EGBA calls for Portuguese igaming tax rethink

The European Gaming and Betting Association (EGBA) has called on the Portuguese authorities to review the country’s online gaming tax rate following reports that as many of 75% of players gambled via unlicensed sites in 2018.

The claim that three-quarters of players are flocking to illegal sites comes from a survey conducted by Lisbon’s Universidade Nova and business intelligence specialist Qdata, which notes that this represents a 10% year-on-year increase on 2017.

The growth in illegal gambling came despite the country’s gambling regulator Serviço de Regulação e Inspeção de Jogos (SRIJ) ordering 338 unlicensed sites to withdraw from the market in 2018, with criminal proceedings launched against 13 operators.

The EGBA blamed the growth of the illegal market on the country’s high igaming tax rates, which see operators face a 15% turnover tax on revenue up to €5m, then a further 15% our revenue above €5m for gaming and bingo. Sports betting operators, meanwhile, pay an 8% turnover tax on revenue up to €30m, then 8% on revenue over €30m.

A plan to shift to a flat tax of 25% of turnover was proposed for the country’s 2019 budget, only to be removed in October 2018.

“[The] current Portuguese tax regime for online gambling is discriminatory because it applies a more favourable tax for some operators, whilst others have to pay a much higher tax based on a broader tax base,” EGBA secretary general Maarten Haijer explained.

He said that while there were few restrictions in terms of product or the number of licences available, applying for a Portuguese licence was much less attractive for igaming operators due to the tax rate.

Haijer noted that only one EGBA member held a licence in the country, and while others were interested in entering the market, they would be more likely to apply if the tax regime was amended. Currently just 10 operators have secured licences in the market.

“If the tax rules do not change then Portuguese consumers will continue to find more competitive gambling products with websites that are not regulated and licensed in Portugal and do not pay tax in Portugal and might expose Portuguese players to inadequate consumer protection safeguards,” he said.

As a result the EBGA is calling for a shift to a flat, revenue-based tax model, which would bring Portugal in line with the majority of other European jurisdictions.

“This would encourage more companies to get a licence for the Portuguese market and increase the share of existing Portuguese players who are playing within the regulated online gambling environment in Portugal,” Haijer said.

In 2018 Portugal's igaming market saw revenue grow 24% year-on-year to €152.1m (£131.2m/$171.4m), with €78.9m coming from sports betting and €73.3m from casino and bingo.

iGamingBusiness.com's Portugal e-zine from October 2018 offers a more in-depth analysis of the current state of the market.