Portugal Asked to Rein in “Discriminatory” Gambling Tax System

  • Online gambling first became legal in 2013 and the first licenses were issued in May 2016
  • The country imposes hefty variable tax rates on the sector
  • The EGBA is calling for changes to be made, including the introduction of a flat tax rate for all
  • The association labeled the current system as "discriminatory"
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The EGBA calls for Portugal to end its “discriminatory” online gambling tax system.

Gambling in Portugal

Generally, Portugal has been very welcoming to gambling. All forms of gambling are legal in the country. The state can operate games of chance or delegate this to a third party.

The Santa Casa da Misericordia de Lisboa Games Department (SCML) is in charge of sports betting and the state lottery. It has certain exclusive rights that make it a sort of monopoly for sports betting and various types of lotteries. Betting on horse racing is outside of its scope.

Operators need a contract to offer bingo and horse race betting in the country. These contracts last for terms of two or more decades. Portugal has ten casinos, nine on the mainland and the tenth on the island of Madeira.

All forms of online gambling have been legal since 2013. The government saw this as an easy way to increase tax revenues.  The legal framework for the sector was approved in 2015. The authorities aim to provide a safe environment for gamblers to use online platforms.

Portugal’s government operates some online casinos and licenses other operators. The country actively blocks offshore gambling platforms that target Portuguese residents without being licensed.

The gambling regulator in Portugal is the Servico de Regullacao Inspecao de Jogos (SRIJ). The first license was awarded in May 2016 and there are now 16 licensed operators.

Taxation of online gambling

The 2015 regulatory framework for online gambling included a new tax system. Online sports betting operators are taxed from 8% to 16% on their betting turnover and those offering online casinos are taxed at rates of between 15% and 30% on gross revenues.

A review of this regime was supposed to come two years after the issuance of the first license, which would have been May 2018 at the latest.

Opposition to this tax regime

The European Gaming and Betting Association (EGBA) is calling on the Portuguese government to conduct a review of its online gambling tax system. They believe that the current system is “discriminatory” and that it has a significant impact on the channelization of players.

This proposal comes not long after a new working group was given the task of assessing the possible need to change the current tax regime for online gambling platforms. While the one month that the working group was given has come to a close, no information about its findings has been made public.

Calls for a change

The reason the EGBA believes that the current system is discriminatory is that some operators paying a more favorable tax rate. This, in turn, means that fewer operators have an interest in setting up shop in the country.

There is a significant unregulated market for gambling in Portugal. A recent study from the Universidade NOVA de Lisboa and Qdata showed that about 75% of gamblers in the country use products from the unregulated market. This is an increase of 10% year on year.

One of the main reasons for this transition is that the licensed operators often pass on much of their hefty tax costs to their players. Therefore, gamblers can get better odds elsewhere.

The EGCA is proposing a change from using turnover for taxing sports betting operators to using revenues. The association is also calling for a flat rate for all operators.

Some legislators in the country at the close of 2018 called for a flat rate tax of 25% for online gambling gross revenues. However, this move did not get the necessary support. This came after SIRJ asked for stakeholder input on the current system in January 2018. The end date for this proposal was May 2018 and many operators expressed their complaints to the regulatory body.