Portuguese to Regulate Online Gambling via New Reforms—but How Well?

Portugal has just joined the ranks of online regulation, as of June 28^th.

The New Law

In late April,  President Anibal Antonio Cavaco signed Portugal's online gambling reforms into law, opening a market that was previously monopolized. The cash-strapped government seeks to add €25 million to its new budget from new licensees.

Until now, gambling operations in the country had been restricted to the government’s gambling monopoly, Santa Casa da Misericordia.

Strict History

In the most prominent challenge, Bwin attempted to sponsor the Portuguese football league in 2005. However, the effort was blocked by the government and upheld in Bwin's subsequent court appeal.

Bwin steadfastly continued to offer a Portuguese language version of its website, resulting in a government order for all Portuguese ISP’s to block access to offshore gambling sites.

Financial Woes

The Portuguese government has now softened its stance due to economic issues.

An €78bn bail-out by the EU Commission, the European Central Bank and International Monetary Fund in 2011 rescued the country from bankruptcy, but the economy has yet to recover.

The Portuguese government's economic woes were amplified last year when the country left the European financial rescue program, leading to tax increases which were roundly criticised as seemingly punitive.

Concerns Remain over New Rates

The tax rate for online casino and poker operators is 15% of gross gaming revenue if an operator’s annual income is less than €5m, with a jump of 3% for every €1m in income over €5m, with a maximum rate of 30% once annual income hits €10m.

The Remote Gambling Association sees the proposed 8 to 16 percent tax as discouraging: potential new entrants into the online gambling market will drop out at an estimated rate of 80% in the new regime's first year.

Also criticized was the fact that Santa Casa will retain the offline sports-betting monopoly at a tax rate of 50% less than online competitors.

Good Luck Needed

The desperation of the Portuguese economic situation seems to be applying high hopes to a system that should be focused. As the new regulations kick into effect, we shall soon see how successful the new regulations will aid Portugal's economy.