Portugal set for "very large" black market
Prohibitive tax rate likely to dissuade sports betting operators from applying for a licence, although opportunities for poker and exchanges may exist
The soon-to-be regulated Portuguese market is unlikely to attract many operators when its online gambling framework passes into law at the end of the month, a senior figure at a major online gambling firm has told eGaming Review.
According to the source, who was speaking under the condition of anonymity, when the regulatory framework passes into law at the end of the month, Portugal would end up with a “handful of licensees and a very large black market”.
The controversial decision to tax sports betting on turnover rather than revenue is the primary factor putting operators off applying for a licence, and the source added there would be a “great temptation” for Portuguese residents to seek out unlicensed operators.
Portugal has set its egaming tax rate at 8% of turnover up to the first 30m, rising to 16% thereafter, with even the lower figure all but wiping out most operators’ potential margin.
But there is some respite for exchanges, which will be taxed at 15% of revenues while online poker will also come under this special ‘person-to-person’ band.
While the regulation is due to come into effect on 28 June, there remains uncertainty over how the process will proceed with secondary legislation and technical guidelines still to be issued.
And although the controversial sports betting tax rate is unlikely to change before implementation, growing pressure could see a review within the near term.
“We know that there is pressure for the tax rate to be reviewed,” Margarida Leitão Nogueira, a lawyer at ABBC in Lisbon, said. “At this stage there will not be a change, but in the near future we don’t know if the pressure or the legal issues arising from the taxes may lead to a review,” she added.
The new regime, which opens up current monopoly Santa Casa de la Misericordia to outside competition, was approved by the Portuguese government in February.
Before passing the bill, accountancy firm PricewaterhouseCoopers urged the Portuguese government to rethink the tax rate or risk losing out on 20m in tax receipts.