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Portugal is a soccer-loving country in the South of Europe, with a population of around ten million people. While it may not be the biggest country in a world, its people are major sports fans and enjoy betting on both sporting events and casino games. With that in mind, gambling has long been popular in this country, in both online and land-based forms. As was the case in many countries, Portugal’s laws were slow to catch up to the reality of online gambling. The situation has now been addressed and gambling – both online and offline – has been regulated in Portugal. However, the way that it has been regulated has caused some controversy, as you are about to discover.
For a long time, Portugal took a somewhat hypocritical stance when it came to gambling. On the one hand, they were perfectly happy for the Portuguese colony of Macau to offer all forms of gambling. To this day, in fact, Macau is known more for its gambling than anything else, being something of a Las Vegas in the East. However, when it came to gambling at home, Portugal has a lot more restrictions in place. For many years the state took control of all forms of gambling centrally. Basically, the Portuguese government could decide whether a particular form of gambling was legal or illegal, seemingly at a whim. As the statutes put it: “Such games may be operated directly, through either a state body or a body controlled directly by the state; alternatively, the state may allow profit-making or not-for-profit private entities to operate such games by inviting tenders in accordance with the Code of Administrative Procedure.”
What this meant in practice was that for many years the Portuguese did not have many options when it came to betting. Three categories of betting were permitted, those being lottery and sports betting, casino games, and raffles (although the last one was never hugely economically important). The state offered two different sportsbooks and one national lottery. Land-based casinos have been legal for many years, and 11 were granted licences to operate with one being placed in each legislative district. What all of the above meant was that there were effectively gambling monopolies being operated as even in the capital of Lisbon there was (and still is) only one licenced casino. Without competition, the people generally suffer, as the operators are free to set the rules of the game.
However, there was a rather large fly in the ointment, at least as far as the Portuguese government was concerned. The existing laws were not equipped to deal with online gambling and its unstoppable rise. In 2005 the British sports betting company Bwin tried to challenge the monopoly in place in Portugal, by attempting to sponsor the Portuguese football league. This move was blocked, but Bwin did not give up and applied for a sports betting licence – a licence which they should, in theory, have been able to obtain. However, this application was also blocked, leaving the state monopoly running the show. What the government could not stop was international betting sites accepting Portuguese players. Within a few years, it was estimated that around 500 international sites were offering Portuguese language versions of their sites and accepting players with Portuguese addresses.
It soon became clear that Portugal was losing out on a huge amount of potential tax revenue thanks to these international interlopers. The government could not afford to let this state of affairs last for too long, so new laws were introduced. The Gaming Law of 2015 made it a requirement for all online gambling sites to obtain a licence and pay taxes to the Portuguese state if they are going to be offering their services in Portugal. The government hoped that these taxes would raise an extra €25 million in revenue for the state. Four types of gambling games can now apply for an online licence: sports betting, bingo, horse-race betting, and casino/poker/slot games. Although the laws now allowed online betting companies to legally enter the market, those companies were far from pleased with one aspect of the new law.
The Portuguese Gaming Law requires that online betting sites pay tax not on gross gambling revenue but on their turnover. As it stands, sports betting sites are charged 16% on turnover, and casino sites (including poker sites) are charged a huge 30% of tax on their turnover. Gambling companies argue that they simply are not able to turn a profit based on these figures. Many simply refused to apply for a licence to operate in Portugal, as the country is now one of the most expensive in the world to operate in. The legislation also allows the state to block the ISPs of unlicensed operators. This has resulted in a situation where Portuguese gamblers have far fewer options than is the case in most other European countries.
Changes are being planned to online gambling laws in Portugal, although it seems they will not change enough to please the online operators. At the moment, Portugal is in a shared liquidity agreement with France and Italy, allowing the Portuguese poker-player pool to merge with those of the other two countries. The amendments to the Online Gambling Laws planned for 2018 will extend this to other forms of online gambling. There are also plans to change the tax laws relating to sports betting slightly. As the gambling companies will still be taxed on turnover rather than revenue, the changes are not expected to make gambling operators happy.
The current state of affairs in Portugal is not ideal, as it leaves the average Portuguese player facing restricted options. However, unlicensed sites continue to accept Portuguese players with no potential penalty to the player for signing up. For this reason, a lot of Portuguese gamblers are taking this option. Neighbouring Spain has experienced a problem with a large percentage of players turning to unlicensed sites in the past for an improved online gambling experience. It looks as though Portugal will face exactly the same issue if the current laws remain unchanged.