Portugal Gambling Tax

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Last week's official 'expansion' of Portugal's online-gambling market by the country's authorities might not turn out to be the boon those politicians had envisioned, if early returns from the companies that Portugal would like to see become officially licensed are considered. At least three major companies — William Hill, Amaya (PokerStars and Full Tilt), and PKR — have pulled out of the Iberian Peninsula as of June 28th, and it's a safe bet that more might follow. PartyPoker had previously pulled out of Portugal, having virtually no market presence in the country, and parent bwin.party has no plans to return.

As a result, applying for a Portuguese license is much less attractive for online gambling companies based elsewhere in the EU: for instance, only one EGBA member has a license in Portugal, while many more are very interested to obtain a license there if the tax regime becomes non-discriminatory and better suited to the online gambling environment. Gaming legislation enacted in 2015 opened the market to international betting brands, but high taxes and excessive regulation have so far put a damper on any excitement we once held that Portugal would finally embrace the reality of online gambling. To date, a total of five gaming companies have received online betting licenses in Portugal.

Several other prominent online sites serving Portuguese bettors have yet to formally announce a decision in the wake of the new tax regime's implementation. Some of these firms, including 888, may be waiting to see how many of their competitors depart, as a way of judging whether the remaining market share just might be worth the cost.

The game changer in all of this? It's the new tax code implemented by the Portuguese pols, intended to repatriate money into the country's tax coffers that has, in the past, gone to unlicensed or untaxed sites.

Portugal's new tax rates for online gambling make it all but impossible for online operators to serve the country's bettors while making any sort of profit. For sports, Portugal now demands a tax on the gross betting handle of between 8 and 16 percent, the top number being more than the vig typically charged on most bets.

And as for online casino games and poker, Portugal now demands a ridiculous tax based on gross gaming revenue (GGR). It begins at 15% for smaller companies, those with an annual income of less than €5 million, and it steps up from there to a top rate, applicable to most large firms, of 30% of GGR.

It appears all but impossible for online operators to profit under the new Portuguese tax regime, which is why Bill Hill, Stars/Tilt and PKR may be only the start of a major wave. The tax demands make France's oft-decried tax rates look like a government freebie.

Of the three companies who have already announced their departure from France, PKR has no plans to return. Bill Hill and Stars/Tilt parent Amaya have asked their affiliates to stop marketing to Portuguese players for the time being, effective immediately, though it is likely that they would return to the country of ten million or so if Portugal backs off on its tax rates. The problem Portugal hasn't fully grasped yet is that which plagues nations such as the United States: By driving its citizens to unregulated, gray-market sites, Portugal realizes zero tax revenue from those players' online bets.

William Hill and PokerStars both issued brief statements on their pullout in e-mails sent to their affiliate networks. William Hill also pulled out of the Baltic country of Estonia at the same time, and over related licensing difficulties. Said William Hill, bluntly, in its e-mail to affiliates, 'William Hill will officially stop providing its online gambling services to customers currently residing in Portugal and Estonia.' The company, though, expressed optimism that Portugal might mitigate the current situation, adding, '[W]e will have the opportunity to work together in the future.'

Over at Amaya, PokerStars Partners Team affiliate members received a similarly brief announcement, though PokerStars is planning to go ahead and get a license from the country. For now, though, Stars 'will no longer accept players from Portugal until further notice,' as the missive's key line read. The e-mail added that 'all marketing materials (banners, links, etc.) and marketing efforts should cease immediately.' Marketing materials driving traffic to Stars' sister site Full Tilt are also covered by the existing Partners Team pacts.

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