impacts users in the Middle East.
Poland has begun to combine website blocking with financial restrictions as it steps up its enforcement actions against offshore online casinos. Poland has built a large blacklist and is now legally requiring internet providers to block those domains, as well as payment processors to stop transfers to those sites.
The strengthening of enforcement aims to close the gaps, allowing unregulated grey market online gambling operators who base their business in other countries and use unlicensed payment processors to offer their services to Polish users. As Poland broadens its financial restrictions on offshore online gambling, users in the Middle East are also likely to be impacted.
Regulatory Shifts Influencing Cross-Border Digital Gambling
Poland’s gambling regulations grant exclusive privileges over online casino operations to a state-owned entity. Any foreign or private casino that advertises its services is breaking the law. Authorities maintain a public Register of banned domains that internet providers must block within a specified timeframe.
Payment services must also disconnect from the blocked domains. A European gambling law review study from ICLG indicates that the blacklist comprises over 46,000 domains, showing significant growth compared to previous years.
Payment restrictions have now been added to the domain blocking. Industry analysts report that regulators have started to exert pressure on financial intermediaries to identify and prevent the transfer of funds to blacklisted operators. This tactic is on target for the framework that sustains the unlicensed gambling ecosystem.
Offshore websites offer targeted advertisements to players in countries where online gambling is restricted and unregulated. Players are enticed by offers such as free spins no deposit, which grant limited play on the site. Consumer gambling guides report that no deposit offers are a common promotional tool on unregulated sites, suggesting that these sites are continuing attempts to attract players despite the stricter enforcement.
Impact On Access To Offshore Platforms In Middle Eastern Markets
Casinos can access a plethora of different jurisdictions. Users situated in Middle Eastern Markets use the same platforms available to European users. As Poland continues to develop regulations in the space, operators may respond to Poland's regulations by either implementing more strict verification policies or blocking Poland and all other countries within the EU. This iron wall containment bloc policy does impact access for users in remote other places, as operators often adopt these policies globally instead of a country-by-country basis.
If financial providers choose not to support any domain that may fall under enforcement actions in Poland, the impact can be significant. Certain payment processors have a continental reach. When those processors flag a domain as high risk due to regulations in a particular country, their risk appetite may result in completely cutting off all users of linked high-risk domains.
As reported by the European Central Bank, there have been policies adopted in global payment systems that show an increasing trend in uniformity of risk policies, most likely in response to slimmer counterparty risk. This may include users in the Middle East being completely restricted from services, or some services, by their financial institutions, despite more permissive local regulations.
Increased difficulty in payment processing may result in operators ceasing to accept users from outside of Europe. This will leave users in Europe facing a more remote and higher-tiered market offering.
Changes In Payment Routing And Transaction Monitoring
The Polish authorities have begun regulating banks and payment service providers with more granularity, requiring careful analyses of transactions that may be routed through multiple entities.
A study from regional AMLS describes it as those scenarios where a financial institution simply acts as a relay. According to the authorities, any payment that indirectly facilitates an unlicensed gambling operator is a compliance risk.
Loss of payment options to online gambling operators as a result of notifications to Payment Service Providers has been noticed. Payment methods that were prevalent in Eastern and Central Europe, which were illegally offered, have been reported by the industry. This is part of a wider plan to render offshore gambling unprofitable. Even when a user can find a technical workaround to gain access to a restricted gambling website, depositing and withdrawing funds is likely to be impossible.
The same financial impacts are felt by all users of offshore casinos, as they are hubs in a singular payment system. When in a certain geographic area, key payment system routes are made unusable, it negatively impacts users in all other geographic areas. This impacts users in the Middle East, where users have access to international Payment Service Providers to gambling websites.
Potential Future Restrictions And Regional Policy Alignment
The actions of Poland have been taken to meet the target of all of Europe regarding the regulation of the control and supervision of electronic payment systems and crypto assets. Data from European regulatory bodies indicates that the control and supervision of finances is being designed to converge, and European regulation will control how offshore casinos can function because payment processors will always choose to work with the highest and most uniform regulation.
The offshore gambling sector will likely contract if other countries implement policies akin to Poland's. Platforms may withdraw from legal markets, relocate, or implement more stringent ID verification policies. The consequence may be that closed platforms and complicated payment systems are more common for Middle Eastern customers.
Increasing regulation leads to more compliance costs for operators, which can reduce profitability for markets where there is no licensing available. Unlike other Middle Eastern countries, there is more proposed gambling regulation, where European policies are referred to. Poland will likely be used to justify more rapid digital regulation.
This article was written in cooperation with BAZOOM