Portugal’s gambling authority, the Serviço de Regulação e Inspeção de Jogos, or 'SRIJ', has issued six online gambling licenses since the market was opened a year ago to international operations. These licences were granted to just four companies and only five sites remain.
The Portuguese market had been considered one of considerable potential as, prior to regulation, it had been targeted by some of the big names in the global gambling industry and there had clearly been a great demand for online offerings.
However, the fact that most of those operators fled the country and never turned back raises certain questions. The lack of more companies in the local market can largely be attributed to Portugal’s gambling tax regime.
Under the country’s current laws, sports betting operators must pay an 8%-16% tax on their turnover. More specifically, operators with turnover of less than €30 million are required to pay an 8% tax, the rate rises proportionally with their turnover. Online casino licensees are taxed on their gross gaming revenue with the rate starting from 15% and reaching 30% for annual revenue of €10 million or over.
Rates of this scale can be detrimental to any market, but the risk is even bigger when bearing in mind that Portugal’s market is not as massive in size as those in other European countries.
SRIJ and Portuguese lawmakers have said that they will review the local iGaming landscape in mid-2018 at the earliest, or precisely two years after its regulation, despite constant calls from industry stakeholders for the country’s gambling laws to be amended in a manner that would make it enticing to big investors.
Portugal’s online gambling market was worth €82.2 million during the first ten months after its official opening to regulated operations, according to recently reported figures by SRIJ.
This was generated in the period between late-May 2016 and March 31, 2017.
The Portuguese government approved a new online gambling regulatory framework in 2015 after several years of deliberations over the matter. The new laws came into effect in the Spring of 2016, allowing international operators to apply for licences to operate in the country legally.
According to the information released by SRIJ, these licensed companies generated a total of €31 million during this year’s first quarter, the amount reflecting an increase of 13.7% from the €27 million reported for the prior quarter.
Sports betting claimed the largest share of Portugal’s online gambling market, accounting for around 70% of overall revenue generated during the reported ten months. There are currently two licensed betting operators to provide their offering to local customers. Those generated the amount of €57.6 million during the first ten months since regulation. However, SRIJ’s figures showed that revenue from this type of offering has been dropping consistently over the past three quarters.
Betting revenue amounted to €17.4 million during the first quarter of 2017, down from around €18 million in the fourth quarter of 2016, which, in turn, reflected a drop from the €22.2 million generated during the three months ended September 30, 2016.
Casino games, including online poker, represented the remaining portion of the revenue generated. The online casino segment contributed €25.1 million in the period between late-July, when the first casino license was issued by SRIJ, and March 31, 2017.
The first three months of this year were particularly successful for the vertical as revenue jumped more than a half since the previous three-month period to over €13.9 million. Portuguese players can play online slots, baccarat, blackjack, American roulette, French roulette, and poker on licensed .pt websites.
Slot machines accounted for the greater portion of the local online casino market (34%), according to SRIJ’s report. Cash game poker ranked next, taking up 23.7%. Tournament poker accounted for 9% of the local market.
The market is still small and with operators already leaving due to tax and profitability issues, it is set to get smaller.
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