Portugal Seeks Online Poker Regulation By July 10th

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Tuesday, June 17th, 2014 | Written by Charles Washington

In 2011, Portugal received a €78 billion IMF-EU bailout package in order to help stabilize its battered public finances. As part of the deal the Troika demanded the implementation of a number of tax revenue-raising measures, including the liberalization of its online gaming market, estimated to be worth €250 million in year one. The texts of the new gambling laws, however, were met with strong political opposition and have been parked at the Finance Ministry for more than three years. Be that as it may, the Troika has now run out of patience and ordered the Portuguese government to get legislation in place within the next few weeks.

Portugal gambling law

Currently, all types of gambling are legal in Portugal, including casinos, sports betting, lottery gambling games, and online gambling. These all then fall under the umbrella of a 500 year-old religious foundation called the Santa Casa da Misericórdia de Lisboa (SCML), which keeps 27.8% of the revenues it derives from regulated gambling to fund a number of worthy causes, such as hospitals for the poor.

Of course a multitude of European-friendly gambling sites are also available to people living in the country, but Portugal has always tried to prohibit access to these online gambling operations and for years now has been locked in legal disputes with igaming companies such as bet365 as it sought to maintain its monopoly on the industry.

Portugal accepted Troika’s demands

When Portugal accepted the Troika’s bailout conditions, liberalizing regulated online gaming was seen as an essential part of the country’s fiscal responsibilities. The government even agreed to introduce its new gambling laws to parliament within a month, but no progress has since been made. After the latest pressure from the Troika, however, the Portuguese government has now booked parliamentary time to debate the proposed online gambling bill before July 10th, when this parliamentary session comes to an end. After being presented to parliament the assembly can subsequently debate the draft before proceeding with a vote.

Details of the bill

Under the proposed bill, foreign companies will be allowed to apply for online gaming licenses and be liable for tax rates of up to 25% in return. Although critics argue the high rate of tax could lead to players opting to gamble on unlicensed sites, the government believes it is impractical to introduce a lower rate at this time. Another detail of the bill is that Portugal’s current state-controlled monopoly, SCML, will need to relinquish its control of the industry, although SCML is still expected to maintain its 27.8% share of revenues. Commenting on the proposed change to legislation, SCML boss, Pedro Santana Lopes, said:

“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.”

Change to a more liberal European system

According to financial information website, Econòmico, Portugal is seeking to set up a liberal European gambling regulatory system, similar to those already in place in countries such as Spain, Italy and France. The state-controlled gambling authority would then be responsible for issuing operators with gambling licenses, and ensuring that the companies comply with all the requirements set out as law. Moving from a monopolistic to a liberal system is also expected to reap greater tax revenues for the government, a belief expressed by the country’s Deputy Prime Minister Paulo Portas back in 2013.

Nevertheless, it is a stated policy of the European Court of Justice (CJEU) that EU member states should not restrict national gambling markets so as to benefit domestic operators over those from other member states. Consequently, the CJEU states that all EU members should regulate and protect their domestic online gambling enterprises, and that no sanctions can be applied contrary to EU law.

When Portugal was initially exploring online gambling legislation, the country seemed to be considering a monopoly system, prompting European Gaming and Betting Association secretary general Maarten Haijer to make the following comment:

“A monopoly is the worst possible way to restrict the freedom of operators to offer services and of consumers to choose what is best for them. A monopoly would also not help against compulsive gambling as it will most likely push people to play on illegal operators. The experience of other EU member states shows that this approach simply doesn’t work. It is also on Portugal to prove the necessity of restrictions in the online gaming market, as the European Court of Justice established strict and precise rules for monopolies.”