Portugal Legislation Set: Six Months to Implementation

After two years of legislative consideration, Portugal's new gaming laws are set to be implemented within six months, under the auspices of the country's Office of the Inspection of Games, as an initiative of the Portuguese Institute of Tourism.

Final Draft

Portugal's final version of online gaming regulation is adapted from the experiences of its European neighbors, whoa re slowly accepting online gaming legislation. The openness to online poker is guarded, however, as the player pools have been opened, and foreign companies are able to apply for licenses under the new agreement; however, the accompanying high tax rates being levied threaten to exclude many new operators, with costs for those that stay in the market passed to the consumer.

Under the new regime, gambling activities are categorized for specific legal and taxation jurisdiction. Online poker falls into the category of variable rates of taxation, rendering the situation still murky to those looking to enter the online poker market in soon to be regulated Portugal.

Taxation Rates

Gross gaming revenues in the online poker category will be taxed 15% across the board, applicable to operators with cumulative gross income of all games not surpassing €5 million. For operators with income surpassing €10 million, the rate is set at 30%.

According to previous performance indicators in other regulated markets, dominant provider PokerStars for example is capable of reaching the cap through online poker revenue alone. Other large igaming companies like bwin.party, 888 and Unibet who rely primarily on revenue from non-poker games are also expected reach the top end of the sliding taxation scale.

Tax Rate Concern

The tax rate threatens to suck out not only profits, but operating costs. The rate actually surpasses stronger markets relying on shared liquidity systems across multiple countries such as previously regulated Denmark, Belgium and Estonia, as well in the soon-to be-regulated UK and Netherlands.

There is additional language addressing social initiatives, such as the mandate for regulator funding of problem gambling research, but the extent to which operators can absorb the exorbitant tax rates will determine if Portugal's current proposed model will prove viable.