Portugal Gambling Regulator

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An in-depth look at the country’s new gambling regulation and what it means for the industry 14th October 2015, Hotel Myriad, Lisbon, Portugal The final requirements needed to start the online licensing procedure in Portugal were published in June 2015 by the state regulator, Turismo de Portugal.

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This Gambling Regulation and Inspection Service is an integral part of Tourism of Portugal, I.P. And it is subject to the authority of the Tourism Secretary of State. The organism has technical and functional autonomy and is endowed with public authority powers to carry out its function.
In Portugal, the online legal framework regulates the operating of and engagement in casino gaming, poker, bingo, fixed-odds sports betting and pari-mutuel and fixed-odds horse race betting, when engaged in such activities remotely through electronic, IT, telematics and interactive media, or by any other means.
The types of gambling available in Portugal are: casinos. The largest gambling city in Portugal is Espinho with 1 gambling facilities, 22 tables games, 777 gaming, slot, and video poker machines. The largest casino in the entire country of Portugal is Casino Estoril which is located in Estoril.

The Portuguese parliament is set to discuss the possible regulation of online gambling and a decision and new bill are expected before the end of the session on 10 July.

Portugal’s parliament is due to discuss the regulation of online gambling before the start of summer break.

The

Ministry of Economics has drawn up a final bill proposal which would allow foreign operators to receive licenses and set tax rates for online gambling at around 15-20%.

The licenses would be issued by a state-controlled committee, a system that is similar to the ones in place in neighboring Spain, France and Italy.

The drafts of the bill that circulated in 2013 were less liberal in their approach. Currently all the country’s gambling is regulated by a 500-year-old religious organization, the Santa Casa da Misericordia de Lisboa (SCML).

The organization uses the profits it gained from gambling towards charitable causes. The more liberal approach in the final proposal is likely due to the country’s difficult economic position which could be relieved through gambling taxation.

However, Pedro Santana, the head of SCML remains hopeful, “If the state gives us, as we hope, the opportunity to exploit sports betting, we have everything ready to begin immediate investigations, which is not the case with other operators interested in this legislation.”

Portugal does offer land based casino gambling, although there are only 9 in total, and many feel that the government not issuing more casino licenses has stifled competition. Some of these casinos are fairly large though and the casino scene in Portugal is fairly vibrant in spite of the limited selection.

In any case, there’s only two of them that offer live poker, with one poker table each, so the live poker scene in Portugal is virtually non existent. If you want to play poker in Portugal you’re either limited to these two casinos, home games, or playing online, and almost all of the real money poker that goes on in Portugal these days is the online version.

Aside from these casino licenses, all other forms of gambling is controlled by the SCML, which has a monopoly on sports betting and online gambling, including online poker.

Portugal has been mulling over changes to its gambling laws for quite a few years now, especially recently, with some new law that is expected to go into effect fairly soon. The original intention of this new law was to preserve the SCML’s monopoly on offering online gambling, and they not only don’t offer online poker but also came out as saying that they don’t have any interest in doing so either. (2)

So since then, the Portuguese government has rethought this stance, moving away from thinking that they can simply make things like online poker just go away by not offering it and blocking people’s access to it. The fact that Portugal doesn’t officially offer online poker certainly has not prevented people from playing it, and the government’s attempts to keep people from accessing it hasn’t worked very well either. (3)

The focus of the SCML has been on sports betting, and totally neglecting the online poker market doesn’t seem like the best way to either regulate it or generate tax revenue for the government, and their monopoly on online gambling in itself puts them at odds with the EU, which is clearly against gambling monopolies and has worked hard over the years to seek to bring them to an end in other countries.

Blocking people’s internet access to gambling sites is something that many countries attempt, but it has only limited success. It doesn’t stop people from actually gambling on the sites, it only seeks to block access to gambling home pages, and players can access and download software from other sources, in addition to other means to get around these restrictions that are readily available to players.

Portugal has had some economic problems of late as well, which even required a bailout from the EU, so they could certainly use some extra tax revenue, and online poker certainly would represent a source of that, in addition to the benefits and need to comply with EU regulations. So this set the stage for a more reasoned approach to the issue of online gambling regulation which is now in the works.

Portugal’s New Online Gambling Regulatory Scheme

Some new legislation is in the works in Portugal and they will soon have a regulatory scheme for online gambling in place, as several other countries in Europe have done. It may be of benefit that they did take their time with this as this has provided them the opportunity to learn from what has taken place in other countries, to aid in allowing them to put together a set of regulations that will perhaps avoid the mistakes made elsewhere and therefore be more successful.

Whether they have done that sufficiently though is yet to be seen.

One of the big issues here is obtaining a high enough level of compliance among players, and to get this right, you need to account for the fact that in this environment, player buy in is necessary, as well as getting buy in from online gambling companies.

Both are important, and they do work together, as if you can get a site like PokerStars to participate, then Portuguese players who want to play at PokerStars are going to be playing Portuguese regulated poker, since part of the deal is going to require a poker site segregate players at least for tax purposes.

So the more large poker sites you attract, the more you reduce the competition from outside the scheme, so it’s important that you design the regulatory framework to be friendly enough to online poker companies that it is going to be worth their while to want to participate.

In addition, it also has to be player friendly, and there will always be options outside the framework, non regulated sites in other words, that they will always be able to choose from.

There are two main areas of concern here, which are player pool access and tax rates. Player pool access is one that’s particularly important to players, and this boils down to whether or not the player pool will be limited to those residing in the particular regulated country or not. It’s preferable to all that players be allowed to play in the main player pool, and it looks like Portugal’s system will allow for that, thankfully. (4)

The second important issue is that of taxation, and if you tax this too heavily then this tends to drive away players, and there’s a price to be paid here when players play on regulated sites, and it’s that the extra tax paid will affect their bottom line. Someone has to pay this extra tax after all, and an extra amount needs to be siphoned off from the games to pay for this.

Portugal’s proposed tax scheme is on the heavier side, although it does give a break to smaller operators who only have to pay half the tax rate, 15% instead of the 30% that normal operators will have to pay. This likely won’t please the larger operators of course. This also doesn’t make much sense.

So we’ll have to see how this all pans out but it might turn out that Portugal may have to do some more thinking on this to get it to work, and we are particularly interested in what kind of operators this will attract, as well as what the participation rate among players may be.

In the mean time online poker players from Portugal are still accepted at most online poker sites so the effect of this is more to generate more tax dollars for the government than anything, but players will still be watching closely to see how it all unfolds.

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