Portugal Proposes New 25 Percent Flat Tax on Online Gambling Revenue

Portugal Proposes New 25 Percent Flat Tax on Online Gambling Revenue

As part of Portugal’s move toward more sensible regulation of gambling, it is considering a flat tax on online sportsbooks. The country hopes this will allow additional growth in the gambling industry. The industry has been severely regulated in the last few decades.

Gambling in Portugal

Gambling in Portugal has a long history. The country has gone through years of no regulation and rampant gambling, and then years of severe regulation. Casino gambling has been in the country since the 16th century. The Portuguese have played different versions of many card games for hundreds of years.

The Portuguese have been betting on sports for hundreds of years, especially on horse racing. However, online sports betting has only been legal in Portugal since May 2016. That year, the government debuted an online sportsbook that was a monopoly in the country. The sport that gets the most bets in Portugal is football/soccer, which has 75 percent of the sportsbook market. Other popular sports include basketball and tennis.

Currently, there are nine casinos in Portugal. The largest casino is Casino Estoril, which has 20 table games and 1,200 gaming and poker machines. Currently, Portugal allows online casinos.

The Proposed Regulation

The government is in the middle of proposing a 25 percent flat tax on all online gambling revenue. The online revenue that will receive the changes include sportsbooks, online casinos, and online poker games. Currently, the tax can be anywhere from 15 percent to 30 percent on a sliding tax scale based on online casino and poker revenue. The online sportsbook tax ranges between 8 percent and 16 percent. The online gambling operators have been complaining that their tax is unfair when compared with the sportsbooks tax. The government is hoping that the 25 percent flat tax will help to jump-start the lagging gambling enterprises.

The Enormous Tax Burden

Tax BurdenMany economists have stated the reason Portugal’s gambling enterprises haven’t managed to get off the ground is government regulation. The heavy tax burden that gambling interests have to pay to operate in Portugal is part of the problem. Other countries with gambling interests, such as France and Spain, don’t have tax burdens as high. The gaming tax proposed by Portugal’s government makes it difficult for gambling interests to succeed in the market.

Portugal issued its first online licenses in 2016. The hope was the number of licenses would be large enough to help prop up social services in Portugal. The country also wanted to add money to its coffers. However, Portugal has only granted eight licenses for 13 different gaming opportunities. These include licenses for online betting, casino, and poker.

Overall, Portugal’s online gambling market reported gains in revenue for 2018. However, critics reported that the increase was really the excitement over Portugal’s run through the World Cup. The national team went to the Round of 16 before losing. The licensed sportsbooks generated $42 million in revenue in the second quarter. However, the government’s share of the taxes was $19 million. Critics have pointed out this revenue, while notable, is not nearly as much as in other quarters.

Portugal’s Problem

While tourism is growing in popularity, casinos, online gaming, and sportsbooks are not. Some people believe that gambling is a problem. Most think it is because Portugal is not a place people think of when they want to gamble. Others believe the problem is directly related to the regulation placed on online gambling and casino gambling. Only time will tell if lifting the heavy tax burden placed on Portugal’s gambling interests will affect the gaming industry.

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