Portuguese Regulated iGaming Bill Awaiting Final Approval

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Friday, February 27th, 2015 | Written by Stephen Smith

After months of being under legislative consideration, Portugal’s new online gaming bill is all set to be enacted by the country’s Office of the Inspection of Games, and could become law as early as the end of this month. Up until now the lengthy delay has proved frustrating to Portugal’s legion of poker players, but ultimately the wait could prove a good thing as multiple changes have now been made to the bill which should help online poker’s future sustainability in the southwest European country. The bill also seems to be in line with existing EU laws and conform to the regulatory framework sought by the Portuguese government when it issued a statement last June, stating:

“This initiative is crucial to combat illegal gambling, enabler of fraudulent activities and activities possibly associated with money laundering, while allowing the development of social policies through a balanced distribution of gambling revenues, to compensate the social cost.”

No Player Pool Segregation?

The Portuguese parliament agreed upon the online gambling bill back in June 2014, but the country’s Council of Ministers subsequently sought a number of adjustments before finally giving the bill its authorization on Thursday, February 19th. One key change made to the online poker bill’s early draft is that operators will no longer have to make their servers capable of being monitored in real-time by the country’s gaming regulators. The logistics of such an endeavor would have proved incredibly prohibitive, and would have made the possibility of sharing international player pool a hugely costly exercise. Removing this stipulation has given rise to hope that Portugal will not seek to ring fence its poker players, unlike France, Italy and Spain, and apparently the revised bill makes no mention of internationally segregated player pools.

User-friendly Financial Transactions

Portuguese legislators have also approved a simplified deposit and withdrawal process in which regulated dot-pt sites and players will be permitted to use any credit institution established within an EU Member State. This significant revision should help make the life of internet poker players much easier, and increases the possibility that Portuguese players will not be ringed fenced from other countries.

Restrictive Taxes

One area of the bill which appears to have remained the same is the part dealing with how much taxes operators will be charged. By all accounts, the online gambling bill is expected to set a tax rate of 15% for those businesses with gross gaming revenues of under €5 million, and a 30% of gross gaming revenues for operators with annual gross income above €10 million. This, however, could prove a sticking point for many operators as many will find it difficult to absorb such a high rate of taxation. PokerStars, for instance, would reach the higher end of the taxation scale from its poker operation alone, while other operators relying on their online gambling revenues, such as 888, bwin.party and Unibet will also find themselves in the higher tax bracket.

The effect such high taxes will have on the various companies’ operating costs and profits will therefore likely result in reduced VIP rewards for players, while Portuguese players are also likely to have their winnings taxed at around 35%, as poker winnings are considered income through a game of chance.

Other Revisions

Finally, a number of other revisions have been announced including operators being required to put in place improved social initiatives for responsible gambling, as well as operators segregating their player funds before being granted an online gambling license. This should help avoid the disaster experienced by Full Tilt players after the company’s post-Black Friday collapse.

Bill Lapses On March 2nd

Regulating its online gambling market is seen as an important way for the country to improve an economy battered since the Financial Crisis of 2008. In April 2011, Portugal even followed in the footsteps of Greece and the Republic of Ireland in requesting a financial bailout from the EU, although by May this year the country exited the €78 billion program. Nevertheless, while last year Portugal’s economy experienced growth for the first time since 2010, 13.5% of its 10.5 million population still remains unemployed, with the Portuguese statistics office putting down much of the positive economic activity noted to “a recovery in household consumption and, to a lesser extent, investments.”

If the country now wishes to reap any potentially benefits from regulating its online gambling industry, however, it will have to act quickly as the new online gambling bill has to be voted upon and enacted before March 2nd, or else it will lapse.