www.euroslot-online.com LITHUANIA
Population 3.5m Under 15 500,000 Aged 15-64 2.5m Urban population 67 percent Major cities Vilnius (540,000), Kaunas (350,000) GDP per capita $16,000 Business climate Although it is an EU member, Lithuania increasingly depends on trade with its neighbours, especially Russia. It was one of the worst-affected countries in the world by the 2008-9 economic crisis and growth since has been poor; unemployment is very high.
The common thread that links the gaming sectors in most eastern European countries is taxation – that is, over-taxing the gaming industry for a short-sighted quick fix, until the industry ends up in decline and the tax revenue generated drops to a level below where it started. Lithuania, sadly, is no exception to this. A tax increase on gaming was expected to raise an extra ¤5.2m for government, but has actually resulted in approximately the same tax being generated in 2010 as was received in 2008; this is only a plateau, however, and 2011 will most likely see a drop in the tax paid. When the tax increase arrived in December 2008, the
concomitant increase in operating costs for gaming salons in Lithuania led to four companies going out of business, and some firms had to close gaming centres which had suddenly become loss-making, Overall, 964 people lost their jobs as a direct result of the taxation increase, according to SCGS (State Commission on Gambling Supervision) figures – that’s 34 percent of the total workforce in gaming in the country. Gambling machines and equipment dropped in volume by more than a quarter, a decline of 991 units. And last year saw the industry slide further, with 12 more gaming salons closing their doors, and the number of Category B gaming machines falling to 2110 units. The only silver lining we can see in this cloud is that Lithuania
already has a smoking ban (introduced in 2007), so gaming does not have that further blow to come.
POLAND
Population 38m Under 15 5.7m Aged 15-64 28.5m Urban population 61 percent Major citiesWarsaw (1.7m), Krakow (760,000), Lodz (750,000), Wroclaw (630,000), others GDP per capita $18,800 Business climate Barely affected by the downturn, Poland’s strong economy may be further boosted by the government’s plans to enhance the business environment by reducing red tape and taxation. Yet corruption remains a minor concern, unemployment is on the high side, and infrastructure still requires some improvement.
Many countries are able to fill a void when an industry contracts or stagnates, and this is exactly the case in Poland, where the gaming industry is in freefall – but there is growth in amusement
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EASTERN EUROPE MARKET REPORT
and theme parks, as well as family entertainment centres. January 2010 saw a massive increase in monthly taxation on gaming machines, a rise equating to 300 percent; that in itself could be seen as the Polish government actively attempting to wipe the industry out, an interpretation reinforced by the fact that new licences are no longer granted and existing licences are not renewed when they expire. The last licence legally granted will expire in 2014. Gaming will
surely move underground with such harsh measures in place, so the government will receive no tax at all and the industry will continue without regulation. In the short time since the new laws came into effect, the number of machines in the gaming industry has dropped from around 55,000 to just 19,190. Euromat estimates that the industry has contracted by as much as 38 percent in this time. Elsewhere, however, the news is not all bad. The new laws do not apply to redemption machines that do not employ random- number generators. Polish trade publication Interplay estimates that the market can absorb between 100,000 and 150,000 of this type of machine by 2013. Also seeing growth are amusement parks, with around 37
travelling examples and several fixed-position parks. Around ten new amusement parks are due to be opened in 2010 alone; Poles show a particular liking for dinosaur parks, with numbers well into double figures, partly because of the low operating costs for owners. Family entertainment centres are also seeing growth – in part
because they avoid the tax burden that slots are now carrying, but also because of Poland’s vastly improved economy and quality of life. People are now earning more, with unemployment falling (from 14.2 percent in May 2006 to 6.7 percent in August 2008), and the country has so far been unaffected by the recession raging through the rest of Europe; in fact, Poland’s economy has had no contraction at all to date. The growth in amusement parks and family entertainment
centres (of which there are around 500) is linked directly to this, with higher earnings and better quality of life leading people to spend more time together as family groups. Businesses interested in Poland as an investment or growth opportunity should look to Surexpo – the International Salon of Entertainment Devices & Vending Salon – which has its tenth edition in 2011, running 13-15 October at Centre Expo XXI in Warsaw.
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