Portugal’s New Online Gambling Regulations: What Poker Players Need to Know

In just under six months, Portugal’s new gaming laws will be implemented under the supervision of the Office of the Inspection of Games, part of the Portuguese…
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Note: This article is an abridged version of an article previously published on pokerfuse PRO.

In just under six months, Portugal’s new gaming laws will be implemented under the supervision of the Office of the Inspection of Games, part of the Portuguese Institute of Tourism.

The country has been considering the introduction of this legislation for over two years, and it has clearly benefited from some of the experience of its European neighbors in drawing up the final draft.

However, the new regime can be seen as only partially friendly to online poker. The player pools should be open, and foreign companies can apply for a license; however, high tax rates will exclude some operators, and costs will likely be passed on to the consumer.

Tax

Each gambling activity under the new law has its own tax regime. Online poker falls into a category where variable rates of taxation will apply.

The base rate will be 15% of gross gaming revenues—but this only applies to operators with gross income across all games below €5 million.

The rate is then capped at 30% when income reaches €10 million.

Using revenue figures from comparable markets, PokerStars will likely reach this cap through just online poker revenue, assuming it dominates the market as it does in other regulated markets.

Large igaming firms like bwin.party, 888 and Unibet, whose revenue comes from predominantly non-poker games, will also be at the top end of this sliding scale.

A 30% tax rate is beyond the point where operators can absorb the costs themselves. It places it higher than other shared-liquidity markets like Denmark, Belgium and Estonia, as well as forthcoming regulation in the UK and Netherlands.

Players will certainly see lower VIP benefits if online poker sites are to enter the market profitably.

Player Pool

There is no specific provision preventing players joining the global dot-com liquidity pool.

No player to player fund transfers will be permitted. This provision is explained more as the result of a prohibition on borrowing money to gamble rather than as an anti-money laundering measure.

Permitted Games

Tournament poker, Omaha and Hold’em are specifically listed as permitted games.

There is a provision to request authorization for other games—on payment of a fee.

Player Fund Protection

On application for a license, operators must post a bond of €500k. This figure will then be adjusted to reflect the actual average player balances an operator maintains.

In addition, player funds must be held in segregated accounts and not intermingled with operating funds. The balance of this account must be reported every month to the regulator who will have the power to carry out unannounced audits.

Operators must also produce proof of their financial soundness, and alert the regulator as soon as there is any indication of financial difficulty.

EU Jurisdiction

Much of the preamble to the various amendments establishes that the purpose of the law is to protect minors, protect consumers, and prevent crime.

The wording and additional provisions in the law, which include a mandate for the regulator to fund problem gambling research, are an attempt to deal with the dichotomy between national gambling regulation and EU treaties.

Even so, there are a number of cases presently proceeding through the Court of Justice of the European Union where the matter will be settled. Complaints about Portugal’s laws look inevitable.

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This is an abridged version of an article previously published on pokerfuse PRO.

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